As filed with the Securities and Exchange Commission on September 12, 1996.
Registration No. 333-1449
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------
FORM S-4/A
AMENDMENT NO. 2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
TEREX CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 3550 34-1531521
(State or other jurisdiction of (Primary standard industrial (I.R.S. employer
incorporation or organization) classification code number) identification no.)
500 Post Road East
Westport, Connecticut 06880
(203) 222-7170
(Address, including zip code, and telephone
number, including area code, of Registrant's
principal executive offices)
--------------------------
CLARK MATERIAL HANDLING COMPANY
(Exact name of Co-Registrant as specified in its charter)
Kentucky 3550 61-1107574
(State or other jurisdiction of (Primary standard industrial (I.R.S. employer
incorporation or organization) classification code number) identification no.)
172 Trade Street
Lexington, Kentucky 40510
(606) 288-1200
(Address, including zip code, and telephone
number, including area code, of Co-Registrant's
principal executive offices)
--------------------------
TEREX CRANES, INC.
(Exact name of Co-Registrant as specified in its charter)
Delaware 3530 06-1423889
(State or other jurisdiction of (Primary standard industrial (I.R.S. employer
incorporation or organization) classification code number) identification no.)
c/o Terex Corporation
500 Post Road East
Westport, Connecticut 06880
(203) 222-7170
(Address, including zip code, and telephone
number, including area code, of Co-Registrant's
principal executive offices)
--------------------------
<PAGE>
PPM CRANES, INC.
(Exact name of Co-Registrant as specified in its charter)
Delaware 3550 39-1611683
(State or other jurisdiction of (Primary standard industrial (I.R.S. employer
incorporation or organization) classification code number) identification no.)
Atlantic Center for Business and Industry
Highway 501 East
Conway, South Carolina 29526
(803) 349-6900
(Address, including zip code, and telephone
number, including area code, of Co-Registrant's
principal executive offices)
--------------------------
KOEHRING CRANES, INC.
(Exact name of Co-Registrant as specified in its charter)
Delaware 3550 06-1423888
(State or other jurisdiction of (Primary standard industrial (I.R.S. employer
incorporation or organization) classification code number) identification no.)
106 12th Street S.E.
Waverly, Iowa 50677
(319) 352-3920
(Address, including zip code, and telephone
number, including area code, of Co-Registrant's
principal executive offices)
--------------------------
CMH ACQUISITION CORP.
(Exact name of Co-Registrant as specified in its charter)
Delaware 3530 39-1738520
(State or other jurisdiction of (Primary standard industrial (I.R.S. employer
incorporation or organization) classification code number) identification no.)
c/o Terex Corporation
500 Post Road East
Westport, Connecticut 06880
(203) 222-7170
(Address, including zip code, and telephone
number, including area code, of Co-Registrant's
principal executive offices)
--------------------------
CMH ACQUISITION INTERNATIONAL CORP.
(Exact name of Co-Registrant as specified in its charter)
Delaware 3530 39-1738521
(State or other jurisdiction of (Primary standard industrial (I.R.S. employer
incorporation or organization) classification code number) identification no.)
c/o Terex Corporation
500 Post Road East
Westport, Connecticut 06880
(203) 222-7170
(Address, including zip code, and telephone
number, including area code, of Co-Registrant's
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 LLP
1290 Avenue of the Americas
New York, New York 10104
Attention: Stuart A. Gordon, Esq.
Eric I Cohen, Esq.
(212) 541-2000
--------------------------
Approximate date of commencement of proposed sale to public: As soon as
practicable after the Registration Statement becomes effective. If the
securities being registered on this form are being offered in connection with
the formation of a holding company and there is compliance with General
Instruction G, check the following box:
--------------------------
The Registrant and the Co-Registrants hereby amend this Registration
Statement on such date or dates as may be necessary to delay its effective date
until the Registrant and the Co-Registrants shall file a further amendment which
specifically states that this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of 1933 or until
the Registration Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
<PAGE>
TEREX CORPORATION
Cross Reference Sheet
Pursuant to Item 501(b) of Regulation S-K Showing
Location in Prospectus of Items of Form S-4
Item Number and Caption Heading or Subheading in Prospectus
A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of Registration Statement
and Outside Front Cover Page of
Prospectus Facing Page of Registration
Statement; Cross Reference Sheet;
Outside Front Cover Page of
Prospectus
2. Inside Front and Outside Back Cover
Pages of Prospectus Inside Front Cover Page of
Prospectus; Outside Back Cover Page
of Prospectus
3. Risk Factors, Ratio of Earnings to
Fixed Charges and Other Information Prospectus Summary; Risk Factors
and Recent Developments; The
Company; Summary Consolidated
Financial Data; Selected
Consolidated Financial Data
4. Terms of the Transaction The Exchange Offer; Description of
the Notes and the Guarantees;
Certain Federal Income Tax
Consequences
5. Pro Forma Financial Information Not Applicable
6. Material Contacts with the Company
Being Acquired Not Applicable
7. Additional Information Required for
Reoffering by Persons and Parties
Deemed to be Underwriters Not Applicable
8. Interests of Named Experts and Counsel Legal Matters; Experts
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities Not Applicable
B. INFORMATION ABOUT THE REGISTRANTS
10. Information with Respect to S-3
Registrants Not Applicable
11. Incorporation of Certain Information
by Reference Not Applicable
12. Information with Respect to S-2 or
S-3 Registrants Not Applicable
13. Incorporation of Certain Information
by Reference Not Applicable
14. Information with Respect to
Registrants Other Than S-3 or S-2
Registrants Prospectus Summary; Summary
Consolidated Financial Data; The
Company; Selected Consolidated
Financial Data; Management's
Discussion and Analysis of
Financial Condition and Results of
Operations; Business; Description
of the Notes and the Guarantees;
Consolidated Financial Statements
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
15. Information with Respect to
S-3 Companies Not Applicable
16. Information with Respect to S-2 or
S-3 Companies Not Applicable
17. Information with Respect to Companies
Other Than S-2 or S-3 Companies Not Applicable
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents
or Authorizations are to be Solicited Not Applicable
19. Information if Proxies, Consents or
Authorizations are Not to be
Solicited, or in an Exchange Offer Management; Certain Transactions
<PAGE>
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.
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED SEPTEMBER 12, 1996
OFFER TO EXCHANGE
all outstanding
Series A 13 1/4% Senior Secured Notes due 2002
($250,000,000 principal amount outstanding)
for
Series B 13 1/4% Senior Secured Notes due 2002
of
TEREX CORPORATION
Payment of Principal and Interest
Unconditionally Guaranteed Jointly and Severally by
Terex Cranes, Inc.
PPM Cranes, Inc.
Koehring Cranes, Inc.
Clark Material Handling Company
CMH Acquisition Corp.
CMH Acquisition International Corp.
---------------------------------
THE EXCHANGE OFFER
WILL EXPIRE AT 5:00 p.m., NEW YORK CITY TIME,
ON ________________, 1996, UNLESS EXTENDED.
---------------------------------
Terex Corporation, a Delaware corporation ("Terex" or the "Company"), hereby
offers, upon the terms and subject to the conditions set forth in this
Prospectus and the accompanying Letter of Transmittal (the "Letter of
Transmittal" which, together with the Prospectus, constitute the "Exchange
Offer"), to exchange its outstanding Series A Senior Secured Notes due 2002 (the
"Old Notes"), of which an aggregate of $250 million in principal amount is
outstanding as of the date hereof, for an equal principal amount of its Series B
Senior Secured Notes due 2002 (the "New Notes"). The form and terms of the New
Notes will be the same as the form and terms of the Old Notes except that the
New Notes will have been registered under the Securities Act of 1933, as amended
(the "Securities Act"), and, therefore, will not bear legends restricting the
transfer thereof. The New Notes will be entitled to the benefits of the
Indenture (the "Indenture"), dated as of May 9, 1995, among the Company, the
Guarantors and United States Trust Company of New York, as trustee, governing
the Old Notes. The New Notes and the Old Notes are sometimes collectively
referred to herein as the "Notes." The Old Notes are, and the New Notes will
continue to be, unconditionally and irrevocably guaranteed jointly and severally
by present and future Material Subsidiaries (as defined herein) of the Company
that are Restricted Subsidiaries (as defined herein) (other than Terex Equipment
Limited, the Company's wholly owned Scottish subsidiary ("TEL"), Clark Material
Handling Company GmbH, the Company's wholly owned German subsidiary ("CMHC
Germany"), P.P.M. S.A., the Company's French subsidiary, and any other present
or future Restricted Subsidiary organized under the laws of a foreign country),
including, without limitation, Terex Cranes, Inc., a Delaware corporation
("Terex Cranes"), PPM Cranes, Inc., a Delaware corporation ("PPM Cranes"),
Koehring Cranes, Inc., a Delaware corporation ("Koehring Cranes"), Clark
Material Handling Company, a Kentucky corporation ("CMHC"), CMH Acquisition
Corp., a Delaware corporation ("CMH Acquisition"), and CMH Acquisition
International Corp., a Delaware corporation ("International"). Such companies
are collectively referred to herein as the "Guarantors." See "The Exchange
Offer" and "Description of the Notes and the Guarantees."
(continued on next page)
---------------------------------
SEE "RISK FACTORS AND RECENT DEVELOPMENTS" ON PAGE 10 FOR A DISCUSSION
OF CERTAIN RISKS THAT SHOULD BE CONSIDERED BY ELIGIBLE HOLDERS
IN EVALUATING THE EXCHANGE OFFER
---------------------------------
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 _______, 1996.
<PAGE>
The Company will accept for exchange any and all Old Notes which are validly
tendered and not withdrawn prior to 5:00 p.m, New York City time, on
__________________, 1996 (if, when and as extended, the "Expiration Date").
Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m., New York
City time, on the Expiration Date, pursuant to the procedures described herein.
The Exchange Offer is not conditioned upon any minimum principal amount of Old
Notes being tendered for exchange. However, the Exchange Offer is subject to
certain conditions which may be waived by the Company. See "The Exchange Offer."
For example, Old Notes may be tendered only in integral multiples of $1,000.
After consummation of the Exchange Offer, the Company may offer to purchase any
Notes at any price or prices which the Company deems appropriate, although the
Company is not obligated and has no present intention to do so.
The New Notes will bear interest at 13 1/4% per annum from the date of original
issue. Interest on the New Notes will be payable semi-annually, in arrears, on
May 15 and November 15 of each year, commencing November 15, 1996. Holders of
Old Notes that are accepted for exchange will receive, in cash, accrued interest
thereon to, but not including, the date of issuance of the New Notes. Such
interest will be paid with and at the time of the first interest payment on the
New Notes. Interest on the Old Notes accepted for exchange will cease to accrue
upon issuance of the New Notes being exchanged therefor.
The New Notes will not be redeemable prior to May 15, 2000, except that the
Company may, at its option, redeem up to one-third of the original principal
amount of the New Notes at the redemption prices set forth in the Indenture plus
accrued interest through the date of redemption, with the net proceeds of
certain sales of common stock of the Company or any Restricted Subsidiary (as
defined herein). From and after May 15, 2000, the New Notes will be redeemable
at the option of the Company, in whole or in part, at the redemption prices set
forth in the Indenture plus accrued interest to the date of redemption. Upon a
Change of Control (as defined herein), the Company is required, subject to
certain conditions, to offer to purchase the New Notes at 101% of the principal
amount thereof together with accrued interest to the date of purchase. See
"Description of the Notes and the Guarantees."
Except as otherwise set forth herein, the Old Notes are and the New Notes will
be secured by a first priority security interest in (i) 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 interest are subordinated to liens
securing obligations under any Revolving Credit Facility (as defined herein) to
which any of them are obligors), (ii) property, plant and equipment of certain
of the Restricted Subsidiaries organized outside of the U.S. and (iii) the
Capital Stock (as defined herein) of, and certain intercompany notes from, all
Subsidiaries (as defined herein) of the Company owned by the Company or any
Material Subsidiary (as defined herein). In addition, the Old Notes are and the
New Notes will initially be secured by a security interest in inventory of
certain foreign Restricted Subsidiaries; provided, however, if any European
subsidiary of the Company enters into a working capital or revolving credit
facility, the Company is permitted to secure such facility with accounts
receivable and/or inventory of such Subsidiary and the security interest
securing the Old Notes and the New Notes will be released to the extent required
by the terms of any such facility. All of the assets of the Company, the
Guarantors and the Restricted Subsidiaries described above are collectively
referred to herein as the "Collateral"). See "Description of the Notes and the
Guarantees."
Prior to this Exchange Offer, there has been no public market for the Old Notes.
The Company does not intend to list the New Notes on any securities exchange or
to seek approval for quotation through any automated quotation system. There can
be no assurance that an active market for the New Notes will develop. To the
extent that a market for the New Notes does develop, the market value of the New
Notes will depend on market conditions (such as yields on alternative
investments), general economic conditions, the Company's financial condition and
other conditions. Such conditions might cause the New Notes, to the extent that
they are actively traded, to trade at a significant discount from face value.
See "Risk Factors -- Lack of Public Market."
Based on previous interpretations by the staff of the Securities and Exchange
Commission (the "Commission") set forth in no-action letters to third parties,
the Company believes that the New Notes issued pursuant to the Exchange Offer in
exchange for Old Notes may be offered for resale, resold and otherwise
transferred by a holder thereof (other than broker-dealers, as set forth below,
and any holder that is an "affiliate" of the Company (within the meaning of Rule
405 under the Securities Act)), without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that the holder
is acquiring the New Notes in its ordinary course of business and is not
participating, and has no arrangement or understanding with any person to
participate, in the distribution of the New Notes. Holders of Old Notes wishing
to accept the Exchange Offer must represent to the Company that such conditions
have been met.
<PAGE>
Each broker-dealer that receives New Notes for its own account pursuant to the
Exchange Offer must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes if such New Notes were received in exchange
for Old Notes that were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Letter of Transmittal
states that by so acknowledging and by delivering a prospectus, a broker-dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act. The Company has agreed that, for a period of 90 days after
the Expiration Date, it will use its best efforts to make this Prospectus, as it
may be amended or supplemented from time to time, available to any broker-dealer
for use in connection with any such resale. See "Plan of Distribution."
Neither the Company nor any Guarantor will receive any proceeds from the
Exchange Offer. The Company has agreed to pay the expenses of the Exchange
Offer. No underwriter is being used in connection with the Exchange Offer.
<PAGE>
TABLE OF CONTENTS
Page
AVAILABLE INFORMATION............................................ 2
PROSPECTUS SUMMARY............................................... 3
RISK FACTORS AND RECENT DEVELOPMENTS............................. 10
THE COMPANY...................................................... 14
THE EXCHANGE OFFER............................................... 15
USE OF PROCEEDS.................................................. 21
CAPITALIZATION................................................... 22
SELECTED CONSOLIDATED FINANCIAL DATA............................. 24
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS............................ 27
BUSINESS......................................................... 38
MANAGEMENT....................................................... 46
SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS...................................... 54
CERTAIN TRANSACTIONS............................................. 56
DESCRIPTION OF THE NOTES AND THE GUARANTEES...................... 57
CERTAIN FEDERAL INCOME TAX CONSEQUENCES.......................... 73
PLAN OF DISTRIBUTION............................................. 73
LEGAL MATTERS.................................................... 74
EXPERTS.......................................................... 74
---------------------------------
NO PERSON IS AUTHORIZED IN CONNECTION WITH THE EXCHANGE OFFER TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN AS CONTAINED IN THIS
PROSPECTUS OR THE ACCOMPANYING LETTER OF TRANSMITTAL, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. NEITHER THE DELIVERY OF THIS PROSPECTUS OR THE
ACCOMPANYING LETTER OF TRANSMITTAL OR BOTH TOGETHER, NOR ANY EXCHANGE MADE
HEREUNDER, SHALL UNDER ANY CIRCUMSTANCES IMPLY THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
Neither this Prospectus nor the accompanying Letter of Transmittal nor both
together constitute an offer to sell or a solicitation of an offer to buy any
security other than the New Notes offered hereby, nor does it constitute an
offer to sell or a solicitation of an offer to buy any securities offered hereby
to any person 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 or in which it is unlawful to make such offer or solicitation to such
person.
Until , 1996 (90 days after the date of the Exchange Offer), all dealers
offering transactions in the New Notes, whether or not participating in this
Exchange Offer, may be required to deliver a Prospectus.
<PAGE>
AVAILABLE INFORMATION
Terex Corporation 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
statements with the Commission. Such reports, proxy statements and other
information statements 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 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of such materials may also 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. Additionally, the
Commission maintains a Web site containing reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission. The address for such Web site is http://www.sec.gov.
The Company's Common Stock, par value $.01 per share (the "Common Stock"), is
listed on the New York Stock Exchange (the "NYSE"), and reports, proxy
statements and other information statements concerning the Company may also be
inspected at the NYSE.
The Company has filed with the Commission a Registration Statement on Form S-4
under the Securities Act with respect to the New Notes offered hereby. This
Prospectus, which constitutes a part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement and 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 New
Notes 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 has agreed to make available to any prospective purchaser of the Notes
or beneficial owner of the Notes in connection with any sale thereof the
information required by Rule 144(d)(1) under the Securities Act, until such time
as the Company has either exchanged the Notes for securities identical in all
material respects which have been registered under the Securities Act or until
such time as the holders thereof have disposed of such Notes pursuant to an
effective registration statement filed by the Company.
The Company furnishes stockholders with annual reports containing audited
financial statements. The Company also furnishes its common stockholders with
proxy material for its annual meetings complying with the proxy requirements of
the Exchange Act.
<PAGE>
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 "Risk Factors and Recent
Developments" on page 10.
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 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 (which is accounted for as a discontinued operation; see "Risk Factors
and Recent Developments") designs, manufactures and markets a complete line of
internal combustion ("IC") and electric lift trucks, electric walkies, automated
pallet trucks and related components and replacement parts. Terex Trucks,
formerly known as the Company's Heavy Equipment Segment, designs, manufactures
and markets heavy-duty, off-highway, earthmoving and construction equipment and
related components and replacement parts. The Terex Cranes Segment designs,
manufactures and markets mobile cranes, aerial platforms, container stackers and
scrap holders and related components and replacement parts. See "The Company"
and "Business."
The Terex 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 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 Terex Cranes Segment.
Summary of Terms of the Exchange Offer
Registration Rights................................ The Old Notes were sold by
the Company (i) to Qualified Institutional Buyers (as defined in Rule 144A under
the Securities Act) and (ii) to a limited number of other institutional
"Accredited Investors" (as defined in Rule 501(A)(1), (2), (3) or (7) under the
Securities Act) on May 9, 1995. Jefferies & Company, Inc. and Dillon, Read & Co.
Inc. were the initial purchasers of the Old Notes (the "Initial Purchasers"). In
connection with the sale of the Old Notes, the Company and the Initial
Purchasers entered into a Registration Rights Agreement, dated as of May 9, 1995
(the "Registration Rights Agreement"), providing for the Exchange Offer.
The Exchange Offer................................. The Company is offering to
exchange $1,000 principal amount of New Notes for each $1,000 principal amount
of Old Notes that are properly tendered and accepted for exchange. The Company
will issue the New Notes on or promptly after the Expiration Date. As of May 21,
1996, there were 15 registered holders of Old Notes and $250 million aggregate
principal amount of Old Notes outstanding. See "The Exchange Offer."
Based on an interpretation by the staff of the Commission set forth in no-action
letters issued to third parties, including "Exxon Capital Holdings Corporation"
(available May 13, 1988), "Morgan Stanley & Co. Incorporated" (available June 5,
1991), "Mary Kay Cosmetics, Inc." (available June 5, 1991) and "Warnaco, Inc."
(available October 11, 1991), the Company believes that, except as described
below, New Notes issued pursuant to the Exchange Offer in exchange for Old Notes
may be offered for resale, resold and otherwise transferred by holders thereof
(other than broker-dealers, as set forth below, and any such holder that is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery provisions
of the Securities Act, provided that such New Notes are acquired in the ordinary
course of such holder's business and that such holder has no arrangement or
understanding with any person to participate in the distribution of such New
Notes and that such holder is not engaging in or intending to engage in the
distribution of New Notes. This Prospectus may be used for an offer to resell or
other retransfer of New Notes only as specifically set forth herein. The
Exchange Offer is not being made to, nor will the Company accept surrenders for
exchange from, holders of Old Notes (i) in any jurisdiction in which the
Exchange Offer or the acceptance thereof would not be in compliance with the
securities or blue sky laws of such jurisdiction or (ii) if any holder is
engaged or intends to engage in a distribution of the New Notes. Each
broker-dealer that receives New Notes for its own account in exchange for Old
Notes, where such Old Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of such New Notes. See
"Plan of Distribution." The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
The Company has agreed that, for a period of 90 days after the Expiration Date,
it will use its best efforts to make this Prospectus, as it may be amended or
supplemented from time to time, available to any broker-dealer for use in
connection with any such resale. See "Plan of Distribution." Any holder who
tenders in the Exchange Offer with the intention to participate, or for the
purpose of participating, in a distribution of the New Notes or who is an
"affiliate" of the Company (within the meaning of Rule 405 under the Securities
Act) may not rely on the position of the staff of the Commission enunciated in
"Exxon Capital Holdings Corporation" or the line of no-action letters referred
to above and, in the absence of an exemption therefrom, must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction. Failure to comply with such
requirements in such instance may result in such holder incurring liability
under the Securities Act for which the holder is not indemnified by the Company.
Expiration Date.................................... The Exchange Offer will
expire at 5:00 p.m., New York City time, on __________________, 1996, unless
extended, in which case the term "Expiration Date" shall mean the latest date
and time to which the Exchange Offer is extended. The Company will accept for
exchange any and all Old Notes which are validly tendered and not withdrawn
prior to 5:00 p.m., New York City time, on the Expiration Date. The New Notes
issued pursuant to the Exchange Offer will be delivered on or promptly after the
Expiration Date.
Interest on the New Notes
and Old Notes......................................The New Notes will bear
interest at the rate of 13 1/4% per annum and interest will be payable
semi-annually in arrears on May 15 and November 15, commencing on November 15,
1996, to holders of record on the immediately preceding May 1 and November 1.
Holders of New Notes will receive interest on November 15, 1996 from the date of
initial issuance of the New Notes, plus an amount equal to the accrued interest
on the Old Notes exchanged therefor from the most recent date to which interest
has been paid to the date of exchange thereof. Such interest will be paid with
the first interest payment on the New Notes. Interest on the Old Notes accepted
for exchange will cease to accrue upon issuance of the New Notes.
Procedures for Tendering
Old Notes.......................................... Each holder of Old Notes
wishing to accept the Exchange Offer must complete, sign and date the Letter of
Transmittal, or a facsimile thereof, in accordance with the instructions
contained herein and therein, and mail or otherwise deliver such Letter of
Transmittal, or such facsimile, together with the Old Notes and any other
required documentation, to United States Trust Company of New York, as Exchange
Agent (the "Exchange Agent"), at the address set forth herein and in the Letter
of Transmittal, prior to 5:00 p.m., New York City time, on the Expiration Date
or comply with the procedure for book-entry transfer or the guaranteed delivery
procedures described herein and in the Letter of Transmittal. See "The Exchange
Offer -- Procedures for Tendering." By executing the Letter of Transmittal, each
holder will represent to the Company that, among other things, (i) the New Notes
acquired pursuant to the Exchange Offer are being obtained in the ordinary
course of business of the person receiving such New Notes, whether or not such
person is the holder, (ii) neither the holder nor any such other person is
engaging in or intends to engage in a distribution of such New Notes, (iii)
neither the holder nor such other person has an arrangement or understanding
with any person to participate in the "distribution" of such New Notes with the
meaning of the Securities Act, and (iv) neither the holder nor any such other
person is an "affiliate," as defined in Rule 405 under the Securities Act, of
the Company. See "The Exchange Offer -- Purpose and Effect of the Exchange
Offer."
Special Procedures for
Beneficial Owners.................................. Any beneficial owner whose
Old Notes are registered in the name of a broker, dealer, commercial bank, trust
company or other nominee and who wishes to tender such Old Notes in the Exchange
Offer should contact such registered holder promptly and instruct such
registered holder to tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on its own behalf, such owner must, prior to
completing and executing the Letter of Transmittal and delivering his Old Notes,
either make appropriate arrangements to register ownership of the Old Notes in
its name or obtain a properly completed bond power from the registered holder.
The transfer of registered ownership may take considerable time and may not be
able to be completed prior to the Expiration Date. See "The Exchange Offer --
Procedures for Tendering."
Guaranteed Delivery Procedures..................... Holders of Old Notes who
wish to tender their Old Notes and whose Old Notes are not immediately available
or who cannot deliver their Old Notes, the Letter of Transmittal or any other
documents required by the Letter of Transmittal to the Exchange Agent prior to
the Expiration Date, must tender their Old Notes according to the guaranteed
delivery procedures set forth in "The Exchange Offer -- Guaranteed Delivery
Procedures."
Withdrawal Rights.................................. Tenders of Old Notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration
Date by furnishing a written or facsimile transmission notice of withdrawal to
the Exchange Agent containing the information set forth in "The Exchange Offer
- -- Withdrawal of Tenders."
Certain Federal Income Tax
Consequences....................................... For a discussion of certain
federal income tax consequences relating to the exchange of the New Notes for
the Old Notes, see "Certain Federal Income Tax Consequences."
Exchange Agent..................................... United States Trust Company
of New York is the Exchange Agent. The address and telephone number of the
Exchange Agent are set forth in "The Exchange Offer -- Exchange Agent."
Consequences of Failure to Exchange................ The Old Notes that are not
exchanged for New Notes pursuant to the Exchange Offer will not have any further
registration rights and remain restricted securities. Accordingly, such Old
Notes may be resold only (i) to the Company (upon redemption thereof or
otherwise), (ii) pursuant to an effective registration statement under the
Securities Act, (iii) so long as the Old Notes are eligible for resale pursuant
to Rule 144A, to a qualified institutional buyer within the meaning of Rule 144A
under the Securities Act in a transaction meeting the requirements of Rule 144A,
or (iv) pursuant to another available exemption from the registration
requirements of the Securities Act, in each case in accordance with any
applicable securities laws of any state of the United States. Old Notes that are
not exchanged pursuant to the Exchange Offer will remain outstanding, continue
to accrue interest and be entitled to distributions of principal and interest.
However, upon the earlier to occur of (i) the Expiration Date and (ii) the
effectiveness of a shelf registration statement covering the Old Notes, the
interest rate on the Old Notes will decrease to 13 1/4% (from 13 3/4%) per
annum.
Summary of Terms of the New Notes and the Guarantees
The Exchange Offer applies to $250 million aggregate principal amount of the Old
Notes. The form and terms of the New Notes will be the same as the form and
terms of the Old Notes, except that the New Notes will be registered under the
Securities Act and, therefore, will not bear legends restricting the transfer
thereof. The New Notes will evidence the same debt as the Old Notes and will be
entitled to the benefits of the Indenture. See "Description of the Notes and the
Guarantees."
Issuer............................................. Terex Corporation.
Securities Offered................................. $250 million aggregate
principal amount of 13 1/4% Series B Senior Secured Notes due 2002.
Maturity........................................... May 15, 2002.
Interest Rate...................................... The New Notes will bear
interest at 13 1/4% per annum from the date of original issue.
Interest Payment Dates............................. May 15 and November 15 of
each year, commencing November 15, 1996.
Collateral......................................... Except as otherwise set
forth herein, the Old Notes are and the New Notes will be secured by a first
priority security interest in (i) 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 interest shall be subordinated to liens securing
obligations under any Revolving Credit Facility to which any of them are
obligors), (ii) property, plant and equipment of certain of the Restricted
Subsidiaries organized outside of the U.S. and (iii) the Capital Stock of, and
certain intercompany notes from, all Subsidiaries of the Company owned by the
Company or any Material Subsidiary. In addition, the Old Notes are and the New
Notes will initially be secured by a security interest in inventory of certain
foreign Restricted Subsidiaries; provided, however, if any European subsidiary
of the Company enters into a working capital or revolving credit facility, the
Company is permitted to secure such facility with accounts receivable and/or
inventory of such Subsidiary and the security interest securing the Old Notes
and the New Notes will be released to the extent required by the terms of any
such facility.
Ranking............................................ The Notes will rank pari
passu in right of payment with all existing and future senior Indebtedness (as
defined herein) and senior to all subordinated Indebtedness of the Company. In
addition, upon any distribution of assets of the Company pursuant to any
insolvency, bankruptcy, dissolution, winding up, liquidation or reorganization,
the payment of the principal of, and the premium, if any, and interest on, the
Notes will rank pari passu in right of payment with all existing and future
senior indebtedness. At June 30, 1996, the aggregate principal amount of senior
indebtedness of the Company was $322.2 million, consisting of the $250 million
aggregate principal amount of the Old Notes and $72.2 million aggregate
principal amount outstanding under the Credit Facility (as defined herein). The
Indenture will limit, among other things, the incurrence or existence of liens
on the assets of the Company and its Restricted Subsidiaries subject to certain
exceptions.
Optional Redemption................................ The New Notes are not
redeemable prior to May 15, 2000, except that the Company may, at its option,
redeem up to one-third of the original principal amount of the New Notes at the
redemption prices set forth in the Indenture plus accrued interest through the
date of redemption, with the net proceeds of certain sales of common stock of
the Company or any Restricted Subsidiary. From and after May 15, 2000, the Notes
are redeemable at the option of the Company, in whole or in part, at the
redemption prices set forth in the Indenture plus accrued interest to the date
of redemption.
Guarantors......................................... Present and future Material
Subsidiaries of the Company that are Restricted Subsidiaries (other than TEL,
CMHC Germany, P.P.M., S.A., and any other present or future Restricted
Subsidiary organized under the laws of a foreign country), including, without
limitation, Terex Cranes, PPM Cranes, Koehring Cranes, CMHC, CMH Acquisition and
International.
Change of Control.................................. Upon a Change of Control,
the Company is required, subject to certain conditions, to offer to purchase the
New Notes at 101% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the date of purchase.
Covenants.......................................... The Indenture under which
the New Notes will be issued will limit, among other things and subject to
certain exceptions, (i) the incurrence of additional debt or the issuance of
Disqualified Stock (as defined herein) by the Company or its Restricted
Subsidiaries, (ii) the payment of dividends on, and redemption of, Equity
Interests (as defined herein) and certain other restricted payments, (iii) asset
sales, (iv) consolidations, mergers or transfers of all or substantially all the
Company's assets, (v) transactions with affiliates, and (vi) the occurrence or
existence of liens.
Risk Factors and Recent Developments
See "Risk Factors and Recent Developments" on page 10 for a discussion of
certain factors that should be considered in connection with the Exchange Offer
and an investment in the New Notes.
<PAGE>
<TABLE>
<CAPTION>
SUMMARY CONSOLIDATED FINANCIAL DATA
(in millions 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 Six Months
Ended June 30, As of and for the Year Ended December 31,
--------------- ------------------------------------------
1996 1995 1995 1994 1993 1992 1991
------ ------ ------ ------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
Summary of Operations (1)
Net Sales $ 356.0 $ 213.5 $ 501.4 $ 314.1 $ 274.7 $ 282.4 $ 784.2
Operating income (loss) from
continuing operations 17.8 5.5 12.8 10.4 (8.2) (6.7) (70.7)
Income (loss) from continuing
operations before
extraordinary items (4.4) (12.5) (32.1) 4.9 (40.7) 0.7 (42.7)
Income (loss) before
extraordinary items 5.0 (18.1) (27.7) 1.2 (65.0) 2.9 (42.7)
Per share:
Income (loss) before
extraordinary items (0.13) (0.35) (3.37) (0.46) (6.55) 0.29 (4.31)
Ratio of earnings to combined fixed
charges and preferred stock
accretion (2) (3) (3) (3) 1.1x (3) 1.2x (3)
Total Assets $ 477.7 $ 412.3 $ 478.9 $ 401.6 $ 390.7 $ 477.3 $ 506.7
Capitalization
Long-term debt and notes payable,
including current maturities $ 340.7 $ 349.0 $ 329.9 $ 190.9 $ 218.0 $ 217.6 $ 223.0
Stockholders' deficit (96.8) (56.6) (96.9) (55.7) (62.3) (9.1) (4.1)
Dividends per share $ --- $ --- $ --- $ --- $ --- $ --- $ 0.1
<FN>
(1) The Summary Consolidated Financial Data include the results of operations of
PPM and the Company's aerial lift division, Mark Industries ("Mark"), from the
dates of their acquisitions, May 9, 1995 and December 31, 1991, respectively,
and reflect the deconsolidation of a former subsidiary, Fruehauf Trailer
Corporation ("Fruehauf"), as of January 1, 1992. Income (loss) before
extraordinary items in 1992 includes a $36.5 gain on deconsolidation of Fruehauf
and in 1991 includes a $56.0 gain as a result of an initial public offering of
Fruehauf common stock. On July 25, 1996 the Company announced the signing of a
definitive agreement to sell its Material Handling business for $135.0 million
in cash. As a result, the results of the Material Handling business, since its
acquisition on July 31, 1992, have been accounted for as discontinued operations
for all periods presented.
(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 $4.4
and $12.5 for the six months ended June 30, 1996 and 1995, respectively, $32.1
for 1995, $40.0 for 1993 and $46.0 for 1991.
</FN>
</TABLE>
<PAGE>
RISK FACTORS AND RECENT DEVELOPMENTS
In addition to other matters described in this Prospectus, the following should
be carefully considered in connection with the Exchange Offer and an investment
in the New Notes:
Significant Leverage
The Company is highly leveraged. At June 30, 1996 the Company had approximately
$340.7 million of indebtedness and stockholders' deficit of $96.8 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 Old 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 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.
See "Recent Developments" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations Liquidity and Capital Resources" for
discussion of the Company's efforts to improve its capital structure and reduce
its outstanding indebtedness.
Consequences of Failure to Exchange; Old Notes Subject to Restrictions
on Transfer; Possible Adverse Effect on Trading Market for Old Notes
Holders of Old Notes who do not exchange their Old Notes for New Notes pursuant
to the Exchange Offer will continue to be subject to the restrictions on
transfer of such Old Notes as set forth in the legend thereon as a consequence
of the issuance of the Old Notes pursuant to exemptions from, or in transactions
not subject to, the registration requirements of the Securities Act and
applicable state securities laws. In general, the Old Notes may not be offered
or sold unless registered under the Securities Act and applicable state laws, or
pursuant to an exemption therefrom. The Company does not intend to register the
Old Notes under the Securities Act and, after consummation of the Exchange
Offer, will not be obligated to do so. In addition, any holder of Old Notes who
tenders in the Exchange Offer for the purpose of participating in a distribution
of the New Notes may be deemed to have received restricted securities and, if
so, will be required to comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction. To
the extent Old Notes are tendered and accepted for exchange in the Exchange
Offer, the trading market for untendered and tendered but unaccepted Old Notes
could be adversely affected. See "The Exchange Offer."
Holders Responsible for Compliance with Exchange Offer
Procedures; No Notice of Defects or Irregularities
Issuance of the New Notes in exchange for Old Notes pursuant to the Exchange
Offer will be made only after a timely receipt by the Company of such Old Notes,
a properly completed and duly executed Letter of Transmittal and all other
required documents. Therefore, holders of Old Notes desiring to tender such Old
Notes in exchange for New Notes should allow sufficient time to ensure timely
delivery. Neither the Exchange Agent nor the Company is under any duty to give
notification of defects or irregularities with respect to the tender of Old
Notes for exchange. Old Notes that are not tendered or are tendered but not
accepted for exchange will, following the consummation of the Exchange Offer,
continue to be subject to the existing restrictions upon transfer thereof and,
upon consummation of the Exchange Offer, the Company's obligation to register
the Old Notes will terminate. See "The Exchange Offer."
Adequacy of Collateral Upon Default
In the event of a default under the Notes, the proceeds from the sale of the
collateral securing the Notes may not be sufficient to satisfy the Company's
obligations under the Notes in full. The amount to be received upon such a sale
would be dependent upon numerous factors including the condition, age and useful
life of the collateral at the time of such sale, the timing and the manner of
the sale, and whether the assets were being sold as part of an ongoing business.
In addition, the book value of the collateral should not be relied upon as a
measure of realizable value.
Repurchase Upon Change of Control
Upon the occurrence of a Change of Control, the Company is required, subject to
certain conditions, to offer to purchase the Notes at a purchase price equal to
101% of the principal amount thereof plus accrued and unpaid interest to the
date of purchase. "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, (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 Securities Exchange Act of 1934, as amended), except for any Person or group
owning in excess of 40% of the voting power of the common 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.
In the event that a Change of Control occurs and the Company is required to make
an offer to repurchase the Notes as described above, there can be no assurance
that sufficient funds will be available to the Company at the time of such
Change of Control to make the required repurchases.
See "Description of the Notes and the Guarantees -- Certain Covenants -- Offer
to Repurchase Upon a Change of Control."
Amendments, Supplements and Waivers
Except for certain specified items (such as reduction of the principal of or
interest on the Notes, change in the date of payment of any installment of
principal or interest, waiver of monetary events of default, change in ranking
or changes to the guarantee), the Indenture and the Notes may be amended or
supplemented, or waivers granted, with the consent of the holders of a majority
in principal amount of the Notes then outstanding. Accordingly, amendments or
supplements may be made to the Indenture and/or the Notes, or waivers granted,
without the consent, and over the objection, of a holder of the Notes. See
"Description of the Notes and the Guarantees -- Amendment, Supplement and
Waiver."
Fraudulent Conveyance or Transfer; Possible Invalidation
or Subordination of Company Obligations
The incurrence by the Company of indebtedness could be affected by various laws
for the protection of creditors, including, without limitation, laws governing
fraudulent conveyances and transfers. A court could find that the Company did
not receive fair consideration or reasonably equivalent value for the issuance
of the Old Notes, or upon the exchange thereof for New Notes, and that at the
time of such issuance the Company (i) was insolvent, (ii) was rendered insolvent
by reason thereof, (iii) was engaged in a business or transaction for which the
assets remaining in the hands of the Company constituted unreasonably small
capital, or (iv) intended to incur or believed it would incur debts beyond its
ability to pay such debts as they mature, thereby rendering the Company's
indebtedness, and the Company's obligations in connection with the issuance of
the New Notes, avoidable.
A finding that the issuance of the New Notes constituted a fraudulent conveyance
or transfer would permit the court to invalidate the Company's obligations under
the New Notes or subordinate repayment of the New Notes to all other obligations
of the Company.
The measure of insolvency for purposes of the test for determining whether the
Company was insolvent varies depending upon the law of the jurisdiction that is
being applied. Generally, a debtor will be considered insolvent if the sum of
its debts is greater than all of its property at a fair valuation or if the
present fair salable value of its assets is less than the amount that would be
required to pay its probable liability on its existing debts (including
contingent liabilities) as they become absolute and matured. There can be no
assurance of which test a court would apply to determine whether the Company was
"insolvent" at the time of the issuance of the New Notes or that a court would
not find the Company to have been insolvent under such test.
The obligations of any Guarantor under the Indenture and the grant by any
Restricted Subsidiary of a security interest under the Collateral Agreements (as
defined herein) may be subject to review under applicable fraudulent transfer or
similar laws, in the event of the bankruptcy or other financial difficulty of
any such person. In the United States, under such laws, if a court in a lawsuit
by an unpaid creditor or representative of creditors of any such person, such as
a trustee in bankruptcy or any such person as debtor in possession, were to find
that at the time such person incurred its obligations under its guarantee or
pledged its assets, it (i) received less than fair consideration or reasonably
equivalent value therefor, and (ii) either (a) was insolvent, (b) was rendered
insolvent, (c) was engaged in a business or transaction for which its remaining
unencumbered assets constituted unreasonably small capital, or (d) intended to
incur or believed that it would incur debts beyond its ability to pay as such
debts matured, such court could avoid such obligations under its guarantee
and/or the security interest in its assets and direct the return of any amounts
paid with respect thereto. Moreover, regardless of the factors identified in the
foregoing clauses (i) and (ii), a court could take such action if it found that
the guarantee was entered into or the security interest granted with actual
intent to hinder, delay, or defraud creditors. The measure of insolvency for
purposes of the foregoing will vary depending on the law of the jurisdiction
being applied. Generally, however, an entity would be considered insolvent if
the sum of its debts (including contingent or unliquidated debts) is greater
than all of its property at a fair valuation or if the present fair salable
value of its assets is less than the amount that would be required to pay its
probable liability on its existing debts as they become absolute and matured.
Net Operating Loss Carryovers and Other Tax Issues
The Internal Revenue Service (the "IRS") 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 certain common stock purchase warrants on
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.
<PAGE>
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 Currency Exchange Risk
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.
Environmental and Labor Factors
While in the past, the Company has not experienced any material effect on its
financial position or results of operations in its current businesses due to
environmental or labor matters, the Company could be affected in the future by
such factors. See "Business" for further discussion.
Lack of Public Market for the New Notes
The New Notes are being offered to the holders of the Old Notes. The Old Notes
were issued in May 1995 to the Initial Purchasers and resold in transactions not
requiring registration under the Securities Act or applicable state securities
laws, including sales pursuant to Rule 144A. The Old Notes are eligible for
trading in the Private Offerings, Resales and Trading through Automatic Linkages
(PORTAL) market. The New Notes are new securities for which there currently is
no market. The Company does not intend to apply for listing of the New Notes on
any securities exchange or for quotation through the National Association of
Securities Dealer Automated Quotation System. There can be no assurance that any
active market for the New Notes will develop. If a trading market develops for
the New Notes, future trading prices of such securities will depend on many
factors, inducing, among other things, prevailing interest rates, the Company's
results of operations and the market for similar securities.
Recent Developments
On July 25, 1996, the Company announced the signing of a definitive agreement
for the sale of its worldwide Material Handling business for $135 million in
cash to Clark Acquisition Corp., a newly formed affiliate of Nesco, Inc. Subject
to the fulfillment of customary closing conditions and regulatory clearances,
the transaction is expected to close within 90 days of the announcement. The
Material Handling business is a leading North American and European designer,
manufacturer and marketer of a complete line of lift trucks, electric walkies
and related components and replacement parts under the Clark trademark. CMHC is
headquartered in Lexington, Kentucky and its manufacturing facilities are
located in Lexington, Kentucky and Mulheim-Ruhr, Germany.
The agreement calls for the sale of substantially all of the assets and
liabilities of CMHC, which is a Guarantor of the Old Notes, and the stock of
CMHC Germany, which is not a Guarantor of the Old Notes, but which is owned by
International, which is a Guarantor of the Old Notes. The obligations of the
Company regarding the use of proceeds from the sale of the Material Handling
business are set forth under "Certain Covenants - Limitation on Asset Sales."
As a result of the announcement of the signing of the agreement to sell the
Material Handling business, included in the financial section herein are a
pro-forma balance sheet as of June 30, 1996 and pro-forma income statements for
the year ended December 31, 1995, and for the six month periods ended June 30,
1996. Also, the Material Handling business has been accounted for as a
discontinued operation herein.
<PAGE>
THE COMPANY
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.
The Company's Material Handling Segment (which is accounted for as a
discontinued operation; see "Risk Factors and Recent Developments") designs,
manufactures and markets a complete line of internal combustion and electric
lift trucks, electric walkies, automated pallet trucks and related components
and replacement parts. Terex Trucks, formerly known as the Company's Heavy
Equipment Segment, designs, manufactures and markets heavy-duty, off-highway,
earthmoving and contruction equipment and related components and replacement
parts. The Terex Cranes Segment designs, manufactures and markets mobile cranes,
aerial platforms, container stackers and scrap holders and related components
and replacement parts.
The Terex 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 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 Terex 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. See also
"Business."
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.
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THE EXCHANGE OFFER
Purpose and Effect of the Exchange Offer
The Old Notes were sold by the Company on May 9, 1995 to the Initial Purchasers
with further distribution permitted only to (i) Qualified Institutional Buyers
(as defined in Rule 144A under the Securities Act) and (ii) a limited number of
other institutional "Accredited Investors" (as defined in Rule 501(A)(1), (2),
(3) or (7) under the Securities Act). In connection with the sale of the Old
Notes, the Company and the Initial Purchasers entered into the Registration
Rights Agreement which requires the Company (i) to cause the Old Notes to be
registered under the Securities Act or (ii) to file with the Commission a
registration statement under the Securities Act with respect to the New Notes of
the Company identical in all material respects to the Old Notes, and to use its
best efforts to cause such registration statement described in clause (ii) above
to become effective under the Securities Act. The Company is further obligated,
upon the effectiveness of the registration statement, to offer the holders of
the Old Notes the opportunity to exchange their Old Notes for a like principal
amount of New Notes, which will be issued without a restrictive legend and may
be reoffered and resold by the holder without restrictions or limitations under
the Securities Act. A copy of the Registration Rights Agreement has been filed
as an exhibit to the Registration Statement of which this Prospectus is a part.
The Exchange Offer is being made pursuant to the Registration Rights Agreement
to satisfy the Company's obligations thereunder. The term "Holder" with respect
to the Exchange Offer means any person in whose name Old Notes are registered on
the Company's books or any other person who has obtained a properly completed
bond power from the registered Holder.
By executing the Letter of Transmittal, each Holder will represent to the
Company, among other things, that (i) the New Notes acquired pursuant to the
Exchange Offer are being acquired in the ordinary course of business of the
person receiving such New Notes, whether or not such person is the Holder, (ii)
neither the Holder nor any such other person is engaging in or intends to engage
in a distribution of such New Notes, (iii) neither the Holder nor any such other
person has an arrangement or understanding with any person to participate in the
distribution of such New Notes within the meaning of the Securities Act, and
(iv) neither the Holder nor any such other person is an "affiliate," as defined
under Rule 405 promulgated under the Securities Act, of the Company or, if such
Holder is an "affiliate," that such Holder will comply with the registration and
prospectus delivery requirements of the Securities Act to the extent applicable.
In the event that any Holder of Old Notes cannot make the requisite
representations to the Company in order to participate in the Exchange Offer,
such Holder may be entitled to have such Holder's Old Notes registered in a
"shelf" registration statement on an appropriate form pursuant to Rule 415 under
the Securities Act. See "Description of the Notes and the Guarantees --
Registration Rights; Liquidated Damages."
Resale of New Notes
The Company has not requested and does not intend to request, an interpretation
by the staff of the Commission with respect to whether the New Notes issued
pursuant to the Exchange Offer in exchange for Old Notes may be offered for
sale, resold or otherwise transferred by any Holder without compliance with the
registration and prospectus delivery provisions of the Securities Act. Based on
an interpretation by the staff of the Commission set forth in no-action letters
issued to third parties, including "Exxon Capital Holdings Corporation"
(available May 13, 1988), "Morgan Stanley & Co. Incorporated" (available June 5,
1991), "Mary Kay Cosmetics, Inc." (available June 5, 1991) and "Warnaco, Inc."
(available October 11, 1991), the Company believes that, except as described
below, the New Notes issued pursuant to the Exchange Offer in exchange for Old
Notes may be offered for resale, resold and otherwise transferred by any Holder
of such Notes (other than any such Holder which is an "affiliate" of the Company
within the meaning of Rule 405 under the Securities Act and in the case of
broker-dealers, as set forth below) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such New
Notes are acquired in the ordinary course of such Holder's business and such
Holder has no arrangement or understanding with any person to participate in the
distribution of such New Notes. Any Holder who tenders in the Exchange Offer for
the purpose of participating in a distribution of the New Notes or who is an
affiliate of the Company cannot rely on such interpretation by the staff of the
Commission and must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale
transaction. Unless an exemption from registration is otherwise available, any
such resale transaction should be covered by an effective registration statement
containing the selling security holders information required by Item 507 of
Regulation S-K under the Securities Act. This Prospectus may be used for an
offer to resell, resale or other retransfer of New Notes only as specifically
set forth herein. Each broker-dealer that receives New Notes for its own account
in exchange for Old Notes, where such Old Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. Any resales or other transfers of New Notes
must also be conducted in compliance with applicable state securities or blue
sky laws. See "Plan of Distribution."
<PAGE>
Terms of the Exchange Offer
Upon the terms and subject to the conditions set forth in this Prospectus and in
the Letter of Transmittal, the Company will accept for exchange any and all Old
Notes properly tendered and not withdrawn prior to 5:00 p.m., New York City
time, on the Expiration Date. The Company will issue $1,000 principal amount of
New Notes on or promptly after the Expiration Date in exchange for each $1,000
principal amount of outstanding Old Notes surrendered pursuant to the Exchange
Offer. Old Notes may be tendered only in integral multiples of $1,000.
The form and terms of the New Notes will be the same as the form and terms of
the Old Notes except the New Notes will be registered under the Securities Act
and hence will not bear legends restricting the transfer thereof. The New Notes
will evidence the same debt as the Old Notes. The New Notes will be issued under
and entitled to the benefits of the Indenture, which also authorized the
issuance of the Old Notes, such that both series will be treated as a single
class of debt securities under the Indenture.
As of the date of this Prospectus, $250 million aggregate principal amount of
the Old Notes are outstanding. This Prospectus, together with the Letter of
Transmittal, is being sent to all registered Holders of Old Notes. There will be
no fixed record date for determining registered Holders of Old Notes entitled to
participate in the Exchange Offer.
The Company intends to conduct the Exchange Offer in accordance with the
provisions of the Registration Rights Agreement and the applicable requirements
of the Exchange Act, and the rules and regulations of the Commission thereunder.
Old Notes which are not tendered for exchange in the Exchange Offer will remain
outstanding and continue to accrue interest and will be entitled to the rights
and benefits such Holders have under the Indenture and the Registration Rights
Agreement.
The Company shall be deemed to have accepted for exchange properly tendered Old
Notes when, as and if the Company shall have given oral or written notice
thereof to the Exchange Agent and complied with the provisions of Section 2.6(h)
of the Indenture. The Exchange Agent will act as agent for the tendering Holders
for the purposes of receiving the New Notes from the Company. If any tendered
Old Notes are not accepted for exchange because of an invalid tender, the
occurrence of such other events set forth herein or otherwise, any such
unaccepted Old Notes will be returned, without expense, to the tendering Holder
thereof as promptly as practicable after the Expiration Date.
Holders who tender Old Notes in the Exchange Offer will not be required to pay
brokerage commissions or fees or, subject to the instructions in the Letter of
Transmittal, transfer taxes with respect to the exchange of Old Notes pursuant
to the Exchange Offer. The Company will pay all charges and expenses, other than
certain applicable taxes described below, in connection with the Exchange Offer.
See " -- Fees and Expenses."
Expiration Date; Extensions; Amendments
The term "Expiration Date" shall mean 5:00 p.m., New York City time on
________________, 1996, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date to which the Exchange Offer is extended. The Expiration Date shall not in
any event be extended to a date later than __________, 1996 (___ days after the
initial Expiration Date).
In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral or written notice and will mail to the Holders an
announcement thereof, prior to 9:00 a.m., New York City time, on the next
business day after the immediately expired Expiration Date.
The Company reserves the right, in its sole discretion, (i) to delay accepting
any Old Notes, to extend the Exchange Offer or to terminate the Exchange Offer,
if any of the conditions set forth below under " -- Conditions" shall not have
been satisfied, by giving oral or written notice of such delay, extension or
termination to the Exchange Agent or (ii) to amend the terms of the Exchange
Offer in any manner. Any such delay in acceptance, extension, termination or
amendment will be followed as promptly as practicable by oral or written notice
thereof to the Holders. If the Exchange Offer is amended in a manner determined
by the Company to constitute a material change, the Company will promptly
disclose such amendment by means of a prospectus supplement that will be
distributed to the registered Holders, and the Company will extend the Exchange
Offer for a period of five to ten business days, depending upon the significance
of the amendment and the manner of disclosure to the registered Holders, if the
Exchange Offer would otherwise expire during such five to ten business day
period.
Without limiting the manner in which the Company may choose to make a public
announcement of any delay, extension, termination or amendment of the Exchange
Offer, the Company shall have no obligation to publish, advertise, or otherwise
communicate any such public announcement, other than by making a timely release
to the Dow Jones news service.
Interest on the New Notes
The New Notes will bear interest at 13 1/4% per annum from the date of original
issue. Interest on the New Notes will be payable semi-annually, in arrears, on
May 15 and November 15 of each year, commencing on November 15, 1996. Holders of
New Notes will receive interest on November 15, 1996 from the date of initial
issuance of the New Notes, plus an amount equal to the accrued interest on the
Old Notes from the most recent date to which interest has been paid to the date
of exchange thereof for New Notes. Interest on the Old Notes accepted for
exchange will cease to accrue upon issuance of the New Notes.
Conditions
Notwithstanding any other term of the Exchange Offer, the Company will not be
required to accept for exchange, or exchange any New Notes for, any Old Notes,
and may terminate the Exchange Offer as provided herein before the acceptance of
any Old Notes for exchange, if:
(a) any action or proceeding is instituted or threatened in any court or by
or before any governmental agency with respect to the Exchange Offer which, in
the Company's sole judgment, might materially impair the ability of the Company
to proceed with the Exchange Offer, or
(b) any law, statute, rule or regulation is proposed, adopted or enacted,
or any existing law, statute, rule or regulation is interpreted by the staff of
the Commission, which, in the Company's sole judgment, might materially impair
the ability of the Company to proceed with the Exchange Offer, or
(c) any governmental approval has not been obtained, which approval the
Company shall, in its sole discretion, deem necessary for the consummation of
the Exchange Offer as contemplated hereby.
If the Company determines in its sole discretion that any of these conditions
have occurred, the Company may (i) refuse to accept any Old Notes and return all
tendered Old Notes to the tendering Holders, (ii) extend the Exchange Offer and
retain all Old Notes tendered prior to the expiration of the Exchange Offer,
subject, however, to the rights of Holders who tendered such Old Notes to
withdraw their tendered Old Notes, or (iii) waive such unsatisfied conditions
with respect to the Exchange Offer and accept all properly tendered Old Notes
which have not been withdrawn. If such waiver constitutes a material change to
the Exchange Offer, the Company will promptly disclose such waiver by means of a
prospectus supplement that will be distributed to the Holders, and the Company
will extend the Exchange Offer for a period of five to ten business days,
depending upon the significance of the waiver and the manner of disclosure to
the Holders, if the Exchange Offer would otherwise expire during such five to
ten business day period.
Procedures for Tendering
Only a Holder of Old Notes may tender such Old Notes in the Exchange Offer. To
tender in the Exchange Offer, a Holder must complete, sign and date the Letter
of Transmittal, or a facsimile thereof, have the signatures thereon guaranteed
if required by the Letter of Transmittal, and mail or otherwise deliver such
Letter of Transmittal or such facsimile, together with the Old Notes and any
other required documents, to the Exchange Agent prior to 5:00 p.m., New York
City time, on the Expiration Date. In addition, either (i) Old Notes must be
received by the Exchange Agent along with the Letter of Transmittal, or (ii) a
timely confirmation of book-entry transfer (a "Book-Entry Confirmation") of such
Old Notes, if such procedure is available, into the Exchange Agent's account at
the Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to
the procedure for book-entry transfer described below must be received by the
Exchange Agent prior to the Expiration Date, or (iii) the Holder must comply
with the guaranteed delivery procedures described below. To be tendered
effectively, the Old Notes, Letter of Transmittal and other required documents
must be received by the Exchange Agent at the address set forth below under " --
Exchange Agent" prior to 5:00 p.m., New York City time, on the Expiration Date.
The tender by a Holder which is not withdrawn prior to the Expiration Date will
constitute an agreement between such Holder and the Company in accordance with
the terms and subject to the conditions set forth herein and in the Letter of
Transmittal.
THE METHOD OF DELIVERY OF OLD NOTES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE
HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE. IF SENT BY MAIL, IT IS RECOMMENDED THAT
REGISTERED MAIL, RETURN RECEIPT REQUESTED, BE USED, PRIOR INSURANCE OBTAINED. IN
ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE
AGENT BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR OLD NOTES SHOULD
BE SENT TO THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS,
COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS
FOR AND ON BEHALF OF SUCH HOLDERS.
Any beneficial owner whose Old Notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and who wishes to tender
such Old Notes should contact the registered Holder promptly and instruct such
Holder to tender on such beneficial owner's behalf. If such beneficial owner
wishes to tender on its own behalf, such owner must, prior to completing and
executing the Letter of Transmittal and delivering of its Old Notes, either make
appropriate arrangements to register ownership of the Old Notes in its name or
obtain a properly completed bond power from the registered Holder. The transfer
of registered ownership may take considerable time and may not be able to be
completed prior to the Expiration Date.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case may
be, must be guaranteed by any Eligible Institution (as defined below) unless the
Old Notes tendered pursuant thereto are tendered (i) by a Holder who has not
completed the box entitled "Special Payment Instructions" or "Special Delivery
Instructions" on the Letter of Transmittal or (ii) for the account of an
Eligible Institution. In the event that signatures on a Letter of Transmittal or
a notice of withdrawal, as the case may be, are required to be guaranteed, such
guarantor must be a member firm of a registered national securities exchange or
of the National Association of Securities Dealers, Inc., a commercial bank or
trust company having an office or correspondent in the United States or an
"eligible guarantor institution" within the meaning of Rule 17Ad-15 under the
Exchange Act which is a member of one of the recognized signature guarantee
programs identified in the Letter of Transmittal (an "Eligible Institution").
If the Letter of Transmittal is signed by a person other than the Holder of any
Old Notes listed therein, such Old Notes must be endorsed or accompanied by a
properly completed bond power, signed by such Holder as such Holder's name
appears on such Old Notes with the signature thereon guaranteed by an Eligible
Institution.
If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by the Company,
evidence satisfactory to the Company of their authority to so act must be
submitted with the Letter of Transmittal.
The Company shall be deemed to have accepted validly tendered Old Notes when, as
and if the Company has given oral or written notice thereof to the Exchange
Agent. Issuances of New Notes in exchange for Old Notes tendered pursuant to a
Notice of Guaranteed Delivery or letter, telegram or facsimile transmission to
similar effect (as provided above) issued by an Eligible Institution will be
made only against deposit of the Letter of Transmittal (and any other required
documents) and the tendered Old Notes.
All questions as to the validity, form, eligibility (including time of receipt),
acceptance of tendered Old Notes and withdrawal of tendered Old Notes will be
determined by the Company in its sole discretion, which determination will be
final and binding. The Company reserves the absolute right to reject any and all
Old Notes not properly tendered or any Old Notes the Company's acceptance of
which would, in the opinion of counsel for the Company, be unlawful. The Company
also reserves the right to waive any defects, irregularities or conditions of
tender as to particular Old Notes. The Company's interpretation of the terms and
conditions of the Exchange Offer (including the instructions in the Letter of
Transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Old Notes must be cured
within such time as the Company shall determine. Although the Company intends to
notify Holders of defects or irregularities with respect to tenders of Old
Notes, neither the Company, the Exchange Agent nor any other person shall incur
any liability for failure to give such notification. Tenders of Old Notes will
not be deemed to have been made until such defects or irregularities have been
cured or waived. Any Old Notes received by the Exchange Agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned by the Exchange Agent to the tendering Holders,
unless otherwise provided in the Letter of Transmittal, as soon as practicable
following the Expiration Date.
While the Company has no present plan to acquire any Old Notes that are not
tendered in the Exchange Offer or to file a registration statement to permit
resale of any Old Notes that are not tendered pursuant to the Exchange Offer,
the Company reserves the right in its sole discretion to purchase or make offers
for any Old Notes that remain outstanding subsequent to the Expiration Date or,
as set forth above under " -- Conditions," to terminate the Exchange Offer and,
to the extent permitted by applicable law, purchase Old Notes in the open
market, in privately negotiated transactions or otherwise. The terms of any such
purchases or offers could differ from the terms of the Exchange Offer.
In all cases, issuance of New Notes for Old Notes that are accepted for exchange
pursuant to the Exchange Offer will be made only after timely receipt by the
Exchange Agent of certificates for such Old Notes or a timely Book-Entry
confirmation of such Old Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility, a properly completed and duly executed Letter of
Transmittal and all other required documents. If any tendered Old Notes are not
accepted for exchange for any reason set forth in the terms and conditions of
the Exchange Offer or if Old Notes are submitted for a greater principal amount
than the Holder desires to exchange, such unaccepted or non-exchanged Old Notes
will be returned without expense to the tendering Holder thereof (or, in the
case of Old Notes tendered by book-entry transfer into the Exchange Agent's
account at the Book-Entry Transfer Facility pursuant to the book-entry transfer
procedures described below, such non-exchanged Old Notes will be credited to an
account maintained with such Book-Entry Transfer Facility) as promptly as
practicable after the expiration or termination of the Exchange Offer.
Book Entry Transfer
The Exchange Agent will make a request to establish an account with respect to
the Old Notes at the Book-Entry Transfer Facility for purposes of the Exchange
Offer within two business days after the date of this Prospectus, and any
financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of Old Notes by causing the
Book-Entry Transfer Facility to transfer such Old Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility in accordance with such
Book-Entry Transfer Facility's procedures for transfer. However, although
delivery of Old Notes may be effected through book-entry transfer at the
Book-Entry Transfer Facility, the Letter of Transmittal or facsimile thereof,
with any required signature guarantees and any other required documents, must,
in any case, be transmitted to and received by the Exchange Agent at the address
set forth below under "-- Exchange Agent" on or prior to the Expiration Date or,
if the guaranteed delivery procedures described below are to be complied with,
within the time period provided under such procedures. Delivery of documents to
the Book-Entry Transfer Facility does not constitute delivery to the Exchange
Agent.
Guaranteed Delivery Procedures
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available or (ii) who cannot deliver their Old Notes, the Letter of
Transmittal or any other required documents to the Exchange Agent prior to the
Expiration Date, may effect a tender if:
(a) The tender is made through an Eligible Institution;
(b) Prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of Guaranteed
Delivery (by facsimile transmission, mail or hand delivery) setting forth the
name and address of the Holder, the registered number(s) of such Old Notes and
the principal amount of Old Notes tendered, stating that the tender is being
made thereby and guaranteeing that, within five New York Stock Exchange trading
days after the Expiration Date, the Letter of Transmittal (or facsimile thereof)
together with the Old Notes or a Book-Entry Confirmation, as the case may be,
and any other documents required by the Letter of Transmittal will be deposited
by the Eligible Institution with the Exchange Agent; and
(c) Such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as all tendered Old Notes in proper form for
transfer or a Book-Entry Confirmation, as the case may be, and all other
documents required by the Letter of Transmittal, are received by the Exchange
Agent within five New York Stock Exchange trading days after the Expiration
Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be sent
to Holders who wish to tender their Old Notes according to the guaranteed
delivery procedures set forth above.
<PAGE>
Withdrawal of Tenders
Except as otherwise provided herein, tenders of Old Notes may be withdrawn at
any time prior to 5:00 p.m., New York City time, on the Expiration Date.
To withdraw a tender of Old Notes in the Exchange Offer, a written or facsimile
transmission notice of withdrawal must be received by the Exchange Agent at its
address set forth herein prior to 5:00 p.m., New York City time, on the
Expiration Date. Any such notice of withdrawal must (i) specify the name of the
person having deposited the Old Notes to be withdrawn (the "Depositor"), (ii)
identify the Old Notes to be withdrawn (including the registered number or
numbers and principal amount of such Old Notes or, in the case of Old Notes
transferred by book-entry transfer, the name and number of the account at the
Book-Entry Transfer Facility to be credited), (iii) be signed by the Holder in
the same manner as the original signature on the Letter of Transmittal by which
such Old Notes were tendered (including any required signature guarantees) or be
accompanied by documents of transfer sufficient to have United States Trust
Company of New York, the trustee with respect to the Old Notes (the "Trustee"),
register the transfer of such Old Notes into the name of the person withdrawing
the tender and (iv) specify the name in which any such Old Notes are to be
registered, if different from that of the Depositor. All questions as to the
validity, form and eligibility (including time of receipt) of such notices will
be determined by the Company, whose determination shall be final and binding on
all parties. Any Old Notes so withdrawn will be deemed not to have been validly
tendered for purposes of the Exchange Offer and no New Notes will be issued with
respect thereto unless the Old Notes so withdrawn are validly re-tendered. Any
Old Notes which have been tendered but which are not accepted for payment will
be returned to the Holder thereof without cost to such Holder as soon as
practicable after withdrawal, rejection of tender or termination of the Exchange
Offer. Properly withdrawn Old Notes may be retendered by following one of the
procedures described above under "-- Procedures for Tendering" at any time prior
to the Expiration Date.
Exchange Agent
United States Trust Company of New York has been appointed as Exchange Agent of
the Exchange Offer. Questions and requests for assistance, requests for
additional copies of this Prospectus or of the Letter of Transmittal and
requests for Notices of Guaranteed Delivery should be directed to the Exchange
Agent addressed as follows:
By Registered or Certified Mail: By Overnight Courier:
United States Trust Company of New York United States Trust Company of New York
P.O. Box 844 770 Broadway
Cooper Station, New York 10276 New York, New York 10003
Attention: Corporate Trust Operations
By Hand: By Facsimile:
United States Trust Company of New York (212) 420-6152
65 Beaver Street Attention: Customer Service
New York, New York 10005
Attention: Ground Level Confirm by telephone:
Corporate Trust Operations (800) 548-6565
Fees and Expenses
The expenses of soliciting tenders will be borne by the Company. The principal
solicitation is being made by mail; however, additional solicitation may be made
by telegraph, telephone or in person by officers and regular employees of the
Company and its affiliates.
The Company has not retained any dealer-manager or other soliciting agent in
connection with the Exchange Offer and will not make any payments to brokers,
dealers or others soliciting acceptances of the Exchange Offer. The Company,
however, will pay the Exchange Agent reasonable and customary fees for its
services and will reimburse it for its reasonable out-of-pocket expenses in
connection therewith.
The cash expenses to be incurred in connection with the Exchange Offer will be
paid by the Company and are estimated in the aggregate to be approximately
$278,200. Such expenses include fees and expenses of the Exchange Agent and
Trustee, accounting and legal fees and printing costs, among others.
The Company will pay all transfer taxes, if any, applicable to the exchange of
Old Notes pursuant to the Exchange Offer. If, however, certificates representing
New Notes or Old Notes for principal amounts not tendered or accepted for
exchange are to be delivered to, or are to be issued in the name of, any person
other than the Holder of the Old Notes tendered, or if tendered Old Notes are
registered in the name of any person other than the person signing the Letter of
Transmittal, or if a transfer tax is imposed for any reason other than the
exchange of Old Notes pursuant to the Exchange Offer, then the amount of any
such transfer taxes (whether imposed on the Holder or any other persons) will be
payable by the tendering Holder. If satisfactory evidence of payment of such
taxes or exemption therefrom is not submitted with the Letter of Transmittal,
the amount of such transfer taxes will be billed directly to such tendering
Holder.
Consequences of Failure to Exchange
The Old Notes that are not exchanged for New Notes pursuant to the Exchange
Offer will not have any further registration rights and remain restricted
securities. Accordingly, such Old Notes may be resold only (i) to the Company
(upon redemption thereof or otherwise), (ii) pursuant to an effective
registration statement under the Securities Act, (iii) so long as the Old Notes
are eligible for resale pursuant to Rule 144A, to a qualified institutional
buyer within the meaning of Rule 144A under the Securities Act in a transaction
meeting the requirements of Rule 144A, or (iv) pursuant to another available
exemption from the registration requirements of the Securities Act, in each case
in accordance with any applicable securities laws of any state of the United
States. Old Notes that are not exchanged pursuant to the Exchange Offer will
remain outstanding, continue to accrue interest and be entitled to distributions
of principal and interest. However, upon the earlier to occur of (i) the
Expiration Date and (ii) the effectiveness of a shelf registration statement
covering the Old Notes, the interest rate on the Old Notes will decrease to 13
1/4% (from 13 3/4%) per annum.
Accounting Treatment
The New Notes will be recorded at the same carrying value as the Old Notes as
reflected in the Company's accounting records on the date of the exchange.
Accordingly, no gain or loss for accounting purposes will be recognized by the
Company. The expenses of the Exchange Offer will be amortized over the term of
the New Notes.
FOR INFORMATION CONCERNING THE TAX CONSEQUENCES OF THE EXCHANGE OFFER AND OR
HOLDING THE NEW NOTES, SEE "CERTAIN FEDERAL INCOME TAX CONSIDERATION.
USE OF PROCEEDS
This Exchange Offer is intended to satisfy certain of the Company's obligations
to the holders of the Old Notes under the Registration Rights Agreement entered
into in connection with the sale of the Old Notes. The Company will not receive
any cash proceeds from the issuance of the New Notes offered hereby. In
consideration for issuing the New Notes as contemplated in this Prospectus, the
Company will receive in exchange Old Notes in like principal amount, the forms
and terms of which are identical, in all material respects, to the New Notes.
The Old Notes surrendered in exchange for New Notes will be retired and canceled
and cannot be reissued. Accordingly, issuance of the New Notes will not result
in any increase in the indebtedness of the Company. Proceeds from the sale of
the privately placed Old Notes were used to refinance the Company's then
outstanding senior secured notes and senior subordinated notes, to finance the
PPM Acquisition of and to pay transaction expenses incurred in connection with
the PPM Acquisition and the issuance of the Old Notes.
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of the Company as
of June 30, 1996. 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 millions)
Notes payable and long-term debt (including current portion):
Senior Secured Notes due May 15, 2002 (1)................ $ 247.1
Credit Facility maturing May 9, 1998 (2)................. 72.2
Other debt, including notes payable (3).................. 21.4
----------
Total notes payable and long term debt................. 340.7
----------
Minority interest, including redeemable
preferred stock of a subsidiary.............................. 9.4
----------
Redeemable Convertible Preferred Stock........................ 27.6
----------
Stockholders' Deficit
Common Stock Purchase Warrants........................... 12.2
Common Stock ............................................ 0.1
Additional paid-in capital............................... 46.4
Accumulated deficit...................................... (149.8)
Pension liability adjustment............................. (2.7)
Unrealized holding gain on equity securities............. 0.2
Foreign currency translation adjustment.................. (3.2)
----------
Total stockholders' deficit............................ 96.8
----------
Total capitalization.......................................... $ 280.9
==========
- ----------------
(1) Represents $250.0 million principal amount of Old Notes. See "Description of
the Notes and the Guarantees."
(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) 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 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 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.
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
(in millions except per share amounts and employees)
Selected Financial Data
The Selected Financial Data include the results of operations of PPM, and Mark
from the dates of their acquisitions, May 9, 1995, and December 31, 1991,
respectively, and reflect the deconsolidation of Fruehauf Trailer Corporation
("Fruehauf") as of January 1, 1992. 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.
On July 25, 1996 the Company announced the signing of a definitive agreement to
sell its Material Handling business for $135.0 million in cash. As a result, the
results of the Material Handling business have been accounted for as
discontinued operations for all periods presented.
The following data should be read in conjunction with the historical financial
statements of the Company and the related notes thereto 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.
<TABLE>
<CAPTION>
As of and for
the Six Months
Ended June 30, As of and for the Year Ended December 31,
---------------- -----------------------------------------
1996 1995 1995 1994 1993 1992 1991
------ ------ ------ ------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
Summary of Operations
Net sales $ 356.0 $ 213.5 $ 501.4 $ 314.1 $ 274.7 $ 282.4 $ 784.2
Operating income (loss) from
continuing operations 17.8 5.5 12.8 10.4 (8.2) (6.7) (70.7)
Income (loss) from continuing operations
before extraordinary items (4.4) (12.5) (32.1) 4.9 (40.7) 0.7 (42.7)
Income (loss) from discontinued operations 9.4 (5.6) 4.4 (3.7) (24.3) 2.2 ---
Income (loss) before extraordinary items 5.0 (18.1) (27.7) 1.2 (65.0) 2.9 (42.7)
Net income (loss) 5.0 (25.6) (35.2) 0.5 (66.5) 2.9 (42.7)
Net income (loss) applicable to
common stock 1.2 (29.1) (42.5) (5.5) (66.7) 2.9 (42.7)
Per Common and Common Equivalent Share:
Income (loss) from continuing operations (0.66) (1.57) (3.79) (0.10) (4.11) 0.07 (4.31)
Income (loss) from discontinued
operations 0.76 (0.55) 0.42 (0.36) (2.44) 0.22 ---
Income (loss) before extraordinary items 0.10 (2.12) (3.37) (0.46) (6.55) 0.29 (4.31)
Net income (loss) 0.10 (2.84) (4.09) (0.53) (6.70) 0.29 (4.31)
Ratio of earnings to fixed charges (1) (2) (2) (2) 1.1x (2) 1.2x (2)
Total Assets $ 477.7 $ 412.3 $ 478.9 $ 401.6 $ 390.7 $ 477.3 $ 506.7
Capitalization
Long-term debt and notes payable,
including current maturities $ 340.7 $ 349.0 $ 329.9 $ 190.9 $ 218.0 $ 217.6 $ 223.0
Minority interest, including redeemable
preferred stock of a subsidiary 9.4 --- 9.4 --- --- --- ---
Redeemable convertible preferred stock 25.8 20.8 24.6 17.3 10.5 --- ---
Stockholders' deficit (96.8) (82.7) (96.9) (55.7) (62.3) (9.1) (4.1)
Dividends per share of Common Stock $ --- $ --- $ --- $ --- $ --- $ --- $(0.06)
Shares of Common Stock outstanding
at period end 10.6 10.3 10.6 10.3 10.3 9.9 9.9
Employees
Continuing operations 2,384 2,523 2,614 1,549 1,520 1,436 6,980
Discontinued operations
(Material Handling) 964 1,101 986 1,302 1,410 1,620 ---
Total 3,348 3,624 3,600 2,851 2,930 3,056 6,980
- -------------------
<PAGE>
<FN>
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 $4.4 and $12.5 for the six months ended June 30,
1996 and 1995, respectively, $50.4 for 1995, $40.0 for 1993 and $46.0 for
1991.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Unaudited Quarterly Financial Data
Summarized quarterly financial data for the six months ended June 30, 1996 and
for the years 1995 and 1994 are as follows (in millions, except per share
amounts):
1996 1995 1994
Second First Fourth Third Second First Fourth Third Second First
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $ 182.8 $ 173.2 $ 139.1 $ 148.8 $ 133.3 $ 80.2 $ 76.4 $ 78.9 $ 87.7 $ 77.1
Gross profit 27.0 23.4 21.1 19.9 17.5 11.9 12.9 12.0 11.9 11.3
Income (loss) from
continuing operations
before extraordinary
items (1.7) (2.7) (7.6) (11.7) (9.3) (3.5) (2.0) (2.9) 14.1 (5.3)
Income (loss) from
discontinued operations 6.2 3.2 5.8 3.9 (7.0) 1.7 2.5 4.1 (3.8) (5.5)
Income (loss) before
extraordinary items 4.5 0.5 (1.8) (7.8) (16.2) (1.9) 0.5 1.2 10.3 (10.8)
Net income (loss) 4.5 0.5 (1.8) (7.8) (23.7) (1.9) 0.2 1.0 10.0 (10.8)
Income (loss) applicable
to common stock 2.6 (1.4) (3.7) (9.6) (25.5) (3.6) (1.4) (0.5) 8.6 (12.2)
Per share:
Primary
Income (loss) before
extraordinary items $ 0.18 $ (0.13) $ (0.35)$ (0.93)$ (1.76)$ (0.35) $ (0.10)$ (0.03)$ 0.64 $(1.18)
Net income (loss) 0.18 (0.13) (0.35) (0.93) (2.48) (0.35) (0.13) (0.05) 0.62 (1.18)
Fully diluted
Income (loss) before
extraordinary items $ 0.18 $ (0.13) $ (0.35)$ (0.93)$ (1.76)$ (0.35) $ (0.10)$ (0.03)$ 0.60 $(1.18)
Net income (loss) 0.18 (0.13) (0.35) (0.93) (2.48) (0.35) (0.13) (0.05) 0.59 (1.18)
</TABLE>
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. Certain 1995 and 1994 amounts have been reclassified to conform with the
1996 presentation.
On July 25, 1996 the Company announced the signing of a definitive agreement to
sell its Material Handling business for $135.0 million in cash. As a result, the
results of the Material Handling business have been accounted for as
discontinued operations for all periods presented.
In 1996, the Company recognized a gain of $2.4 million in the first quarter from
the sale of excess property in Scotland.
In 1995, the Company recognized a gain of $1.0 million in the first quarter as a
result of the sale of 486.6 thousand shares of Fruehauf common stock and
recorded an extraordinary loss of $7.5 million on the retirement of debt 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 5.9 million
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 J -- "Preferred Stock" in the
Notes to the Company's Consolidated Financial Statements.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Dollar amounts except per share are in millions unless otherwise designated)
Results of Operations
The Company operates in three industry segments: Material Handling, Terex
Trucks, and Terex Cranes. On July 25, 1996 the Company announced the signing of
a definitive agreement for the sale of its Material Handling business for $135
in cash. Accordingly, the results of the Material Handling business are
classified as Income (Loss) from Discontinued Operations. The Terex Cranes
segment results for periods prior to May 1995 consist solely of Koehring's
operations. Subsequent to that date, Terex Cranes results include the results of
the PPM business acquired in May of 1995. Terex Trucks consists of the Terex
business and Unit Rig division.
Six Months Ended June 30, 1996
The table below is a comparison of net sales, gross profit, engineering, selling
and administrative expenses, income (loss) from operations, and income (loss)
from discontinued operations, by segment, for the six months ended June 30, 1996
and 1995.
Six Months Ended
June 30, Increase
1996 1995 (Decrease)
(in millions of dollars)
NET SALES
Terex Trucks ...................................$ 152.9 125.7 27.2
Terex Cranes ................................... 203.5 88.6 114.9
Eliminations ................................... (0.4) (0.8) 0.4
Total .......................................$ 356.0 213.5 142.5
GROSS PROFIT
Terex Trucks ...................................$ 20.3 17.3 3.0
Terex Cranes ................................... 30.7 12.3 18.4
Eliminations ................................... (0.6) --- (0.6)
Total .......................................$ 50.4 29.6 20.8
ENGINEERING, SELLING AND
ADMINISTRATIVE EXPENSES
Terex Trucks ...................................$ 12.3 11.5 0.8
Terex Cranes ................................... 17.7 9.3 8.4
General/Corporate .............................. 2.6 3.3 (0.7)
Total .......................................$ 32.6 24.1 8.5
INCOME (LOSS) FROM OPERATIONS
Terex Trucks ...................................$ 8.0 5.8 2.2
Terex Cranes ................................... 13.0 3.0 10.0
General/Corporate .............................. (3.2) (3.3) 0.1
Total .......................................$ 17.8 5.5 12.3
INCOME (LOSS) FROM
DISCONTINUED OPERATIONS
Material Handling ..............................$ 9.4 (5.6) 15.0
Total .......................................$ 9.4 (5.6) 15.0
Net Sales
Sales increased $142.5, or approximately 67%, to $356.0 for the six months ended
June 30, 1996 over the comparable 1995 period, reflecting the acquisition of PPM
Cranes in the second quarter of 1995, a strong sales quarter for Terex Cranes
overall, and increased revenue at Terex Trucks.
Terex Trucks sales increased $27.2 for the six months ended June 30, 1996 from
the six months ended June 30, 1995. Machines sales increased 24%, and parts
sales increased 10%. The sales mix was approximately 31% parts for the six
months ended June 30, 1996 compared to 34% parts for the comparable 1995 period.
Terex Trucks bookings for the six months ended June 30, 1996 were $103.1, an
increase of $12.8, or 14%, from the year earlier period. Bookings for parts
sales, from which the Company generally realizes higher margins than machine
sales, increased $4.7 from the six months ended June 30, 1995. Machine bookings
for the six months ended June 30, 1996 increased $8.1 from the comparable 1995
period. Backlog was $64.1 at June 30, 1996 compared to $86.5 at March 31, 1996
and $32.5 at June 30, 1995.
Terex Cranes sales were $203.5 for the six months ended June 30, 1996, an
increase of $114.9 from $88.6 in the year earlier period which did not include
the PPM business prior to its acquisition in May 1995. Terex Cranes backlog was
$58.1 at June 30, 1996, compared to $59.8 at March 31, 1996 and $60.2 at June
30, 1995. The increase in cranes sales was due to the addition of the PPM
business, growth in sales at the PPM business, and continued strong performance
by Koehring.
Gross Profit
Gross profit for the six months ended June 30, 1996 increased $20.8 to $50.4
compared to the six months ended June 30, 1995. The improvement in the gross
profit was primarily due to the increased net sales during 1996 as compared to
1995. The gross profit percentage for the six months ended June 30, 1996
increased to 14.2% from 13.9% for the same period in 1995.
Terex Trucks gross profit increased $3.0 to $20.3 for the six months ended June
30, 1996 compared to $17.3 for the comparable 1995 period. The gross profit
percentage in the Terex Trucks decreased to 13.3% for the six months ended June
30, 1996 from 13.8% for the six months ended June 30, 1995, primarily due to the
negative impact on Unit Rig of the inability of a major supplier to adhere to
its delivery schedule. This resulted in Unit Rig having to shut down production
for a period in March, with an estimated negative profit impact of $800
thousand, due to lost sales volume and unabsorbed overhead. The Company
understands that the supplier has corrected the problem and it is not expected
to recur.
Terex Cranes gross profit increased $18.4 to $30.7 for the six months ended June
30, 1996, compared to $12.3 for the prior year's period, reflecting the PPM
acquisition, the effect of cost reduction actions put in place at PPM, and
improved performance at Koehring. The gross profit percentage at Terex Cranes
increased to 15.1% for the six months ended June 30, 1996 compared to 13.9% in
the same period during 1995.
Engineering, Selling and Administrative Expenses
Engineering, selling and administrative expenses increased to $32.6 for the six
months ended June 30, 1996 from $24.1 for the six months ended June 30, 1995,
reflecting the effects of the PPM acquisition in May 1995. However, engineering,
selling and administrative expenses as a percentage of net sales decreased to
9.2% for the six months ended June 30, 1996 from 11.3% for the same period in
1995. Terex Trucks engineering, selling and administrative expenses increased to
$12.3 for the six months ended June 30, 1996 from $11.5 for the comparable 1995
period primarily due to costs associated with a new parts sales office and a new
U.K. dealership. Terex Cranes engineering, selling and administrative expenses
increased to $17.7 for the six months ended June 30, 1996 from $9.3 for the
comparable 1995 period, reflecting the PPM acquisition in May 1995.
Income (Loss) from Operations
Terex Trucks income from operations increased by $2.2 to $8.0 for the six months
ended June 30, 1996 from $5.8 in the comparable 1995 period, primarily due to
the factors mentioned above under "Gross Profit".
Terex Cranes income from operations of $13.0 for the six months ended June 30,
1996 increased by $10.0 over the comparable 1995 period, primarily due to the
increased net sales and the effect of cost control initiatives implemented at
PPM during Terex's ownership of that business, and continued strong performance
by Koehring.
On a consolidated basis, the Company had operating income of $17.8 for the six
months ended June 30, 1996, compared to operating income of $5.5 for the
comparable 1995 period, for the reasons mentioned above.
Other Income (Expense)
Interest expense increased to $22.8 for the six months ended June 30, 1996 from
$16.0 in the comparable 1995 period as a result of incremental borrowings
associated with the PPM acquisition in May 1995. The Company realized a gain in
the six months ended June 30, 1996 of $2.4 from the sale of excess property in
Scotland. In 1995, the Company had a gain of $1.0 from the sale of Fruehauf
stock and recorded a charge of $0.5 to recognize the impairment in value of
certain properties held for sale.
Income (Loss) from Discontinued Operations
Income from discontinued operations in the Company's Material Handling Segment
increased $15.0 to $9.4 for the six months ended June 30, 1996 as compared to a
loss of $5.6 for the same period in 1995. The increased income was primarily due
to the success of the cost reduction programs put in place in the latter half of
1995, as well as some improvements in pricing. As a result, gross profit for the
six months ended June 30, 1996 increased $5.3 to $24.7 as compared to the same
period in 1995 even though net sales decreased $45.9 or 17%. Additionally, in
1995 the Material Handling Segment recorded charges of $6.0 related to charges
for severance costs, exit costs and the impairment in value of certain
properties held for sale.
Extraordinary Items
The Company recorded a charge of $7.5 in 1995 to recognize a loss on the early
extinguishment of debt in connection with the May 1995 refinancing.
<PAGE>
1995 Compared with 1994
The table below is a comparison of net sales, gross profit, selling, general and
administrative expenses, severance and exit costs, and income (loss) from
operations, by segment, for 1995 and 1994.
Year Ended
December 31, Increase
1995 1994 (Decrease)
(in millions of dollars)
NET SALES
Terex Trucks ...................................$ 250.3 $ 226.8 $ 23.5
Terex Cranes ................................... 252.3 90.4 161.9
Eliminations ................................... (1.2) (3.1) 1.9
Total .......................................$ 501.4 $ 314.1 $ 187.3
GROSS PROFIT
Terex Trucks ...................................$ 35.9 $ 33.9 $ 2.0
Terex Cranes ................................... 35.2 14.2 21.0
Eliminations ................................... (0.7) --- (0.7)
Total .......................................$ 70.4 $ 48.1 $ 22.3
ENGINEERING, SELLING AND
ADMINISTRATIVE EXPENSES
Terex Trucks ...................................$ 22.9 $ 22.0 $ 0.9
Terex Cranes ................................... 28.0 6.3 21.7
General/Corporate .............................. 6.7 8.7 (2.0)
Total .......................................$ 57.6 $ 37.0 $ 20.6
SEVERANCE AND EXIT COSTS
Terex Trucks ...................................$ --- $ 0.7 $ (0.7)
Total .......................................$ --- $ 0.7 $ (0.7)
INCOME (LOSS) FROM OPERATIONS
Terex Trucks ...................................$ 13.0 $ 11.2 $ 1.8
Terex Cranes ................................... 7.2 7.9 (0.7)
General/Corporate .............................. (7.4) (8.7) 1.3
Total .......................................$ 12.8 $ 10.4 $ 2.4
INCOME (LOSS) FROM
DISCONTINUED OPERATIONS
Material Handling ..............................$ 4.4 $ (3.7) $ 8.1
Total .......................................$ 4.4 $ (3.7) $ 8.1
Prior to the PPM Acquisition on May 9, 1995, the Company operated in two
industry segments during the periods presented herein: Material Handling, which
is accounted for as a discontinued operation, and Terex Trucks (formerly known
as 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. The Terex Cranes
results for periods prior to May 1995 consist solely of Koehring's operations.
Net Sales
Sales increased $187.3 to $501.4, or approximately 60%, for 1995 versus 1994.
Terex Trucks sales increased $23.5 for 1995 over 1994. Machines sales increased
8%, and parts sales increased 7%. The sales mix was approximately 35% parts for
1995 compared to 36% parts for 1994. Terex Trucks parts sales were adversely
affected by the strike at the Company's parts distribution center.
Terex Trucks bookings for 1995 were $271.3, an increase of $39.1, or 17%, from
1994. Terex Trucks backlog was $88.8 at December 31, 1995 compared to $67.8 at
December 31, 1994.
Terex Cranes sales were $252.3 for 1995, an increase of $161.9 from $90.4 in
1994 due primarily to the PPM Acquisition in May 1995. Terex Cranes backlog was
$85.3 at December 31, 1995, reflecting the additional PPM backlog, compared to
$11.7 at December 31, 1994.
Gross Profit
Gross profit of $70.4 for 1995 was $22.3, or 46%, higher than gross profit of
$48.1 for 1994.
Terex Trucks gross profit increased $2.0 to $35.9 for 1995 compared to $33.9 for
1994. The gross profit percentage in the Terex Trucks was 14% for 1995 and 15%
for 1994.
Terex Cranes gross profit increased $21.0 to $35.2 for 1995, compared to $14.2
for 1994, primarily reflecting the addition of the May through December 1995
results of the PPM businesses. The gross profit percentage for Terex Cranes was
14% for 1995 and 16% for 1994. The gross profit percentage decrease was
primarily due to costs related to integrating the PPM Acquisition into Terex
Cranes.
Engineering, Selling and Administrative Expenses
Engineering, selling and administrative expenses increased to $57.6 for 1995
from $37.0 for 1994. Terex Trucks engineering, selling and administrative
expenses increased to $22.9 for 1995 from $22.0 for 1994 as a result of costs
associated with the start-up of a new parts service business. Terex Cranes
engineering, selling and administrative expenses increased to $28.0 for 1995
from $6.3 for 1994 reflecting the PPM Acquisition in May 1995. Corporate
administrative expenses in 1994 included a charge of $2.2 in connection with the
termination of a 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. See Note N
- -- "Related Party Transactions" in the Notes to the Consolidated Financial
Statements for further information.
Income (Loss) from Operations
Terex Trucks income from operations improved by $1.8 to $13.0 for 1995 from
$11.2 in 1994, primarily as a result of reduced costs, offset by costs
associated with the start up of a new parts service business.
Terex Cranes income from operations of $7.2 for 1995 decreased by $0.7 versus
1994, primarily due to losses of the PPM businesses acquired in May 1995. As a
result of cost reductions, improvements in inventory management and
consolidation of model offerings, Koehring was profitable in 1994 and 1995 after
several years of losses.
On a consolidated basis, the Company realized operating income of $12.8 for
1995, compared to $10.4 for 1994.
Other Income (Expense)
Net interest expense increased to $38.0 for 1995 from $27.8 in 1994 as a result
of incremental borrowings associated with the PPM Acquisition in May 1995. The
Company realized gains of $1.0 and $26.0 from sales of Fruehauf common stock
during 1995 and 1994, respectively. The Company owns 250 thousand shares of
Fruehauf common stock which it received in settlement of certain obligations of
Fruehauf.
The Company recorded a charge of $0.5 in 1995 to recognize the impairment in
value of certain properties held for sale.
The Company also incurred net foreign exchange losses of $1.9, trademark-related
expenses of $1.3, and $0.6 of group retiree expenses during 1995.
The Company recorded a charge of $2.5 in 1995 for payments related to the
retirement of its former Chairman of the Board in August 1995, and future
payments related to the consulting obligations under the retirement agreement of
the former Chairman.
During 1995, the Company recorded no provision for income taxes.
<PAGE>
Extraordinary Items
The Company recorded a charge of $7.5 in 1995 to recognize a loss on the early
extinguishment of debt in connection with the May 1995 refinancing. During 1994,
the Company recognized extraordinary losses totaling $0.7 to write-off
unamortized discount and debt issuance costs when it repurchased $27.3 of its
old senior secured debt.
Income (Loss) from Discontinued Operations
Income from discontinued operations in the Company's Material Handling Segment
increased $8.1 to $4.4 for 1995 as compared to a loss of $3.7 for 1994. The
increased income was primarily due to increased sales and to the success of the
cost reduction programs put in place in the latter half of 1995.
Material Handling Segment sales were $528.8 for 1995, an increase of $56.1 from
$472.7 in 1994. The sales mix was approximately 18% parts in 1995 compared to
19% in 1994. Machine sales increased 12%, 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. 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. Parts sales increased 6% because of improved
parts inventory availability partially offset by the adverse effects of a labor
strike at the Company's parts distribution center. The strike has not had a
material continuing effect on parts sales.
Material Handling Segment bookings for 1995 were $471.8, an increase of $13.0,
or 3%, from 1994. Backlog at the Material Handling Segment fell from $135.9 at
December 31, 1994 to $78.9 at December 31, 1995 as the Company maintained full
production in the Material Handling Segment United States operations and parts
availability returned to normal levels. As a result, the backlog of both
machines orders and parts orders was reduced during 1995.
The Material Handling Segment's gross profit increased $1.7 to $44.6 for 1995
compared to $42.9 for 1994. The gross profit percentage in the Material Handling
Segment was 8% for 1995 as compared to 9% for 1994. 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 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 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
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 charge represents severance costs
associated with these actions. 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 $2.9 charge was recorded for costs, principally severance
costs, associated with these actions.
<PAGE>
1994 Compared with 1993
The table below is a comparison of net sales, gross profit, engineering,
selling, and administrative expenses, severance and exit costs and goodwill
write-off and income (loss) from operations, by segment, for 1994 and 1993.
Year Ended
December 31, Increase
1994 1993 (Decrease)
(in millions of dollars)
NET SALES
Terex Trucks ..................................$ 226.8 $ 203.8 $ 23.0
Terex Cranes .................................. 90.4 71.4 19.0
Eliminations .................................. (3.1) (0.5) (2.6)
Total ......................................$ 314.1 $ 274.7 $ 39.4
GROSS PROFIT
Terex Trucks ..................................$ 33.9 $ 30.5 $ 3.4
Terex Cranes .................................. 14.2 2.0 12.2
Total ......................................$ 48.1 $ 32.5 $ 15.6
ENGINEERING, SELLING AND
ADMINISTRATIVE EXPENSES
Terex Trucks ..................................$ 22.0 $ 19.5 $ 2.5
Terex Cranes .................................. 6.3 10.1 (3.8)
General/Corporate ............................. 8.7 6.4 2.3
Total ......................................$ 37.0 $ 36.0 $ 1.0
SEVERANCE AND EXIT COSTS
AND GOODWILL WRITE-OFF
Terex Trucks ..................................$ 0.7 $ --- $ 0.7
Terex Cranes .................................. --- 4.7 (4.7)
Total ......................................$ 0.7 $ 4.7 $ (4.0)
INCOME (LOSS) FROM OPERATIONS
Terex Trucks ..................................$ 11.2 $ 11.0 $ 0.2
Terex Cranes .................................. 7.9 (12.8) 20.7
General/Corporate ............................. (8.7) (6.4) (2.3)
Total ......................................$ 10.4 $ (8.2) $ 18.6
INCOME (LOSS) FROM
DISCONTINUED OPERATIONS
Material Handling .............................$ (3.7) $ (24.3) $ 20.6
Total ......................................$ (3.7) $ (24.3) $ 20.6
Net Sales
Sales in 1994 increased $39.4, or approximately 14%, over 1993.
Terex Trucks sales increased $23.0, or 11%, to $226.8 in 1994 from $203.8 in
1993. Machine sales increased $21.6 and parts sales increased $1.4. The sales
mix was approximately 36% parts in 1994 compared to 39% parts in 1993. Machine
sales increased at all of the Terex Trucks divisions, reflecting increased
domestic construction industry demand and improved sales volume outside the
United States.
Terex Trucks bookings for 1994 were $232.2, an increase of $38.1, or 20%, from
1993. Bookings for parts sales of $77.6, from which the Company generally
realizes higher margins than machine sales, were comparable to bookings for
1993. Machine bookings for 1994 increased $42.2, or 38%, from 1993, reflecting
the factors discussed above. Terex Trucks backlog was $67.8 at December 31, 1994
compared to $62.3 at December 31, 1993, reflecting the improved shipments in
1994. Parts backlog was $6.1 at December 31, 1994 compared to $8.6 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 the backlog of parts
orders was reduced as working capital continues to be applied to improve parts
inventory availability.
Terex Cranes sales were $90.4 for 1994, an increase of $19.0 from $71.4 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.
Terex Cranes bookings were $83.6 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 $15.6 compared to 1993.
Terex Trucks gross profit increased $3.4 to $33.9 for 1994 compared to $30.5 for
1993. Improved gross profit from machine sales accounted for substantially all
of the increase. The gross profit percentage for Terex Trucks remained at 15%
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.
Terex Cranes gross profit increased $12.2 to $14.2 for 1994, compared to $2.0
for 1993. The gross profit percentage for Terex Cranes increased to 15.7% for
1994 from 2.8% in 1993 reflecting the continuing effects of cost reductions and
improved manufacturing efficiency.
Engineering, Selling and Administrative Expenses
Engineering, selling and administrative expenses increased to $37.0 for 1994
from $36.0 for 1993. However, engineering, selling and administrative expenses
as a percentage of net sales decreased to approximately 11.8% in 1994 as
compared to 13.1% in 1993. The decrease is a result of cost reduction
initiatives throughout the Company. Terex Trucks engineering, selling and
administrative expenses increased to $22.0 for 1994 from $19.5 for 1993. Terex
Cranes engineering, selling and administrative expenses decreased to $6.3 for
1994 compared to $10.1 for 1993. Corporate administrative expense in 1994
includes a charge of $2.2 in connection with the termination, as of January 1,
1994, of the Company's management contract with KCS, offset by allocations to
operating segments. See Note N -- "Related Party Transactions" in the Notes to
the Consolidated Financial Statements for further information.
Severance and Exit Costs and Goodwill Write-off
As a result of changing Mark's product offerings and distribution, Terex Cranes
recognized a charge to income of $4.7 in the fourth quarter of 1993 to write-off
the remaining unamortized goodwill from the acquisition of Mark.
Income (Loss) from Operations
Terex Trucks income from operations improved by $0.2 to $11.2 for 1994 compared
to $11.0 for 1993. This improvement resulted from the increase in gross profit
offset by the increase in engineering, selling and administrative expenses
described above.
Terex Cranes income from operations of $7.9 for 1994 improved by $20.7 over 1993
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.
Additionally, as discussed above, Terex Cranes recognized a charge to income of
$4.7 to write-off the remaining unamortized goodwill from the Mark acquisition.
On a consolidated basis, the Company achieved operating income of $10.4 for 1994
compared to an operating loss of $8.2 for 1993.
<PAGE>
Other Income (Expense)
Net interest expense on a consolidated basis was $27.8 for 1994 compared to
$29.1 for 1993. The decrease in net interest expense was primarily the result of
repayments of the then outstanding 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 in 1993. In
December 1993, the Company sold 1.0 million shares of Fruehauf common stock and
realized a gain of $3.0. During 1994 the Company sold a total of 5.9 million
shares of Fruehauf common stock and realized a gain of $26.0.
Extraordinary Items
During 1994, the Company repurchased a total of $27.3 of its old senior secured
notes. The Company recognized extraordinary losses totaling $0.7 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 in the second quarter of 1993 to write
off unamortized debt issuance costs.
In December 1993, the Company repurchased $5.0 of its old senior secured notes
for approximately $4.5, including accrued interest. The Company recognized an
extraordinary gain on this transaction of approximately $0.5, net of write-off
of unamortized discount and debt issuance costs.
Income (Loss) from Discontinued Operations
Loss from discontinued operations in the Company's Material Handling Segment
decreased $20.6 to $3.7 for 1994 as compared to $24.3 for 1993.
As discussed below, the decreases in sales and gross profit in the opening
months of 1994 reflected the difficulties in restoring full production due to
supplier problems.
Material Handling Segment sales were $472.7 for 1994, an increase of $77.1, or
19%, from $395.6 for 1993. Machine sales increased $81.0 and parts sales
decreased $3.9. 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, an increase of $5.6
from 1993. Machine order bookings for 1994 of $381.2 increased $17.3 or 5%
compared to $364.0 in 1993. Bookings for parts sales for 1994, from which the
Company generally realizes higher margins than machine sales, decreased $11.6,
or 12%, from 1993, primarily because of decreased parts availability as
discussed above. Material Handling Segment backlog was $135.9 at December 31,
1994 compared to $152.7 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. The Company
maintained full production in the Material Handling Segment United States
operations and parts availability returned to normal levels. As a result, the
backlog of both machines orders and parts orders was reduced during 1995.
The Material Handling Segment's gross profit increased $20.6 to $42.9 for 1994
compared to $22.3 for 1993. The gross profit percentage in the Material Handling
Segment increased to 9.1% for 1994 from 5.6% 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.
In June 1994, the Company announced personnel reductions in plant supervision,
engineering, marketing and administration totaling approximately 160 employees
at the Material Handling Segment's North American and European operations. A
charge of $4.5 was recorded related to 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 $2.9
charge was recorded for costs, principally severance costs, associated with
these actions.
In 1994, the Material Handling Segment recorded a provision for state income
taxes of $0.5 in connection with the sale of its former subsidiary, Drexel. 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.
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. Debt reduction and an
improved capital structure are major focal points for the Company. In this
regard, the Company regularly reviews its alternatives to improve its capital
structure and to reduce debt through debt financings, issuance of equity, assets
sales, including the sale of business units, or any combination thereof.
Currently, the Company has focused its attention on the sale of assets,
including business units, and has taken steps to explore the opportunities
available to it in this regard. As part of the Company's efforts to improve its
capital structure and reduce debt, on July 25, 1996 the Company announced the
signing of a definitive agreement to sell its Material Handling business for
$135 in cash at closing. Subject to the fulfillment of customary closing
conditions and regulatory clearances, the closing is expected to take place
within ninety days of the announcement. To the extent borrowings under the
Credit Facility are secured by working capital of CMHC, proceeds will be used to
reduce the Credit Facility. Based on current borrowing levels, approximately $30
borrowed under the Credit Facility is secured by CMHC working capital. In
accordance with the Indenture governing the Company's 13.25% Senior Secured
Notes, the Company plans to use the portion of the proceeds applicable to the
Notes to offer to purchase the Notes and reduce its overall debt level.
Net cash of $10.2 was used in operating activities during the six months ended
June 30, 1996. Net cash provided by investing activities was $2.5 during the six
months ended June 30, 1996 principally due to the sale of excess property. Net
cash provided by financing activities during the six months ended June 30, 1996
was $10.2 million, primarily from use of the lending facilities in the U.S.
($5.4) and in the U.K ($6.5). Cash and cash equivalents totaled $9.5 at June 30,
1996.
The balance outstanding under the Credit Facility as of June 30, 1996 was $72.2,
and the additional amount the Company could have borrowed was $6.5 as of that
date. TEL entered into a new bank working capital facility in 1995, and PPM
Europe is in negotiations to secure a working capital facility in 1996.
Management intends to seek additional working capital financing facilities for
the Company's international operations to provide additional liquidity
worldwide.
Factors affecting future liquidity
As discussed above, on July 25, 1996, the Company announced the signing of a
definitive agreement for the sale for $135.0 in cash of its Material Handling
business. To the extent borrowings under the Credit Facility are secured by
working capital of CMHC, proceeds will be used to reduce the Credit Facility.
Based on current borrowing levels, approximately $30 borrowed under the Credit
Facility is secured by CMHC working capital. In accordance with the Indenture
governing the Company's 13.25% Senior Secured Notes, the Company plans to use
the portion of the proceeds applicable to the Notes to offer to purchase the
Notes and reduce its overall debt level.
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 of the Old Notes, repayment of the Company's old senior secured notes and
senior subordinated notes, totaling approximately $152.6 principal amount, and
entry into the Credit Facility to replace the Company's existing lending
facility in the U.S. The Indenture for the Old 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
Old Notes, the Company issued 1.0 million 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 of the proceeds of the Old 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 acquisition costs
totaled approximately $5.0. The remainder of the purchase price consisted of the
issuance of redeemable preferred stock of Terex Cranes having an aggregate
liquidation preference of 127 French francs (approximately $26.1), 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 (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 in outstanding letters of credit)
up to $100. 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 $17.2 on May 15, 1996 on the Old Notes.
The Company's debt service obligations for the remainder of 1996 include
approximately $17.2 on November 15, 1996 on the Notes and approximately $0.6
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 June 30, 1996 was $72.2, and
the additional amount the Company could have borrowed was $21.3 as of that date.
TEL entered into a new bank working capital facility in 1995, and PPM Europe is
in negotiations to secure a working capital facility in 1996. Management intends
to seek additional working capital financing facilities for the Company's
international operations to provide additional liquidity worldwide.
Foreign Currencies and Interest Rate Risk
The Company's products are sold in over 50 countries around the world and,
accordingly, revenues of the Company are generated in foreign currencies, while
the costs associated with those revenues are only partly incurred in the same
currencies. The major foreign currencies, among others, in which the Company
does business are the German Mark, the Pound Sterling, and the French Franc. The
Company may, from time to time, hedge specifically identified committed cash
flows in foreign currencies using forward currency sale or purchase contracts.
Such foreign currency contracts have not historically been material in amount.
The Company's borrowings are at both fixed and floating rates of interest. For
the floating rate portion of the borrowings, the Company is at risk for
fluctuations in interest rates. The Company does not currently hedge any
interest rate risk.
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 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
plus interest and penalties and the ultimate outcome cannot presently be
determined or estimated. A change in control of the Company 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. During 1995 the Company incurred $0.3 of legal fees and expenses
on behalf of the Company, directors and executives of the Company and KCS. In
general, under the Company's by-laws, the Company is obligated to indemnify
officer and directors, for all liabilities arising in the course of their duties
on behalf of the Company. To date, no officer or director has had legal
representation separate from the Company's legal representation, and no
allocation of the legal fees for such representation has been made.
The Company received a letter from the Department of Labor (the "DOL") in May of
1995, 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. 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.
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, 1995, consolidated revenues of continuing
operations of the Company amounted to approximately $501.4 million. Prior to May
1995, the Company's operations were divided into two principal segments:
Material Handling and Heavy Equipment, now known as Terex Trucks. On May 9,
1995, the Company completed the PPM Acquisition. Together with Koehring, these
businesses form the Terex Cranes Segment.
Terex Trucks, formerly known as the Company's 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. Terex Trucks 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 Terex 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. Terex Cranes 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 strategy is to increase shareholder value through sustained
growing earnings.
Terex Trucks
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 Corporation, whose operations were subsequently
carried out as 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 sold under the TEREX trademark and as original
equipment manufactured to be sold under other brand names. 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.
Terex Cranes
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 has three principal
competitors in the mobile crane market: Grove Manufacturing, Liebherr Werk
Ehingen and Link-Belt.
In December 1991, the Company acquired substantially all operating assets of the
business that operated prior to the PPM Acquisition as the Marklift Division
("Mark"). 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: PPM S.A. in France, 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.
<PAGE>
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 three main competitors in the mobile crane
market: Grove Manufacturing, Liebherr Werk Ehingen and Link-Belt.
Discontinued Operations
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 and related replacement parts under the CLARK trademark. 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
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 Industries,
Inc. ("Drexel"). Drexel, which is located in Horsham, Pennsylvania, manufactures
very narrow-aisle lift trucks.
CMH currently offers 116 basic truck designs within five 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) and
electric walkies.
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.
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 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.
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.
<PAGE>
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. Electric wheel motors and controls used in the Unit Rig product line
are currently supplied exclusively by General Electric Company.
<PAGE>
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 are generally less
affected by such seasonal factors.
Distribution
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.
Terex Cranes 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 June 30, 1996, December 31, 1995 and 1994 was as
follows:
June 30, December 31,
1996 1995 1994
(in millions of dollars)
Terex Trucks ..............$ 64.1 $ 88.8 $ 67.8
Terex Cranes .............. 58.1 85.3 11.7
Total ...................$ 122.2 $ 174.1 $ 79.5
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, KOEHRING, LORAIN, UNIT RIG, MARKLIFT, DYNAHOE, P&H (licensed by PPM North
America from Harnischfeger Corporation), PPM, HYPERSTACKER, SUPERSTACKER and
BENDINI 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 June 30, 1996, the Company had approximately 3,348 employees (including
964 employed at the Material Handling Segment, which is accounted for as a
discontinued operation). 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. The Company experienced a labor strike at its parts
distribution center in Southaven, Mississippi during the second quarter of 1995,
which is ongoing, and a strike at its Koehring facility in Waverly, Iowa in
December 1995, which has been settled. The strike at Southaven has had no
appreciable effect on the conduct of business or financial results of that
operation.
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 O -- "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 other than those
related to its Material Handling Segment:
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)
Terex Trucks
Unit Rig .................Tulsa, Oklahoma .............Manufacturing and office
325,000 sq. ft.
TEL.......................Motherwell, Scotland ........Manufacturing, warehouse
and office
714,000 sq. ft. (3)
Terex Cranes
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.
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.
<PAGE>
LEGAL PROCEEDINGS
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. See Note M -- "Litigation and Contingencies" in the Notes to the
Consolidated Financial Statements.
For information concerning other contingencies and uncertainties, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Contingencies and Uncertainties."
<PAGE>
MANAGEMENT
Executive Officers and Directors
The following individuals are currently directors of the Company:
Positions and First Year
Name Age Offices with Company Elected Director
Ronald M. DeFeo .....44 ...President, Chief Executive ............1993
Officer, Chief Operating Officer
and Director
Marvin B. Rosenberg .56 ...Senior Vice President, General ........1992
Counsel, Secretary and Director
G. Chris Andersen ...58 ...Director ..............................1992
William H. Fike .....60 ...Director ..............................1995
Bruce I. Raben ......42 ...Director ..............................1992
David A. Sachs ......37 ...Director ..............................1992
Adam E. Wolf ........82 ...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 as President of the Company's Heavy Equipment Group, 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 and served as a
director of Fruehauf from July 1991 until August 1993. Mr. Andersen was a Vice
Chairman of PaineWebber Incorporated ("PaineWebber") from March 1990 through
1995. Mr. Andersen is currently a partner of Andersen Weinroth & Co. L.P.,
serves as a consultant to PaineWebber Incorporated and also serves as a director
of AFGL International, Inc., Sunshine Mining Company and United Waste Systems,
Inc.
Mr. 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. Fike serves as a director to Magna and AGCO
Corporation.
Mr. Raben was appointed a director of the Company in 1992. Mr. Raben is a
managing director of CIBC Wood Gundy. Prior to joining CIBC Wood Gundy in
February 1996, Mr. Raben was employed as an Executive Vice President of
Jefferies & Company, Inc. 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.
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 August 15, 1996, 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 .....44 ...President, Chief Executive Officer and
Chief Operating Officer
David J. Langevin ...45 ...Executive Vice President
Marvin B. Rosenberg .55 ...Senior Vice President, General Counsel and Secretary
Joseph F. Apuzzo ....40 ...Vice President - Finance and Controller
Brian J. Henry ......37 ...Vice President - Finance, Treasurer and Director of
Investor Relations
Steven E. Hooper ....43 ...Vice President, Human Resources
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. Apuzzo was appointed Vice President - Finance and Controller of the Company
on May 15, 1996. Mr. Apuzzo previously held the position of Vice President,
Corporate Controller of the Company since joining the Company on October 9,
1995. Mr. Apuzzo was Vice President of Corporate Finance at D'Arcy Masius Benton
& Bowles, Inc. from September 1994 until October 1995 when he joined the
Company. Mr. Apuzzo was employed by Price Waterhouse LLP in various capacities
from 1983 until September 1994.
Mr. Henry was appointed Vice President - Finance and Treasurer of the Company on
July 11, 1995. Mr. Henry also serves as the Company's Director of Investor
Relations. Mr. Henry formerly held the position of the Company's Vice President
- - Corporate Development and Acquisitions and has been employed by the Company
since 1993. He was employed by KCS from 1990 to 1993.
Mr. Hooper was appointed Vice President, Human Resources of the Company on
September 15, 1995, after serving as Director of Human Resources of the Company
since January 1994. He was previously a Human Resources Director at Allied
Signal Aerospace from October 1992 to December 1993. Prior to October 1992, Mr.
Hooper was with Tenneco Inc. for eight years in various senior level human
resources positions.
<PAGE>
Executive Compensation
<TABLE>
<CAPTION>
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 1995 earned qualifying compensation in
excess of $100,000 (the "Named Executive Officers").
Long-Term
Annual Compensation Compensation
Other Restricted Securities All Other
Annual Stock Underlying Compen-
Name and Salary Bonus Compen- Awards Options/ sation
Principal Position Year ($) ($) sation ($) SARS (#) ($)
------------------ ---- --- ---- --- ---- -------- ----- ---- --------- --- ---
($)
<S> <C> <C> <C> <C> <C> <C> <C>
Ronald M. DeFeo 1995 $ 350,000 $ 250,000 $ --- $ 237,500(1) 40,000 $ 3,080(6)
President, Chief Executive 1994 350,000 225,000 --- 84,700(2) 30,800 3,080(6)
Officer and Chief Operating 1993 237,500 100,000 222,693(7) --- 10,000 3,148(6)
Officer (3)
Randolph W. Lenz 1995 384,750 --- --- --- --- ---
Chairman of the Board(4)(5) 1994 486,000 243,000 --- 118,250(2) 43,000 ---
1993 483,508 --- --- --- --- ---
David J. Langevin 1995 303,600 150,000 --- --- 10,000 3,080(6)
Executive Vice President(4)(8) 1994 303,600 150,000 --- 75,350(2) 27,400 ---
1993 --- --- --- --- --- ---
Marvin B. Rosenberg 1995 250,000 75,000 --- --- 5,000 ---
Senior Vice President, 1994 250,000 75,000 --- 62,150(2) 22,600 ---
Secretary and General 1993 --- --- --- --- --- ---
Counsel(4)(9)
Ralph T. Brandifino 1995 235,000 100,000 --- --- --- 3,080(6)
Senior Vice President, Chief 1994 235,000 100,000 --- 58,300(2) 21,200 ---
Financial Officer and 1993 16,913 --- --- --- --- ---
Treasurer(10)
Brian J. Henry 1995 165,000 33,000 --- --- 10,000 3,080(6)
Vice President and Treasurer (11) 1994 150,000 33,000 --- 13,750(2) 5,000 3,080(6)
1993 70,000 50,000 --- --- --- 1,500(6)
- -----------------------------
<FN>
(1) As part of Mr. DeFeo's 1995 long term incentive compensation, on February
15, 1996, Mr. DeFeo was granted 5,000 shares of Restricted Stock under the
Company's 1994 Long Term Incentive Plan (the "1994 Plan") and conditionally
granted 45,000 shares of Restricted Stock under the Company's 1996 Long
Term Incentive Plan (the "1996 Plan"), subject to stockholder approval,
which was obtained on May 15, 1996. The value of the Restricted Stock
granted to Mr. DeFeo set forth in the table above for 1995 is based on the
closing stock price of $5.00 per share as of February 15, 1996, the date of
grant. The shares of Restricted Stock awarded to Mr. DeFeo for 1995 become
vested to the extent of one-fourth of the shares covered thereby on each of
the first four anniversaries of February 15, 1996; however, upon the
earliest to occur of a change in control of the Company and the death or
disability of Mr. DeFeo, any unvested portion of such Restricted Stock
shall vest immediately. Dividends, if any, are paid on Restricted Stock
awards at the same rate as paid to all stockholders.
(2) As part of their 1994 long term incentive compensation, on June 23, 1994
the Named Executive Officers were granted shares of Restricted Stock under
the Company's 1994 Plan. The value of the Restricted Stock set forth in the
table above is based on the closing stock price of $5.50 per share on June
23, 1994, the date of grant. Dividends, if any, 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 $4.75 of the Restricted
Stock awards set forth in the table above as of December 31, 1995 for
Messrs. DeFeo, Lenz, Langevin, Rosenberg, Brandifino and Henry are: Mr.
DeFeo, 15,400 shares, $73,150; Mr. Lenz, 21,500 shares, $102,125; Mr.
Langevin, 13,700 shares, $65,075; Mr. Rosenberg, 11,300 shares, $53,675;
Mr. Brandifino, 10,600 shares, $50,350; and Mr. Henry, 2,500 shares,
$11,875. 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 of 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 vest
immediately.
(3) Mr. DeFeo became Chief Executive Officer on March 24, 1995.
(4) 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 in 1994. Such payments are not included
as part of Messrs. Lenz's, Langevin's and Rosenberg's 1994 annual
compensation.
(5) Mr. Lenz was Chief Executive Officer of the Company from 1993 through March
24, 1995 when Mr. DeFeo was appointed CEO. Mr. Lenz retired as Chairman of
the Board and a Director of the Company as of August 28, 1995 (see
"Retirement of Randolph W. Lenz" below). Mr. Lenz was paid his salary
through the date of his retirement.
(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.
(11) Mr. Henry joined the Company on July 1, 1993. Prior to July 1, 1993, Mr.
Henry was employed by KCS and received compensation from KCS.
</FN>
</TABLE>
Option Grants in 1995
In May 1986, the stockholders approved an incentive stock option plan covering
key management employees (the "1988 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 1988 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 1988 Incentive Plan vest ratably over three years from
the date of grant. During 1995, options for 28,000 shares were granted to Named
Executive Officers under the 1988 Incentive Plan.
The Board of Directors adopted the 1994 Plan on June 23, 1994, subject to
stockholder approval which was obtained on June 23, 1995. The 1994 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 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 Plan).
During 1995, options for 65,000 shares were granted to Named Executive Officers
under the 1994 Plan.
In December 1995, the Board of Directors approved, subject to shareholder
approval, the 1996 Plan. Shareholder approval of the 1996 plan was granted on
May 15, 1996. The 1996 Plan authorizes the granting of (i) options ("Stock
Option Awards") to purchase shares of Common Stock, including Restricted Stock,
(ii) shares of Common Stock, including Restricted Stock ("Stock Awards"), and
(iii) cash bonus awards based upon a participant's job performance ("Performance
Awards"). Subject to adjustment as described below under "Adjustments," the
aggregate number of shares of Common Stock (including Restricted Stock, if any)
optioned or granted under the 1996 Plan shall not exceed 300,000 shares. The
1996 Plan provides that a committee (the "Committee") of the Board of Directors
consisting of two or more members thereof who are non-employee directors, shall
administer the 1996 Plan and has provided the Committee with the flexibility to
respond to changes in the competitive and legal environments, thereby protecting
and enhancing the Company's current and future ability to attract and retain
directors and officers and other key employees and consultants. The 1996 Plan
also provides for automatic grants of Stock Option Awards to non-employee
directors.
<TABLE>
<CAPTION>
The table below summarizes options granted during 1995 to the Named Executive
Officers.
Option/SAR Grants in Last Fiscal Year
Individual Grants
-------------------------------------------------
Number of % of Total Potential Realizable
Securities Options/SARs Value at Assumed
Underlying Granted to Exercise Annual Rates of
Options/SARs Employees in or Base Expiration Stock Price
Name Granted (#)(1) Fiscal Year Price ($/Sh) Date Appreciation for
Option Term(3)
5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C>
Ronald M. DeFeo 40,000 12.2% $4.250 12/13/05 $106,912 $270,930
Randolph W. Lenz (2) -0- 0% -0- --- -0- -0-
David J. Langevin 10,000 3.0% 4.250 12/13/05 26,995 68,411
Marvin B. Rosenberg 5,000 1.5% 4.250 12/13/05 13,364 33,867
Ralph T. Brandifino -0- 0% -0- --- -0- -0-
Brian J. Henry 10,000 3.0% 4.875 07/10/05 30,659 77,695
- -------------------
<FN>
(1) Of the options listed above, 19,709, 4,927 and 2,464 for Messrs. DeFeo,
Langevin and Rosenberg, respectively, were granted under the 1994 Plan and
become vested to the extent of one-fourth of the shares of Common Stock
covered thereby on each of the first four anniversaries of December 13,
1995, the date of grant; and 20,291, 5,173 and 2,536 for Messrs. DeFeo,
Langevin and Rosenberg, respectively, were granted under the 1988 Plan and
become vested to the extent of one-third of the shares of Common Stock
covered thereby on each of the first three anniversaries of December 31,
1995, the date of grant. Mr. Henry's option to purchase 10,000 shares of
Common Stock was granted to him under the 1994 Plan in connection with his
promotion to Vice President and Treasurer on July 10, 1995, and becomes
vested to the extent of one-fourth of the shares of Common Stock covered
thereby on each of the first four anniversaries of July 10, 1995, the date
of grant.
(2) Mr. Lenz retired as Chairman on August 28, 1995. (See "Retirement of
Randolph W. Lenz" below.)
(3) 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.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Aggregated Option Exercises in 1995 and Year-End Option Values
The table below summarizes options exercised during 1995 and year-end option
values of the Named Executive Officers.
Number of Securities
Underlying Unexercised
Options/SARs at Value of Unexercised
Fiscal Year-end In-the-Money Options/SARs
(#) at Fiscal Year-end ($)(1)
Shares Value ---- ----------------------
Name Acquired on Realized
Exercise (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
<S> <C> <C> <C> <C>
Ronald M. DeFeo - - 34,366/66,434 0/190,000
Randolph W. Lenz (2) - - 10,750/32,250 0/0
David J. Langevin - - 6,850/30,550 0/47,500
Marvin B. Rosenberg - - 5,650/21,950 0/23,750
Ralph T. Brandifino - - 5,300/15,900 0/0
Brian J. Henry - - 1,250/13,750 0/0
- ------------------
<FN>
(1) Based on the closing price of the Company's Common Stock on the New York
Stock Exchange ("NYSE") on December 31, 1995 of $4.75.
(2) Mr. Lenz retired as Chairman on August 28, 1995. (See "Retirement of
Randolph W. Lenz" below.)
</FN>
</TABLE>
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.
Mr. DeFeo participates in the Terex Corporation Salaried Employees' Retirement
Plan (the "Retirement Plan"). Messrs. Brandifino, Henry, 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. 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. The
annual retirement benefits payable at normal retirement age under the Retirement
Plan will be $4,503 for Mr. DeFeo (assuming full vesting).
Compensation of Directors
The directors who are employees of the Company receive no additional
compensation by virtue of their being directors of the Company. Non-employee
directors receive an annual fee of $24,000. All directors of the Company are
reimbursed for travel, lodging and related expenses incurred in attending Board
and committee meetings.
In addition, in accordance with the 1996 Plan, outside directors shall, in lieu
of compensation payable under the 1994 Plan:
(i) be awarded on the date of appointment as an outside director, an
option to purchase 25,000 shares of Common Stock;
(ii) be awarded an option to purchase the number of shares of Common Stock
necessary to bring the total number of shares of Common Stock for
which the director has or had an option, granted by the Company during
his tenure as a director, to 25,000 shares, at a price of $4.25 per
share;
(iii)in consideration of services to the Board during 1995 and each year
thereafter, as applicable, be awarded annually an option to purchase
7,500 shares of Common Stock five business days after the date on
which the Company files its Annual Report on Form 10-K with the
Commission, at the closing price of a share of Common Stock on the
NYSE on such date, except that the exercise price of options granted
in consideration of services rendered during 1995 shall be $4.25 per
share;
(iv) in consideration of services to the Board during 1995 and each year
thereafter, as applicable, (a) if such outside directors are serving
as a chairperson of a committee to the Board of Directors five
business days after the date on which the Company files its Annual
Report on Form 10-K with the Commission, be awarded an option to
purchase 5,000 shares of Common Stock at $4.25 per share for the
options granted in consideration of services rendered during 1995 and
at the closing price of a share of Common Stock on the NYSE on the
date of all other annual awards, or (b) if such outside directors are
serving as a member of a committee (and not as a chairperson of such
committee) of the Board of Directors five business days after the date
on which the Company files its Annual Report on Form 10-K with the
Commission, be awarded an option to purchase 2,500 shares of Common
Stock at $4.25 per share for the options granted in consideration of
services rendered during 1995 and at the closing price of Common Stock
on the NYSE on the date of all other annual awards; provided, however,
that an individual outside director shall not be awarded an option to
purchase more than 7,500 shares of Common Stock per year for service
as a committee chairperson and/or member, regardless of the number of
positions held.
The outside director options described above shall have a term of five years and
the exercise price of the options shall be equal to the fair market value of the
Common Stock on the date preceding the day the grant is authorized, unless
otherwise provided. The options shall vest immediately. On December 13, 1995,
pursuant to such provisions of the 1996 Plan, (i) G. Chris Andersen was
conditionally granted an option to purchase 30,000 shares of Common Stock; (ii)
William H. Fike was conditionally granted an option to purchase 25,000 shares of
Common Stock; (iii) Bruce I. Raben was conditionally granted an option to
purchase 30,000 shares of Common Stock; (iv) David A. Sachs was conditionally
granted an option to purchase 27,500 shares of Common Stock; and (v) Adam E.
Wolf was conditionally granted an option to purchase 17,500 shares of Common
Stock, in each case at an option price of $4.25 per share. In addition, on
December 13, 1995, pursuant to the provisions of the 1996 Plan; (i) G. Chris
Andersen was conditionally granted an option to purchase 15,000 shares of Common
Stock; (ii) William H. Fike was conditionally granted an option to purchase
12,500 shares of Common Stock; (iii) each of Bruce I. Raben and David A. Sachs
was conditionally granted an option to purchase 15,000 shares of Common Stock;
and (iv) Adam E. Wolf was conditionally granted an option to purchase 10,000
shares of Common Stock, in each case at an option price of $6.75 per share. At
the time of the Board of Directors' approval of the 1996 Plan and the initial
awards to outside directors, the Board of Directors noted the increased workload
of the outside directors during 1995 as a result of negotiations relating to Mr.
Lenz's retirement as well as the lack of a permanent Chairman since the date of
Mr. Lenz's retirement. See "Retirement of Randolph W. Lenz" below.
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 upon the recommendation of a
committee comprised of its independent Directors and represented by independent
counsel) and Mr. Lenz have entered into 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 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 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 income for a period of 24 months.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Board recommending compensation for executive
officers, including the Named Executive Officers, during the Company's 1995
fiscal year consisted of G. Chris Andersen, William H. Fike and David A. Sachs.
There are no compensation Committee interlocks or insider participation with
respect to such individuals.
<PAGE>
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 July 31, 1996. 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 July
31, 1996 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) ..........................4,539,451 (2) 35.61%
c/o Terex Corporation
500 Post Road East
Westport, CT 06880
G. Chris Andersen ............................. 79,900 (3) *
821 West Shore Drive
Kinnelon, NJ 07405
Ronald M. DeFeo ............................... 69,602 (4) *
c/o Terex Corporation
500 Post Road East
Westport, CT 06880
William H. Fike ............................... 37,500 (5) *
Magna International, Inc.
26200 Lahser Road
Suite 300
Southfield, MI 48034
Bruce I. Raben ................................ 112,663 (6) *
CIBC Wood Gundy
1999 Avenue of the Stars, Suite 1910
Los Angeles, CA 90067
Marvin B. Rosenberg ........................... 120,107 (7) *
c/o Terex Corporation
500 Post Road East
Westport, CT 06880
David A. Sachs ................................ 75,300 (8) *
Onyx Partners
9595 Wilshire Boulevard, Suite 700
Beverly Hills, CA 90212
Adam E. Wolf .................................. 48,500 (9) *
875 East Donges Lane
Milwaukee, WI 53217
Joseph F. Apuzzo .............................. 345 *
c/o Terex Corporation
500 Post Road East
Westport, CT 06880
Ralph T. Brandifino ........................... 18,163 (10) *
c/o Terex Corporation
500 Post Road East
Westport, CT 06880
Brian J. Henry ................................ 10,635 (11) *
c/o Terex Corporation
500 Post Road East
Westport, CT 06880
Steven E. Hooper .............................. 4,083 (12) *
c/o Terex Corporation
500 Post Road East
Westport, CT 06880
David J. Langevin ............................. 138,950 (13) 1.09%
c/o Terex Corporation
500 Post Road East
Westport, CT 06880
All directors and executive
officers as a group (12 persons) ............. 715,748 (14) 5.61%
- ------------------------------
* 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. Pursuant to a retirement
agreement between the Company and Mr. Lenz, Mr. Lenz has agreed to vote his
shares of the Company's Common Stock in the manner recommended by the
Company's Board of Directors.
(2) Includes (a) 3,841,537 shares of Common Stock directly owned by Mr. Lenz,
(b) 21,500 shares of Common Stock issuable upon the exercise of options
exercisable within 60 days and held by Mr. Lenz, (c) 573,414 shares of
Common Stock indirectly owned by Mr. Lenz through four corporations that he
indirectly owns and controls, (d) 38,800 shares of Series B Cumulative
Redeemable Convertible Preferred Stock (the "Series B Preferred Stock")
convertible into 87,300 shares of Common Stock and (e) Series B Common
Stock Purchase Warrants (the "Series B Warrants") exercisable into 15,700
shares of Common Stock.
(3) Includes 55,000 shares of Common Stock issuable upon the exercise of
options exercisable within 60 days.
(4) Includes 42,066 shares of Common Stock issuable upon the exercise of
options exercisable within 60 days.
(5) Includes 37,500 shares of Common Stock issuable upon the exercise of
options exercisable within 60 days.
(6) Includes 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.
Also includes 55,000 shares of Common Stock issuable upon the exercise of
options held by Mr. Raben and which are exercisable within 60 days.
(7) Includes 11,300 shares of Common Stock issuable upon the exercise of
options exercisable within 60 days.
(8) Includes 3,300 shares of Common Stock owned by Mr. Sach's wife. Mr. Sachs
disclaims the beneficial ownership of such shares. Also includes 52,500
shares of Common Stock issuable upon the exercise of options held by Mr.
Sachs which are exercisable within 60 days.
(9) Includes 47,500 shares of Common Stock issuable upon the exercise of
options held by Mr. Wolf which are exercisable within 60 days. Also
includes 800 shares of Common Stock held in a testamentary trust for which
Mr. Wolf has shared voting power and shared investment power and 200 shares
of Common Stock held by Mr. Wolf's wife for which he claims beneficial
ownership.
(10) Includes 10,600 shares of Common Stock issuable upon the exercise of
options exercisable within 60 days
(11) Includes 5,000 shares of Common Stock issuable upon the exercise of options
exercisable within 60 days.
(12) Includes 2,500 shares of Common Stock issuable upon the exercise of options
exercisable within 60 days.
(13) Includes 13,700 shares of Common Stock issuable upon the exercise of
options exercisable within 60 days.
(14) Includes 332,666 shares of Common Stock issuable upon the exercise of
options exercisable within 60 days.
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 March 31, 1996 he beneficially owned, directly and indirectly,
approximately 42% 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" on page 51. In addition to indebtedness pursuant
to the retirement agreement, an affiliate of Mr. Lenz is indebted to the Company
in the approximate amount of $33,450 representing shipping charges incurred by
such affiliate to the Company during 1994. The affiliate of Mr. Lenz has not
paid such charges as of May 31, 1996.
The Company, certain directors and executives of the Company, and KCS are named
parties in various legal proceedings. During 1995, the Company incurred $0.3
million of legal fees and expenses on behalf of the Company, directors and
executives of the Company, and KCS named in the lawsuits.
In 1995, the Company retained Jefferies, of which Bruce I. Raben, a director of
the Company, was then an officer, in connection with the offering of the Old
Notes and the Acquisition of PPM which was completed in May 1995. Jefferies was
paid $9.338 million as an underwriting discount and for services rendered.
Jefferies has previously rendered financial advisory and other services to the
Company. Jefferies has not performed any services for the Company during 1996
nor have they proposed to perform any services during 1996.
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.
<PAGE>
DESCRIPTION OF THE NOTES AND THE GUARANTEES
General
The Old Notes were, and the New Notes will be, issued pursuant to the Indenture.
The form and terms of the New Notes will be the same as the form and terms of
the Old Notes, except that the New Notes will be registered under the Securities
Act and, therefore, will not bear legends restricting the transfer thereof. The
terms of the New Notes will include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"), as in effect on the date of the Indenture.
The following summary of certain provisions of the Indenture, the Collateral
Agreements (as defined below) and the Registration Rights Agreement does not
purport to be complete and is qualified in its entirety by reference to the
Indenture, the Collateral Agreements and the Registration Rights Agreement,
including the definitions therein of certain terms used below. Copies of the
forms of Indenture, Collateral Agreements and Registration Rights Agreement have
been filed as exhibits to the Registration Statement of which this Prospectus is
a part). The definitions of certain terms used in the following summary are set
forth below under "-- Certain Definitions."
Principal Maturity and Interest; Ranking of New Notes
The New Notes are limited in aggregate principal amount to $250 million and will
mature on May 15, 2002. Interest on the New Notes will be payable semi-annually
on May 15 and November 15 of each year, commencing on November 15, 1996, to
holders of record on the immediately preceding May 1 and November 1,
respectively. The Notes will bear interest at 13 1/4% per annum from the date of
original issue. Holders of New Notes will receive interest on November 15, 1996,
from the date of the initial issuance of the New Notes, plus an amount equal to
the accrued interest on the Old Notes exchanged therefor from the most recent
date to which interest has been paid to the date of exchange thereof. Interest
on the Notes will accrue from the most recent date to which interest has been
paid or, if no interest has been paid, from the date of original issuance.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months. The New Notes will be payable both as to principal and interest
at the office or agency of the Company or, at the option of the Company, payment
of interest may be made by check mailed to the holders of the New Notes at their
respective addresses set forth in the register of holders of Notes. Until
otherwise designated by the Company, the Company's office or agency will be the
office of the Trustee maintained for such purpose. 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 at such place of payment, and no
interest shall accrue for the intervening period.
The New Notes will rank pari passu in right of payment with all existing and
future senior indebtedness (including the Old Notes) and senior to all
subordinated indebtedness of the Company. In addition, upon any distribution of
assets of the Company pursuant to any insolvency, bankruptcy, dissolution,
winding up, liquidation or reorganization, the payment of the principal of, and
the premium, if any, and interest on, the New Notes will rank pari passu in
right of payment with all existing and future senior indebtedness (including the
Old Notes). The Notes will rank pari passu in right of payment with all senior
borrowings. The New Notes will be issued in registered form, without coupons,
and in denominations of $1,000 and integral multiples thereof.
Redemption
The Notes are not redeemable at the Company's option prior to May 15, 2000.
Thereafter, the Notes will be subject to redemption at the option of the
Company, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest thereon 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 redeem up
to one-third of the original principal amount of the Notes, at a redemption
price of 111.36% of the principal amount of the Notes if the Notes are redeemed
prior to May 15, 1997, 109.46% of the principal amount of the Notes if the Notes
are redeemed after May 15, 1997 and prior to May 15, 1998, 107.57% of the
principal amount of the Notes if the Notes are redeemed after May 15, 1998 and
prior to May 15, 1999, and 105.68% of the principal amount the Notes are
redeemed after May 15, 1999, in each case plus accrued interest to the
applicable redemption date, with the net proceeds of a bona fide public offering
of common stock of the Company or any Restricted Subsidiary; provided, however,
that such redemption shall occur within 60 days of the date of the closing of
such public offering. The restrictions on optional redemptions set forth in the
Indenture will not limit the Company's right to make open market purchases of
the Notes from time to time, except 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.
If less than all of the Notes are to be redeemed at any time, selection of Notes
for redemption will be made by the Trustee in compliance with the requirements
of the principal national securities exchange, if any, on which the Notes are
listed, or, if the Notes are not so listed, on a pro rata basis, by lot or by
such method as the Trustee deems to be fair and appropriate, provided, however,
that Notes of $1,000 or less may not be redeemed in part. Notice of redemption
will be mailed by first-class mail at least 30 but not more than 60 days before
the redemption date to each holder of Notes to be redeemed at such holder's
registered address. If any Note is to be redeemed in part only, the notice of
redemption that relates to such Note will state the portion of the principal
amount thereof to be redeemed. A new Note in principal amount equal to the
unredeemed portion thereof will be issued in the name of the holder thereof upon
cancellation of the original Note. On and after the date of redemption, interest
will cease to accrue on Notes or portions of them called for redemption.
The Notes will not be entitled to any mandatory redemption or sinking fund.
Guarantors
The repayment of the Old Notes is and repayment of the New Notes will be
unconditionally guaranteed jointly and severally by present and future Material
Subsidiaries of the Company that are Restricted Subsidiaries (other than TEL,
CMHC Germany, P.P.M., S.A. and any other present or future Restricted Subsidiary
organized under the laws of a foreign country), including Terex Cranes, PPM
Cranes, Koehring Cranes and CMHC. Two other Guarantors, CMH Acquisition and
International, are intermediary holding companies. See Note P -- "Consolidating
Financial Statements" in the Notes to the Consolidated Financial Statements. The
Indenture will provide that as long as any Notes remain outstanding, any future
domestic Material Subsidiary of the Company that is a Restricted Subsidiary
shall enter into a similar guarantee and the stock of such Subsidiary will be
pledged to secure the Notes.
The obligations of each Guarantor will be limited to the maximum amount as will,
after giving effect to all other contingent and fixed liabilities of such
Guarantor and after giving effect to any collections from or payments made by or
on behalf of any other Guarantor in respect of the obligations of such other
Guarantor under its Guarantee, result in the obligations of such Guarantor under
the Guarantee not constituting a fraudulent conveyance or fraudulent transfer
under federal or state law. See "Risk Factors -- Fraudulent Conveyance or
Transfer; Possible Invalidation or Subordination of Company Obligations."
Collateral
Subject to certain exceptions, the Notes and Guarantees will be secured by a
security interest in (i) 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 interest shall be subordinated to Liens securing obligations under any
Revolving Credit Facility to which any of them are obligors), (ii) property,
plant and equipment of the Company and certain of the Restricted Subsidiaries
organized outside of the U.S. and (iii) all of the Capital Stock of (and certain
intercompany notes from) all Subsidiaries of the Company owned by the Company or
any Restricted Subsidiary. In addition, the Notes will initially be secured by a
security interest in inventory of certain foreign Restricted Subsidiaries;
provided, however, that if any European subsidiary of the Company enters into a
Revolving Credit Facility, the Company is permitted to secure such facility with
accounts receivable and/or inventory of such subsidiary and the security
interest securing the Notes will be released to the extent required by the terms
of any such facility. All of the assets of the Company, the Guarantors and the
Restricted Subsidiaries described above are collectively referred to herein as
the "Collateral."
The Company, the Guarantors and the Restricted Subsidiaries have entered into
security agreements, mortgages, deeds of trust and certain other collateral
assignment agreements (collectively, the "Collateral Agreements") that provide
for the grant of a security interest in or pledge of the Collateral to the
Trustee, as collateral agent (in such capacity, the "Collateral Agent"), for the
benefit of the holders of the Notes. Such pledges and security interests will
secure the payment and performance when due of all of the Obligations of the
Company, the Guarantors and the Restricted Subsidiaries, under the Indenture,
the Notes, the Guarantees and the Collateral Agreements. The Trustee, on behalf
of the Noteholders, has entered into an intercreditor agreement with the Lenders
(as defined herein) under the Credit Facility relating to the parties'
respective rights to collateral and providing for certain other matters.
The Collateral Agreements grant certain blanket-type Liens to the Collateral
Agent against the personal property of the Company, the Guarantors and certain
of the Restricted Subsidiaries that are intended to secure the Obligations of
such persons under the Indenture, the Guarantees and the Notes. The Collateral
Agreements also grant a first priority Lien in all fee real property and certain
leasehold interests (the "Real Property Assets") owned or leased by the Company,
the Guarantors and certain of the Restricted Subsidiaries as of the date of the
Indenture. Such Liens shall be subordinate to (i) Purchase Money Liens permitted
under the covenant entitled "--Liens," (ii) Permitted Liens and (iii) Liens on
accounts receivable and inventory, and the proceeds thereof and certain related
rights securing obligations under the Credit Facility. With respect to leasehold
interests, the Collateral Agent's Liens will be limited to the extent such
leasehold interests may be encumbered pursuant to the terms of their respective
underlying leases, and by the terms of such leases. The Company and its
Restricted Subsidiaries will have the right to grant (and suffer to exist) Liens
to third parties to the extent provided in the covenant entitled "Liens" and
will have the right to acquire any such assets subject to such Liens (and suffer
to exist such Liens.) The Collateral Agent's Liens are intended to be, and shall
be, at all times automatically junior and subordinate in priority to certain of
such Liens. The Collateral Agreements also provide that the Collateral Agent
shall not have a lien on property, plant or equipment acquired by the Company,
any Guarantor or any Restricted Subsidiary with the proceeds of Purchase Money
Obligations permitted under the terms of the Indenture, which property, plant
and equipment is 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 junior liens
on the assets so acquired.
So long as no Event of Default (as defined in the Indenture) has occurred and is
continuing, and subject to certain terms and conditions in the Indenture and the
Collateral Agreements, the Company will be entitled to receive all cash
dividends, interest and other payments made upon or with respect to the Capital
Stock of any Subsidiary's collateral pledged by it, and to exercise any voting,
other consensual rights and other rights pertaining to such collateral pledged
by it. Upon the occurrence and during the continuance of an Event of Default
relating to payment of principal or interest on the Notes or if the Notes are
accelerated, all rights of the Company to exercise such voting, other consensual
rights or other rights will cease upon notice from the Collateral Agent, and all
such rights will become vested in the Collateral Agent, which to the extent
permitted by law, will have sole right to exercise such voting, other consensual
rights or other rights. Upon the occurrence and during continuance of any Event
of Default, all rights of the Company to receive all cash dividends, interest
and other payments made upon or with respect to the pledged collateral will,
upon notice from the Collateral Agent, cease and such cash dividends, interest
and other payments will be paid to the Collateral Agent. All funds distributed
under the Collateral Agreements and received by the Collateral Agent for the
benefit of the holders of the Notes will be retained and/or distributed by the
Collateral Agent in accordance with the provisions of the Indenture.
Under the terms of the Collateral Agreements, the Collateral Agent will
determine the circumstances and manner in which the Collateral will be disposed
of, including, but not limited to, the determination of whether to foreclose on
the Collateral following an Event of Default. Holders of the Notes may not
enforce the Collateral Agreements. Subject to certain limitations, holders of a
majority in principal amount of the then outstanding Notes may direct the
Collateral Agent in its exercise of any trust or power under the Collateral
Agreements. Upon the full and final payment and performance of all Obligations
of the Company under the Indenture and the Notes, the Collateral Agreements will
terminate and the pledged Collateral will be released. In addition, in the event
that the pledged Collateral is sold and the Net Proceeds are or will be applied
in accordance with the terms of the covenant described under "--Limitation on
Asset Sales," the Collateral Agent will release simultaneously with such sale
the Liens in favor of the Collateral Agent in the assets sold, provided,
however, that the Collateral Agent has received (i) a certificate stating, among
other things, that the Company is receiving fair value for the Collateral being
sold (which certification, under certain circumstances, must be made by an
independent expert, appraiser or engineer), (ii) a certificate of the Company
stating, among other things, that all conditions precedent to the release of the
Liens in favor of the Collateral Agent have been satisfied and (iii) an opinion
of counsel to the effect that, among other things, all conditions precedent to
the release of the Liens in favor of the Collateral Agent have been satisfied.
In the event of a default under the Notes, the proceeds from the sale of the
Collateral may not be sufficient to satisfy the Company's obligations under the
Notes in full. The amount to be received upon such a sale would be dependent
upon numerous factors including the condition, age and useful life of the
collateral at the time of such sale, the timing and the manner of the sale, and
whether the assets were being sold as part of an ongoing business. In addition,
the book value of the collateral should not be relied upon as a measure of
realizable value.
Repurchase Upon Change of Control
Upon the occurrence of a Change of Control, the Company will be required to
offer to repurchase all 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"). Within 40 days following any
Change of Control, the Company must mail a notice to each holder stating, among
other things: (i) that the Change of Control Offer is being made pursuant to
this provision and that all Notes tendered will be accepted for payment, (ii)
the purchase price and the purchase date, which will be 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 will 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 will 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 will be required to surrender the Notes, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Notes completed, to
the paying agent with respect to the Notes (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 the holder will 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 delivered for purchase,
and a statement that such holder is withdrawing his election to have such Notes
purchased, and (vii) that a holder whose Notes are being purchased only in part
will 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. The Company will comply with
the requirements of Rule 14e-1 under the Exchange Act and any other securities
laws and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the Notes in connection with a
Change of Control.
On the Change of Control Payment Date, the Company will, 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 officer's certificate stating that the Notes or
portions thereof tendered to the Company are accepted for payment. The Paying
Agent will promptly mail to each holder of Notes so accepted payment in an
amount equal to the purchase price for such Notes, and the Trustee will
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 will announce the result of the Change of Control Offer on
or as soon as practicable after the Change of Control Payment Date.
Except as described above with respect to a Change of Control, the Indenture
does not contain provisions that permit the holders of the Notes to require that
the Company repurchase or redeem the Notes in the event of a takeover,
recapitalization or similar restructuring.
There can be no assurance that sufficient funds will be available at the time of
any Change of Control Offer to make required repurchases.
"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 the 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.
Certain Covenants
Limitation on Restricted Payments. The Company will not, and will 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 dividends or distributions payable in
Equity Interests of the Company or such Restricted Subsidiary (other than
Disqualified Stock) or 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
are collectively referred to as "Restricted Payments") unless, at the time of
such Restricted Payment:
(a) no Default or Event of Default has occurred and is continuing or would
occur as a consequence thereof, and
(b) 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 the covenant described under "-- Limitation on
Incurrence of Indebtedness," and
(c) such Restricted Payment, together with the aggregate of all other
Restricted Payments made by the Company and its Restricted
Subsidiaries after the date of the Indenture (including Restricted
Payments permitted by clauses (i) and (ii) of the next following
paragraph 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 date of the Indenture 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 date of the Indenture 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 date of
the Indenture and on or prior to the time of such Restricted Payment.
The foregoing provisions will 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 the
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 (as defined below) permitted to be incurred pursuant to
the provision described under "--Limitation on Incurrence of Indebtedness," (iv)
the redemption, purchase, retirement or other payoff of the Series A Cumulative
Redeemable Convertible Preferred Stock, (v) Investments by the Company or any
Restricted Subsidiary, in an aggregate amount not to exceed $3 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 million.
Not later than the date of making any Restricted Payment, the Company will
deliver to the Trustee an officers' certificate stating that such Restricted
Payment is permitted and setting forth the basis upon which the calculations
required by this covenant were computed, which calculations may be based upon
the Company's latest available financial statements.
Limitation on Incurrence of Indebtedness. The Company will not, and will 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 will not issue any Disqualified Stock and will 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 has been issued, as the case may be, at the beginning of such
four-quarter period;
Period Ending Ratio
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.
The foregoing limitations will not prohibit the incurrence of (a) 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 (a) and outstanding on such date, shall not
exceed the sum of (i) 85% of Eligible Receivables (as defined in the Indenture),
plus (ii) 50% of Eligible Inventory (as defined in the Indenture), (b)
performance bonds, surety bonds, insurance obligations or bonds and other
similar bonds or obligations incurred in the ordinary course of business, (c)
Hedging Obligations incurred to fix the interest rate on any variable rate
Indebtedness otherwise permitted by the Indenture, (d) 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 million during any calendar year, (e) 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, (f) 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 (i) 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
(ii) 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 (1) title to such inventory, (2) a valid
assignment of a perfected first priority security interest in such inventory or
(3) the net proceeds of any resale of such inventory, (g) Indebtedness
outstanding on the date of the Indenture, up to 80 million French Francs of PPM
Funded Debt (as defined in the Indenture) remaining outstanding following
consummation of the Acquisition and the PPM Subordinated Note (as defined in the
Indenture) and (h) 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 (d) or (g) above
and outstanding Indebtedness incurred pursuant to the debt incurrence tests set
forth in the immediately preceding paragraph (the "Refinancing Indebtedness"),
provided, however, that (1) 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), (2) 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 (3) the Refinancing
Indebtedness ranks, in right of payment, no less favorable to the Notes as the
Indebtedness being Refinanced.
Limitation on Asset Sales. The Company will not, and will 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 date of the
Indenture, (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 million, the Company will not be required to repay
indebtedness pursuant to clause (b) or to make an offer pursuant to clause (c).
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 will 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 will 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 will 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. Any Excess Proceeds Offer will
be conducted in compliance with applicable regulations under the federal
securities law, including Exchange Act Rule 14e-1.
The Company's ability to purchase Notes in the event it is required to make an
Excess Proceeds Offer may be adversely affected by, among other things,
covenants of the Credit Facility. There can be no assurance that sufficient
funds will be available at the time of any Excess Proceeds Offer to make
required repurchases. The Company's failure to comply with the covenant
described above will be an Event of Default under the Indenture if such failure
continues for a specified period and the required notice is given by the Trustee
or the holders of not less than 25% in principal amount of the then outstanding
Notes.
The Company will not, and will 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.
Limitation on Liens. The Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, create, incur, assume or suffer to exist
any Lien on any asset 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 receivable and inventory and the proceeds thereof
(and certain rights relating thereto) securing Indebtedness permitted to be
incurred pursuant to clause (a) under "--Limitation on Incurrence of
Indebtedness" (including the Revolving Credit Facility), (ii) Purchase Money
Liens securing Purchase Money Indebtedness incurred pursuant to clause (d) under
"--Limitation on Incurrence of Indebtedness," and (iii) Permitted Liens.
Limitation on Restrictions on Restricted Subsidiary Dividends. The Company will
not, and will 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 date of the Indenture, (ii) the
Indenture, the Notes and the Collateral Agreements, (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.
Merger, Consolidation or Sale of Assets. The Company may not consolidate or
merge with or into (whether or not the Company 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 is the surviving person
or the person formed by or surviving any such consolidation or merger (if other
than the Company) 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 the person to which such sale, assignment, transfer,
lease, conveyance or other disposition has been made assumes all the obligations
of the Company, pursuant to a supplemental indenture and Collateral Agreements
in a form reasonably satisfactory to the Trustee and the Collateral Agent, under
the Notes, the Indenture and the Collateral Agreements, (iii) immediately after
giving effect to such transaction, no Default or Event of Default exists, and
(iv) the Company, 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, (A) 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
immediately preceding the transaction and (B) 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 the Interest Coverage Ratio
test set forth in the covenant described under "--Limitation on Incurrence of
Indebtedness."
Limitation on Transactions with Affiliates. The Company will not, and will not
permit any of its 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 (i)
Affiliate Transactions of aggregate value of up to $1 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, (ii) Affiliate Transactions of aggregate value of up to $10 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 (iii) 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; provided, however, that 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 the provisions of the Indenture
described above under "--Limitation on Restricted Payments", (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.
Rule 144A Information Requirement. The Company has agreed to furnish to the
holders or beneficial holders of the Notes and prospective purchasers of Notes
designated by the holders of Transfer Restricted Securities, upon their request,
the information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act until such time as the holders thereof have disposed of such
Notes pursuant to an effective registration statement.
Reports. Whether or not required by the rules and regulations of the Commission,
so long as any Notes are outstanding, the Company will furnish to the holders of
Notes all quarterly and annual financial information that would be required to
be contained in a filing with the Commission on Forms 10-Q and 10-K if the
Company were required to file such forms, including a "Management's Discussion
and Analysis of Results of Operations and Financial Condition" and, with respect
to the annual information only, a report thereon by the Company's certified
independent accountants. From and after the time the Company files a
registration statement with the Commission with respect to the Notes, the
Company will file such quarterly and annual information with the Commission.
Events of Default and Remedies
Each of the following constitutes an Event of Default under the Indenture: (i)
default for 30 days in the payment when due of interest on the Notes, (ii)
default in payment of principal (or premium, if any) on the Notes when due at
maturity, redemption, by acceleration or otherwise, (iii) default in the
performance or breach of the provisions of "--Merger, Consolidation or Sale of
Assets," "--Limitation on Restricted Payments," "--Limitation on Asset Sales,"
"--Limitation on Liens" or "--Repurchase Upon Change of Control," and certain
provisions of the Collateral Agreements, (iv) default in the performance or
breach of the provisions of "--Limitation on Incurrence of Indebtedness" which
the Company fails to cure within 30 days after the occurrence thereof, (v)
failure by the Company, any Guarantor or any Restricted Subsidiary for 30 days
after notice to comply with certain other agreements in the Indenture, the Notes
or the Collateral Agreements, (vi) default 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 evidenced 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 guarantee now exists or is created after the date of the
Indenture, if (a) either (1) such default results from the failure to pay
principal of or interest on such Indebtedness and (2) 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 such a payment 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
million in the aggregate, (vii) failure by the Company, any Guarantor or any
Restricted Subsidiary to pay final judgments (other than any judgment as to
which a reputable insurance company has accepted full liability) aggregating in
excess of $1 million which judgments are not stayed within 60 days after their
entry, (viii) breach by the Company, any Guarantor or any Restricted Subsidiary
of any material representation or warranty set forth in the Collateral
Agreements, which breach is not cured by the Company or such Guarantor or
Restricted Subsidiary or waived within 30 days after notice to comply with such
breach of a material representation or warranty, (ix) repudiation by the Company
or any of the Guarantors or Restricted Subsidiaries of their obligations under
the Indenture, the Notes, the Collateral Agreements or the Guarantees or the
Company, any Guarantor or any Restricted Subsidiary takes any action that
causes, or asserts, or fails to take any action that it knows, or has been
notified by the Trustee, is necessary to prevent, the unenforceability of the
Indenture, the Notes, the Collateral Agreements or the Guarantees against the
Company or any of the Guarantors or Restricted Subsidiaries for any reason or is
necessary to maintain the priority and perfection of the Liens of the Collateral
Agreements, and (x) certain events of bankruptcy or insolvency with respect to
the Company or any of its Restricted Subsidiaries.
If any 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 by
written notice all the Notes to be due and payable immediately. Notwithstanding
the foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, all outstanding Notes will become due and payable
without further action or notice. Holders of the Notes may not enforce the
Indenture or the Notes except as provided in the Indenture. 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 of the Notes notice of any continuing Default or Event
of Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest.
The holders of a majority in aggregate principal amount of the Notes then
outstanding, by written notice to the Trustee, may on behalf of the holders of
all of the Notes (i) waive any existing Default or Event of Default and its
consequences under the Indenture except a continuing Default or Event of Default
in the payment of interest on, or the principal of, the Notes, and/or (ii)
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 the
acceleration) have been cured or waived.
No Personal Liability of Directors, Officers, Employees and Stockholders
No director, officer, employee, incorporator or stockholder of the Company or
any Guarantor, as such, will have any liability for any obligations of the
Company under the Notes, the Indenture, the Collateral Agreements or the
Registration Rights Agreement or for any claim based on, in respect of, or by
reason of, such obligations of their creation. Each holder of the Notes by
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for issuance of the Notes. Such waiver may not be
effective to waive liabilities under the federal securities laws and it is the
view of the Commission that such a waiver is against public policy.
Defeasance and Discharge of the Indenture and the Notes
The Indenture provides that the Company will 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 with the terms of the Notes and the Indenture upon irrevocable
deposit with the Trustee, in trust, of money and/or U.S. government obligations
that will provide money in an amount sufficient in the opinion of a nationally
recognized accounting firm to pay the principal of and premium, if any, and each
installment of interest, if any, on the due dates thereof on the Notes. Such
trust may only be established if, among other things, (i) 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, (ii) no Event of Default or event that with the passing of time or the
giving of notice, or both, shall constitute an Event of Default shall have
occurred or be continuing, and (iii) certain of the customary conditions
precedent are satisfied.
The Company may satisfy and discharge its obligations under the Indenture to
holders of the Notes by delivering to the Trustee for cancellation all
outstanding Notes or by depositing with the Trustee or the Paying Agent, if
applicable, after the Notes have become due and payable, cash sufficient to pay
at the stated maturity all of the Notes and paying all other sums payable under
the Indenture by the Company.
Transfer and Exchange
A holder may transfer or exchange Notes in accordance with 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 Company is not required to transfer or exchange any Note selected for
redemption. Also, the Company is not required to transfer or exchange any Note
for a period of 15 days before a selection of Notes to be redeemed.
The registered holder of a Note will be treated as the owner of it for all
purposes.
Payments for Consent
Neither the Company nor any of its Subsidiaries shall, directly or indirectly,
pay or cause to be paid any consideration, whether by way of interest, fee or
otherwise, to any holder of any Notes for or as an inducement to any consent,
waiver or amendment of any of the terms or provisions of the Indenture or the
Notes unless such consideration is offered to be paid or agreed to be paid to
all holders of the Notes that consent, waive or agree to amend in the time frame
set forth in the solicitation documents relating to such consent, waiver or
agreement.
Amendment, Supplement and Waiver
Except as provided in the next succeeding paragraph, the Indenture and the Notes
may be amended or supplemented with the consent of the holders of at least a
majority in principal amount of the Notes then outstanding (including consents
obtained in connection with a tender offer or exchange offer for Notes) and any
existing Default or Event of Default or compliance with any provision of the
Indenture, the Notes of the Collateral Agreements 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 each holder affected, an amendment or waiver may not
(with respect to any Notes held by a non-consenting holder of Notes) (i) reduce
the principal amount of Notes whose holders must consent to an amendment,
supplement or waiver, (ii) reduce the principal of, or the premium on, or change
the fixed maturity of any Note or alter the provisions with respect to the
redemption of the Notes or alter the price at which repurchases of the Notes may
be made pursuant to an Excess Proceeds Offer or Change of Control Offer, (iii)
reduce the rate of or change the time for payment of interest on any Note, (iv)
waive a Default or Event of Default in the payment of principal of or premium,
if any, or interest on the Notes, (v) make any Note payable in money other than
that stated in the Notes, (vi) make any change in the provisions of the
Indenture relating to waivers of past Defaults or the rights of holders of Notes
to receive payments of principal of or interest on the Notes, (vii) waive a
redemption payment with respect to any Note, (viii) make any change in the
provisions of any of the Guarantees that adversely affects the rights of any
holder of Notes, (ix) adversely affect the contractual ranking of the Notes or
Guarantees, or (x) make any change in the foregoing amendment and waiver
provisions.
Notwithstanding the foregoing, without the consent of the holder of Notes, the
Company and the Trustee may amend or supplement the Indenture or the Notes to
cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes
in addition to or in place of certificated Notes, to provide for the assumption
of the Company's obligations to holders of the Notes or the Guarantor's
obligation under the Guarantee in the case of a merger or consolidation, 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 under the
Indenture of any such holder, or to comply with requirements of the Commission
in order to effect or maintain the qualification of the Indenture under the
Trust Indenture Act.
Concerning the Trustee
The Indenture contains certain limitations on the rights of the Trustee, should
it become a creditor of the Company, to obtain payment of claims in certain
cases, or to realize on certain property received in respect of any such claim
as security or otherwise. The Trustee will be permitted to engage in other
transactions; provided, however, if it acquires any conflicting interest it must
eliminate such conflict within 90 days, apply to the Commission for permission
to continue or resign.
The holders of a majority in principal amount of the then outstanding Notes will
have the right to direct the time, method and place of conducting any proceeding
for exercising any remedy available to the Trustee, subject to certain
exceptions. The Indenture provides that in case an Event of Default occurs (and
is not cured), the Trustee will be required, in the exercise of its power, to
use the degree of care of a prudent man in the conduct of his own affairs.
Subject to such provisions, the Trustee will be under no obligation to exercise
any of its rights or powers under the Indenture at the request of any holder of
Notes, unless such holder shall have offered to the Trustee security and
indemnity satisfactory to it against any loss, liability or expense.
Additional Information
Anyone who receives this Prospectus may obtain a copy of the Indenture without
charge by writing to Terex Corporation, 500 Post Road East, Westport,
Connecticut 06880, Attention: Marvin B. Rosenberg, Senior Vice President and
General Counsel.
Certain Definitions
Set forth below are certain defined terms used in the Indenture. Reference is
made to the Indenture for a full definition of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
"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.
"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, will 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.
"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 the Indenture).
"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.
"Closing Date" means the date upon which the Notes are first issued.
"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 the 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 or 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 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
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 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.
"Default" means any event that is, or after notice or the passage of time or
both would be, an Event of Default.
"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 Issue
Date shall not constitute the issuance of additional Disqualified Stock.
"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).
"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
the Indenture.
"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.
"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.
"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.
"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.
"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 (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 consistent with past practice),
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.
"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).
"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.
"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
the 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.
"Obligations" means any principal, interest, penalties, fees, indemnifications,
reimbursements, damages and other obligations and liabilities of the Company or
any of the Subsidiaries under the Indenture, the Notes or any of the Collateral
Agreements.
"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 in satisfaction of outstanding indebtedness of Fruehauf to the
Company in the amount of up to $2 million, and (f) other Investments that do not
exceed in the aggregate $5 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 the Employee Retirement Income
Security Act of 1974, as amended ("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 date of the Indenture, (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 the 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 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.
"Purchase Money Liens" means (i) Liens to secure or securing Purchase Money
Obligations permitted to be incurred under the 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.
"Restricted Investment" means an Investment other than a Permitted Investment.
"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 clause (a) of the second paragraph under the heading
"Limitations on Incurrence of Indebtedness," including, without limitation, the
Credit Facility and any related notes, guarantees, collateral documents,
instruments and agreements executed in connection therewith.
"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.
"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, PPM Cranes 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.
Book-Entry, Delivery and Form
Old Notes that were initially issued to qualified institutional buyers ("QIBs")
were issued in the form of one or more registered Global Notes (the "Global
Notes"), which were deposited with, or on behalf of, The Depositary Trust
Company (the "Depositary") and registered in its name or in the name of Cede &
Co., its nominee (the "Global Holder"). Old Notes that were (i) originally
issued to or transferred to institutional "accredited investors" (as such term
is defined in Rule 501(A)(1), (2), (3) or (7) under the Securities Act) who are
not QIBs or to any other persons who are not QIBs (the "Non-Global Purchasers")
or (ii) issued as described below under "Certificated Securities," were issued
in registered form (the "Certificated Securities"). Upon the transfer to a QIB
of Certificated Securities initially issued to a Non-Global Purchaser, such
Certificated Securities will, unless the applicable Global Notes have previously
been exchanged for Certificated Securities, be exchanged for an interest in the
Global Notes representing the principal amount of Notes being transferred. The
following are summaries of certain rules and operating procedures of the
Depository which affect the Global Notes.
The Depository is a limited-purpose trust company that was created to hold
securities for its participating organizations (collectively, the "Participants"
or the "Depository's Participants") and to facilitate the clearance and
settlement of transactions in such securities between Participants through
electronic book-entry changes in accounts of its Participants. The Depository's
Participants include securities brokers and dealers (including the Initial
Purchasers), banks and trust companies, clearing corporations and certain other
organizations. Access to the Depository's system is also available to other
entities such as banks, brokers, dealers and trust companies (collectively, the
"Indirect Participants" or the "Depository's Indirect Participants") that clear
through or maintain a custodial relationship with a Participant, either directly
or indirectly. Persons who are not Participants may beneficially own securities
held by or on behalf of the Depository only through the Depository's
Participants or the Depository's Indirect Participants.
Pursuant to procedures established by the Depository (i) upon deposit of the
Global Notes, the Depository credited the accounts of Participants designated by
the Initial Purchasers with portions of the Global Notes and (ii) ownership of
the Notes was shown on, and the transfer of ownership thereof will be effected
only through, records maintained by the Depository (with respect to the
interests of the Depository's Participants), the Depository's Participants and
the Depository's Indirect Participants. The laws of some states require that
certain persons take physical deliver in definitive form of securities that they
own. Consequently, the ability to transfer Notes will be limited to such extent.
So long as the Global Holder is the registered owner of any Notes, the Global
Holder will be considered the sole owner of such Notes under the Indenture.
Except as provided below, owners of beneficial interests in Global Notes will
not be entitled to have Notes represented by such Global Notes registered in
their names, will not receive or be entitled to receive physical delivery of
Certificated Securities, and will not be considered the owners or Holders
thereof under the Indenture, for any purpose. As a result, the ability of a
person having a beneficial interest in Notes represented by a Global Note to
pledge such interest to persons or entities that do not participate in the
Depository's system or to otherwise take actions in respect of such interest,
may be affected by the lack of a physical certificate evidencing such interest.
Accordingly, each QIB owning a beneficial interest in a Global Note must rely on
the procedures of the Depository and, if such QIB is not a Participant or an
Indirect Participant, on the procedures of the Participant through which such
QIB owns its interest, to exercise any rights of a holder under such Global Note
or the Indenture.
Neither of the Company nor the Trustee will have any responsibility or liability
for any aspect of the records relating to or payments made on account of Notes
by the Depository, or for maintaining, supervising or reviewing any records of
the Depository relating to such Notes.
Payments in respect of the principal of, premium, if any, and interest on any
Notes registered in the name of a Global Holder on the applicable record date
will be payable by the Trustee to or at the direction of such Global Holder in
its capacity as the registered holder under the Indenture. Under the terms of
the Indenture, the Company and the Trustee may treat the persons in whose names
the Notes, including the Global Notes, are registered as the owners thereof for
the purpose of receiving such payments and for any and all other purposes
whatsoever. Consequently, neither the Company nor the Trustee has or will have
any responsibility or liability for the payment of such amounts to beneficial
owners of Notes (including principal, premium, if any, and interest), or to
immediately credit the accounts of the relevant Participants with such payment,
in amounts proportionate to their respective interests in the Global Notes in
principal amount of beneficial interests in the relevant security as shown on
the records of the Depository. Payments by the Depository's Participants and the
Depository's Indirect Participants to the beneficial owners of Notes will be
governed by standing instructions and customary practice and will be the
responsibility of the Depository's Participants or the Depository's Indirect
Participants.
Certificated Securities
If (i) the Company notifies the Trustee in writing that the Depository is no
longer willing or able to act as a Depository and the Company is unable to
locate a qualified successor within 90 days or (ii) the Company, at its option,
notifies the Trustee in writing that it elects to cause the issuance of Notes in
definitive form under the Indenture, then, upon surrender by the relevant Global
Holder of its Global Note, Certificated Securities in such form will be issued
to each person that such Global Holder and the Depository identify as the
beneficial owner of the related Notes. In addition, subject to certain
conditions, any person having a beneficial interest in the Global Note may, upon
request to the Trustee, exchange such beneficial interest for Notes in the form
of Certificated Securities. Upon any such issuance, the Trustee is required to
register such Certificated Securities in the name of, and cause the same to be
delivered to, such person or persons (or the nominee of any thereof) in full
registered form.
Neither the Company nor the Trustee will be liable for any delay by the related
Global Holder or the Depository in identifying the beneficial owners of the
related Notes and each such person may conclusively rely on, and will be
protected in relying on, instructions from such Global Holder or of the
Depository for all purposes (including with respect to the registration and
delivery, and the respective principal amounts of the Notes to be issued).
Same-Day Settlement and Payment
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearinghouse or next-day funds. In contrast, the Notes are
expected to be eligible to trade in the PORTAL Market and to trade in the
Depository's Same-Day Funds Settlement System, and any permitted secondary
market trading activity in the Notes will therefore be required by the
Depository to be settled in immediately available funds. No assurance can be
given as to the effect, if any, of such settlement arrangements on trading
activity in the Notes.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the anticipated principal United States Federal
income tax consequences of the exchange of Old Notes for New Notes. The
discussion set forth below is based upon the Internal Revenue Code of 1986, as
amended, regulations and announcements promulgated thereunder and published
rulings and court decisions, all as in effect on the date hereof and without
giving effect to changes to the Federal tax laws, if any, enacted after the date
hereof. Legislative, judicial or administrative changes or interpretations may
be forthcoming that could alter or modify the statements or conclusions set
forth below. This summary does not discuss all the Federal income tax
consequences that may be relevant to a particular holder or to certain holders
subject to special treatment under the Federal income tax laws (including
insurance companies, tax exempt organizations, financial institutions,
broker-dealers, foreign corporations and persons who are not citizens of the
United States).
The exchange of Old Notes for New Notes should not be treated as a sale or
exchange of Old Notes for Federal income tax purposes. Consequently, Noteholders
who exchange Old Notes for New Notes will not recognize gain or loss upon
receipt of the New Notes. For purposes of computing original issue discount on
the New Notes, the original issue discount, if any, of the Old Notes will carry
over to the New Notes as if the New Notes were issued on the same issue date and
for the same issue price as the Old Notes. A Noteholder's tax basis in and
market discount, if any, on the New Notes will be the same as such noteholder's
tax basis in and market discount, if any, on the Old Notes exchanged therefor.
Noteholders will be considered to have held the New Notes from the time of their
original acquisition of the Old Notes.
There will be no Federal income tax consequences of the Exchange Offer to
nonexchanging noteholders.
This summary is based on the Company's understanding of the Federal Income Tax
laws, which in turn is in part based on discussions with the Company's
professional advisers. It is the Company's belief that all material federal
income tax consequences are addressed.
THE FOREGOING IS A SUMMARY OF THE PRINCIPAL INCOME TAX CONSEQUENCES TO A HOLDER
OF AN OLD NOTE. EACH HOLDER OF AN OLD NOTE IS URGED TO CONSULT ITS TAX ADVISOR
TO DETERMINE THE SPECIFIC FEDERAL INCOME TAX CONSEQUENCES OF ACCEPTING THE
EXCHANGE OFFER, AS WELL AS THE EFFECT OF STATE, LOCAL AND FOREIGN INCOME AND
OTHER TAX LAWS.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to the
Exchange Offer must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of New Notes received in exchange for Old Notes where such Old
Notes were acquired as a result of market-making activities or other trading
activities. The Company has agreed that, for a period of [___] days after the
Expiration Date, it will use its best efforts to make this Prospectus, as
amended or supplemented from time to time, available to any broker-dealer for
use in connection with any such resale. In addition, until
______________________, 1996 (90 days after the Registration Statement is
declared effective), all dealers effecting transactions in the New Notes may be
required to deliver a prospectus.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Notes. Any broker-dealer
that resells New Notes that were received by it for its own account pursuant to
the Exchange Offer and any broker or dealer that participates in a distribution
of such New Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act, and any profit on any such resale of New Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
The Company has agreed to pay all expenses incident to the Exchange Offer other
than commissions or concessions of any brokers or dealers and will indemnify the
Holders of the New Notes (including any broker-dealers) against certain
liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
Certain legal matters in connection with the New Notes and the guarantees
thereof will be passed upon for the Company by Robinson Silverman Pearce
Aronsohn & Berman LLP, 1290 Avenue of the Americas, New York, New York 10104.
EXPERTS
The consolidated financial statements of the Company as of December 31, 1995 and
1994 and for each of the years in the three year period ended December 31, 1995
and the consolidated financial statements of PPM Cranes, Inc. as of December 31,
1995 and for the eight months ended December 31, 1995 included in this
Prospectus have been so included in reliance on the reports 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 are included in reliance upon
such report given upon the authority of such firm as experts in accounting and
auditing.
The consolidated financial statements of PPM Cranes, 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 which is based in part on the report of Price
Waterhouse (Australia), independent accountants. The financial statements
referred to above are included in reliance upon such reports given upon the
authority of such firms as experts in accounting and auditing.
<PAGE>
TEREX CORPORATION
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
Page
TEREX CORPORATION (REGISTRANT)
CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 1995
AND 1994 AND FOR EACH OF THE THREE YEARS
IN THE PERIOD ENDED DECEMBER 31, 1995
Report of independent accountants........................................F - 3
Consolidated statement of operations ....................................F - 4
Consolidated balance sheet...............................................F - 5
Consolidated statement of changes in stockholders' deficit...............F - 6
Consolidated statement of cash flows.....................................F - 7
Notes to consolidated financial statements...............................F - 8
TEREX CORPORATION (REGISTRANT)
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1996 AND FOR THE SIX MONTH PERIODS ENDED
JUNE 30, 1996 AND 1995
Unaudited condensed consolidated statement of operations ................F - 37
Unaudited condensed consolidated balance sheet...........................F - 39
Unaudited condensed consolidated statement of cash flows.................F - 40
Notes to unaudited condensed consolidated financial statements...........F - 41
PPM S.A. AND LEGRIS INDUSTRIES, INC.
(BUSINESS ACQUIRED FROM LEGRIS INDUSTRIES, S. A. BY TEREX CORPORATION)
COMBINED FINANCIAL STATEMENTS AS OF DECEMBER 31, 1994
AND 1993 AND FOR EACH OF THE THREE YEARS
IN THE PERIOD ENDED DECEMBER 31, 1994
Report of independent auditors...........................................F - 47
Combined balance sheets..................................................F - 48
Combined statements of operations........................................F - 50
Combined statements of shareholders' equity..............................F - 51
Combined statements of cash flows........................................F - 52
Notes to combined financial statements...................................F - 53
PPM S.A. AND LEGRIS INDUSTRIES, INC.
(BUSINESS ACQUIRED FROM LEGRIS INDUSTRIES, S.A. BY TEREX CORPORATION)
UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS AS OF MAY 9, 1995 AND 1994
AND FOR THE PERIODS ENDED MAY 9, 1995 AND 1994
Unaudited condensed combined statement of operations.....................F - 64
Unaudited condensed combined balance sheets..............................F - 65
Unaudited condensed combined statement of cash flows.....................F - 67
Notes to unaudited condensed combined financial information..............F - 68
PRO FORMA FINANCIAL INFORMATION
PPM ACQUISITION AND REFINANCING
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
INFORMATION OF TEREX CORPORATION AND SUBSIDIARIES
Pro forma financial information..........................................F - 69
Unaudited pro forma condensed consolidated statement of operations for the
year ended December 31, 1995.........................................F - 70
Notes to unaudited pro forma financial information.......................F - 71
<PAGE>
PPM CRANES, INC. (GUARANTOR)
CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 1995
AND FOR THE EIGHT MONTHS ENDED DECEMBER 31, 1995
Report of independent accountants........................................F - 72
Consolidated balance sheet...............................................F - 73
Consolidated statement of operations ....................................F - 75
Consolidated statement of shareholders' deficit..........................F - 76
Consolidated statement of cash flows.....................................F - 77
Notes to consolidated financial statements...............................F - 78
PPM CRANES, INC. (GUARANTOR)
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31 1996
AND FOR THE SIX MONTH PERIODS ENDED JUNE 30, 1996 AND 1995
Unaudited condensed consolidated statement of operations ................F - 88
Unaudited condensed consolidated balance sheet...........................F - 89
Unaudited condensed consolidated statement of cash flows.................F - 90
Notes to unaudited condensed consolidated financial statements...........F - 91
PPM CRANES, INC. (GUARANTOR)
CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 1994 AND 1993 AND FOR
EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1994
Report of independent auditors...........................................F - 94
Consolidated statements of operations ...................................F - 95
Consolidated balance sheets..............................................F - 96
Consolidated statements of changes in shareholders' equity...............F - 98
Consolidated statements of cash flows....................................F - 99
Notes to consolidated financial statements...............................F - 100
PPM CRANES, INC. (GUARANTOR)
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF MAY 9, 1995
AND FOR THE PERIOD FROM JANUARY 1 THROUGH MAY 9, 1995
Unaudited condensed consolidated statements of operations ...............F - 112
Unaudited condensed consolidated balance sheet...........................F - 113
Unaudited condensed consolidated statements of cash flows................F - 114
Notes to unaudited condensed consolidated financial statements...........F - 115
PRO FORMA FINANCIAL INFOMRATION
DISCONTINUED OPERATIONS
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
OF TEREX CORPORATION AND SUBSIDIARIES
Pro forma financial information..........................................F - 117
Unaudited pro forma condensed consolidated statement of operations
for the year ended December 31, 1995................................F - 118
Unaudited pro forma condensed consolidated statement of operations
for the six months ended June 30, 1996..............................F - 119
Unaudited pro forma condensed consolidated balance sheet
as of June 30, 1996.....................................................F - 120
Notes to unaudited pro forma financial information.......................F - 121
FINANCIAL STATEMENT SCHEDULES
Terex Corporation and Subsidiaries
Schedule II - Valuation and Qualifying Accounts and Reserves.............F - 122
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Stockholders of Terex Corporation
In our opinion, the Terex Corporation consolidated financial statements listed
in the accompanying index on page F-1 present fairly, in all material respects,
the financial position of Terex Corporation and its subsidiaries at December 31,
1995 and 1994, and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 1995, 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.
PRICE WATERHOUSE LLP
Stamford, Connecticut
March 22, 1996
except as to Notes A and B
which are as of September 6, 1996
<PAGE>
TEREX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(in millions except per share amounts)
Year Ended
December 31,
1995 1994 1993
NET SALES .............................................$501.4 $314.1 $274.7
COST OF GOODS SOLD .................................... 431.0 266.0 242.2
Gross Profit ....................................... 70.4 48.1 32.5
ENGINEERING, SELLING AND ADMINISTRATIVE EXPENSES
Third parties ...................................... 57.6 34.8 33.1
Related parties .................................... --- 2.2 2.9
Write-off of Mark goodwill ......................... --- --- 4.7
Engineering, selling and
administrative expenses ....................... 57.6 37.0 40.7
SEVERANCE AND EXIT CHARGES ............................ --- 0.7 ---
Income (loss) from operations ...................... 12.8 10.4 (8.2)
OTHER INCOME (EXPENSE)
Interest income .................................... 0.7 0.5 0.9
Interest expense ................................... (38.7) (28.3) (30.0)
Amortization of debt issuance costs ................ (2.3) (2.3) (3.4)
Gain on sale of Fruehauf stock ..................... 1.0 26.0 3.0
Property impairment charge ......................... (0.5) --- ---
Gain on sale of property, plant and equipment ...... 0.4 0.3 0.5
Other income (expense) - net ....................... (5.5) (1.7) (3.5)
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES AND EXTRAORDINARY ITEMS ...... (32.1) 4.9 (40.7)
PROVISION FOR INCOME TAXES ............................ --- --- ---
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE EXTRAORDINARY ITEMS ............ (32.1) 4.9 (40.7)
INCOME (LOSS) FROM DISCONTINUED OPERATIONS
(net of tax expense of $0, $0.8
and $0.1, in 1995, 1994 and 1993, respectively) .. 4.4 (3.7) (24.3)
INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS ............ (27.7) 1.2 (65.0)
EXTRAORDINARY LOSS ON RETIREMENT OF DEBT ............ (7.5) (0.7) (1.5)
NET INCOME (LOSS) ................................ (35.2) 0.5 (66.5)
LESS PREFERRED STOCK ACCRETION ...................... (7.3) (6.0) (0.2)
INCOME (LOSS) APPLICABLE TO COMMON STOCK .........$(42.5) $(5.5) $(66.7)
PER COMMON AND COMMON EQUIVALENT SHARE:
Income (loss) from continuing operations .........$(3.79) $(0.10) $(4.11)
Income (loss) from discontinued operations ....... 0.42 (0.36) (2.44)
Loss before extraordinary items ................. (3.37) (0.46) (6.55)
Extraordinary loss on retirement of debt ........ (0.72) (0.07) (0.15)
Net income (loss) ...............................$(4.09) $(0.53) $(6.70)
AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING IN PER SHARE CALCULATION ......... 10.4 10.3 10.0
The accompanying notes are an integral part of these financial statements.
<PAGE>
TEREX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in millions)
December 31,
1995 1994
CURRENT ASSETS
Cash and cash equivalents ................................. $ 7.0 $ 9.7
Cash securing letters of credit ........................... 6.9 6.7
Trade receivables (less allowance of
$7.4 in 1995 and $6.1 in 1994) .......................... 87.7 91.7
Customer deposit .......................................... 19.1 ---
Net inventories ........................................... 180.8 164.2
Other current assets ...................................... 10.5 5.8
Total Current Assets ................... 312.0 278.1
LONG-TERM ASSETS
Property, plant and equipment - net ....................... 40.1 86.2
Goodwill - net ............................................ 61.3 5.3
Debt issuance costs - net ................................. 14.5 3.3
Net assets of discontinued operations ..................... 41.8 ---
Other assets .............................................. 9.2 28.7
TOTAL ASSETS ................................................. $ 478.9 $ 401.6
CURRENT LIABILITIES
Notes payable ............................................. $ 1.0 $ 2.1
Current portion of long-term debt ......................... 4.7 25.8
Trade accounts payable .................................... 99.5 112.2
Accrued compensation and benefits ......................... 12.2 10.8
Accrued warranties and product liability .................. 19.6 27.6
Accrued interest .......................................... 4.7 9.0
Accrued income taxes ...................................... 1.4 1.3
Customer deposit .......................................... 19.1 ---
Other current liabilities ................................. 34.1 32.8
Total Current Liabilities ............... 196.3 221.6
NON CURRENT LIABILITIES
Long-term debt, less current portion ...................... 324.2 163.0
Accrued warranties and product liability .................. 1.5 31.8
Accrued pension ........................................... 5.8 16.4
Other ..................................................... 14.0 7.2
MINORITY INTEREST, INCLUDING REDEEMABLE
PREFERRED STOCK OF A SUBSIDIARY
Liquidation preference $26.1, subject to adjustment ....... 9.4 ---
REDEEMABLE CONVERTIBLE PREFERRED STOCK
Liquidation preference $41.2, in 1995 and $36.6 in 1994 .... 24.6 17.3
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIT
Warrants to purchase common stock ......................... 17.2 17.6
Common Stock, $0.01 par value--
authorized 30.0 shares; issued and
outstanding 10.6 in 1995 and 10.3 in 1994 ............. 0.1 0.1
Additional paid-in capital ................................ 40.5 40.1
Accumulated deficit ....................................... (150.9) (108.4)
Pension liability adjustment .............................. (2.7) (1.8)
Unrealized holding gain on equity securities .............. 1.0 1.8
Cumulative translation adjustment ......................... (2.1) (5.1)
Total Stockholders' Deficit ............... (96.9) (55.7)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT .................. $ 478.9 $ 401.6
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
TEREX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
(in millions)
Additional Pension Unrealized Cumulative
Common Paid-in Accumulated Liability Holding Translation
Warrants Stock Capital Deficit Adjustment Gain Adjustment Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1992 $ --- $ 0.1 $ 37.8 $ (36.2) $ (4.5) $ --- $ (6.2) $ (9.0)
Issuance of Warrants 16.9 --- --- --- --- --- --- 16.9
Pension Contribution --- --- 2.3 --- --- --- --- 2.3
Net loss --- --- --- (66.5) --- --- --- (66.5)
Accretion of carrying
value of redeemable
preferred stock to
redemption value --- --- --- (0.2) --- --- --- (0.2)
Pension liability
adjustment --- --- --- --- 0.3 --- --- 0.3
Translation adjustment --- --- --- --- --- --- (6.0) (6.0)
BALANCE AT DECEMBER 31, 1993 16.9 0.1 40.1 (102.9) (4.2) --- (12.2) (62.2)
Issuance of Warrants 0.7 --- --- --- --- --- --- 0.7
Net income --- --- --- 0.5 --- --- --- 0.5
Accretion of carrying
value of redeemable
preferred stock to
redemption value --- --- --- (6.0) --- --- --- (6.0)
Pension liability
adjustment --- --- --- --- 2.4 --- --- 2.4
Unrealized holding gain on
equity securities --- --- --- --- --- 1.8 --- 1.8
Translation adjustment --- --- --- --- --- --- 7.1 7.1
BALANCE AT DECEMBER 31, 1994 17.6 0.1 40.1 (108.4) (1.8) 1.8 (5.1) (55.7)
Conversion of Warrants (0.4) --- 0.4 --- --- --- --- ---
Net loss --- --- --- (35.2) --- --- --- (35.2)
Accretion of carrying
value of redeemable
preferred stock to
redemption value --- --- --- (7.3) --- --- --- (7.3)
Pension liability
adjustment --- --- --- --- (0.9) --- --- (0.9)
Unrealized holding gain on
equity securities --- --- --- --- --- (0.8) --- (0.8)
Translation adjustment --- --- --- --- --- --- 3.0 3.0
BALANCE AT DECEMBER 31, 1995 $ 17.2 $ 0.1 $ 40.5 $ (150.9) $ (2.7) $ 1.0 $ (2.1) $ (96.9)
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
TEREX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
Year Ended December 31,
1995 1994 1993
OPERATING ACTIVITIES
Net Income (Loss) ............................$ (35.2) $ 0.5 $ (66.5)
Adjustments to reconcile
net income (loss) to cash
used in operating activities:
Depreciation ................................. 7.4 13.7 12.1
Amortization ................................. 5.5 3.4 10.3
Extraordinary loss on
retirement of debt .......................... 7.5 0.7 1.5
Gain on sale of Fruehauf stock ............... (1.0) (26.0) (3.0)
Gain on sale of Drexel business .............. -- (4.7) --
Gain on sale of property,
plant and equipment ......................... (0.4) (0.3) (2.6)
Property impairment charge ................... 0.5 -- --
Other ........................................ -- (0.8) 0.1
Changes in operating assets
and liabilities (net of
effects of acquisitions):
Restricted cash .............................. (0.5) (0.4) 5.2
Trade receivables ............................ 7.0 (17.6) 1.7
Net inventories .............................. (7.9) 0.1 30.3
Net assets of discontinued
operations .................................. 2.0 -- --
Trade accounts payable ....................... 2.3 24.4 (5.2)
Accrued compensation and benefits ............ 5.6 3.3 (3.6)
Accrued warranties and
product liability ........................... 1.3 0.3 (3.4)
Accrued interest ............................. (4.1) (1.7) (1.1)
Accrued income taxes ......................... (1.8) (0.1) (0.6)
Other, net ................................... (12.2) (4.1) (21.4)
Net cash used in operating activities ........ (28.6) (9.3) (46.2)
INVESTING ACTIVITIES
Acquisition of businesses,
net of cash acquired ........................ (92.4) -- --
Capital expenditures ......................... (5.2) (12.7) (11.5)
Proceeds from sale of excess assets .......... 0.6 3.3 11.3
Proceeds from sale of Fruehauf stock ......... 2.7 24.9 2.5
Proceeds from sale of Drexel business ........ -- 10.3 --
Proceeds from sale-leaseback
of Saarn property ........................... -- 10.0 --
Other ........................................ 0.2 1.0 1.1
Net cash provided by (used in)
investing activities ........................ (94.1) 36.8 3.4
FINANCING ACTIVITIES
Net borrowings under revolving
line of credit agreements ................... 35.9 13.0 11.9
Principal repayments of long-term debt ....... (153.9) (41.5) (12.4)
Proceeds from issuance of
preferred stock and warrants ................ -- -- 27.2
Proceeds from issuance of
long-term debt, net of issuance costs ....... 239.8 -- --
Other ........................................ -- 0.2 --
Net cash provided by (used in)
financing activities ........................ 121.8 (28.3) 26.7
EFFECT OF EXCHANGE RATE CHANGES
ON CASH AND CASH EQUIVALENTS ................ (0.3) 1.3 (0.4)
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS ........................ (1.2) 0.5 (16.5)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD ......................... 8.2 9.2 25.7
CASH AND CASH EQUIVALENTS AT
END OF PERIOD ...............................$ 7.0 $ 9.7 $ 9.2
The accompanying notes are an integral part of these financial statements.
<PAGE>
TEREX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1995
(dollar amounts in millions, unless otherwise noted, except per share amounts)
NOTE A -- SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation. As set forth in Note B below, on July 25, 1996 the
Company announced the signing of a definitive agreement to sell its Material
Handling business for $135.0 in cash. Subject to the fulfillment of customary
closing conditions and regulatory clearances, closing of the sale is expected to
take place within ninety days of the announcement. The sale will result in a
gain which will be recognized in the period of the closing. The Material
Handling business is accounted for as a discontinued operation in the December
31, 1995 consolidated balance sheet, and in the consolidated statement of
operations for the years ended December 31, 1995, 1994 and 1993.
Generally accepted accounting principles permit, but do not require, the
allocation of interest expense between continuing and discontinued operations.
Because the methods allowed under generally accepted accounting principles for
calculating interest expense to be allocated to discontinued operations are not
necessarily indicative of the use of proceeds from the sale of the Material
Handling business by the Company, and the effect on interest expense of the
continuing operations of the Company, the Company has elected not to allocate
interest expense to discontinued operations. The results of this election is
that loss from continuing operations includes substantially all of the interest
expense of the Company, and income from discontinued operations does not include
any material interest expense.
The assets and liabilities of the Material Handling business as of December 31,
1995 have been segregated in the consolidated balance sheet and are shown under
"Net assets of discontinued operations."
Principles of Consolidation. The Consolidated Financial Statements include the
accounts of Terex Corporation and its majority owned subsidiaries ("Terex" or
the "Company"). The Company has classified the results of operations of its
Material Handling business as a discontinued operation. See Note B for
additional information on discontinued operations. 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 entities 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.
Customer Deposits. The customer deposit asset and liability in 1995 represent a
deposit made by an Australian customer on a large order placed with Unit Rig.
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 19%
and 50% of consolidated inventories at December 31, 1995 and 1994, respectively,
are accounted for under the LIFO method.
Debt Issuance Costs. Debt issuance costs incurred in securing the Company's
financing arrangements are capitalized and amortized over the term of the
associated debt. 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 $14.5 and $3.3 at December 31, 1995 and 1994,
respectively. During 1995, 1994 and 1993, the Company amortized $2.3, $2.3 and
$3.4, respectively, of capitalized debt issuance costs; in addition, $7.5, $0.7
and $2.2 of such costs were charged to extraordinary loss on retirement of debt
in 1995, 1994 and 1993, respectively.
Intangible Assets. Intangible assets include purchased patents and trademarks.
Costs allocated to patents, trademarks and other specifically identifiable
assets arising from business combinations are amortized on a straight-line basis
over the respective estimated useful lives not exceeding seven years.
Goodwill. Goodwill, representing the difference between the total purchase price
and the fair value of assets (tangible and intangible) and liabilities at the
date of acquisition, is being amortized on a straight-line basis over between
fifteen and forty years. Accumulated amortization is $3.2 and $0.7 at December
31, 1995 and 1994, respectively. It is the Company's policy to periodically
evaluate the carrying value of goodwill, and to recognize impairments when the
estimated related future net operating cash flows is less than its carrying
value. The amount of any impairment then recognized would be calculated as the
difference between estimated future discounted cash flows and the carrying value
of the goodwill.
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. The Company's product liability accruals are
presented on a gross settlement basis. Product liability payments, including
expenses, are estimated to approximate $10.0 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 L -- "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' Deficit. Gains or losses resulting from foreign currency
transactions are included in Other income (expense) -- net.
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, 1995 the Company had
foreign exchange contracts, which were hedges of firm commitments, totaling
$21.8 whose fair value approximates its carrying value. These contracts related
primarily to the customer deposit discussed above. At December 31, 1994, the
Company had no material 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 were not
material at December 31, 1995 and 1994.
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.
Income Taxes. The Company adopted SFAS No. 109, "Accounting for Income Taxes" on
January 1, 1993. SFAS No. 109 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 I -- "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.
Reclassifications. Certain amounts shown for 1993 and 1994 have been
reclassified to conform to the 1995 presentation.
NOTE B -- DISCONTINUED OPERATIONS
On July 25, 1996 the Company signed a definitive agreement to sell its worldwide
Material Handling business ("CMHC") for $135.0 in cash. CMHC comprises the
Company's Material Handling Segment. The accompanying Consolidated Statement of
Operations for the years ended December 31, 1995, 1994 and 1993 include the
results of CMHC in "Income (Loss) from Discontinued Operations." Net assets of
the discontinued operations at December 31, 1995 have been segregated in the
Consolidated Balance Sheet. Please refer to Note A - Basis of Presentation for a
discussion of allocation of interest expense. Summary operating results of
discontinued operations are as follows:
Year Ended December 31,
1995 1994 1993
Net Sales ...................................$ 528.8 $ 472.7 $ 395.6
Income (loss) before income taxes ........... 4.4 (2.9) (24.2)
Provision for income taxes .................. --- (0.8) (0.1)
Income (loss) from discontinued operations .. 4.4 (3.7) (24.3)
Net assets of the discontinued operations at December 31, 1995 are as follows:
Assets:
Current assets ................ $ 114.1
Non-current assets ............ 75.6
Total assets ................ 189.7
Liabilities:
Current liabilities ........... 98.3
Non-current liabilities ....... 51.5
Total liabilities ........... 149.8
Cumulative translation adjustment (1.9)
Net assets .................... 41.8
<PAGE>
NOTE C -- ACQUISITIONS
PPM, Inc. - On May 9, 1995, the Company, through Terex Cranes, Inc., a 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 Terex Cranes Segment.
The purchase price of PPM, including acquisition costs, was approximately
$104.5. Approximately $92.6 of the purchase price was paid in cash, including
the repayment of certain indebtedness of PPM required to be repaid in connection
with the acquisition. 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),
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 (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 was accounted for as a purchase, 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 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 ......................................... $ 1.0
Accounts receivable .......................... 33.8
Inventories .................................. 69.1
Other current assets ......................... 11.9
Property, plant and equipment ................ 20.5
Other assets ................................. 0.3
Goodwill ..................................... 68.0
Accounts payable and other current liabilities (86.6)
Other liabilities ............................ (13.5)
$ 104.5
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:
Unaudited Pro Forma
for the Year
Ended December 31,
1995 1994
Net sales ................................. $ 566.3 $ 493.8
Income (loss) from operations ............. (3.7) (5.9)
Loss before extraordinary items ........... (53.0) (19.3)
Loss before extraordinary items, per share $ (5.89) $ (2.45)
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 D -- SALE OF FRUEHAUF STOCK
In December 1993, the Company, which owned 26% of Fruehauf Trailer Corporation
("FTC" or "Fruehauf") before the sale, sold one million shares of FTC Common
Stock. The Company realized a gain of $3.0. In 1994, the Company sold 5.9
million shares of FTC stock for $24.9. In January 1995, the Company sold its
remaining shares of FTC for $1.0. In June 1995, the Company received 250
thousand shares of Fruehauf stock in settlement of certain obligations of
Fruehauf.
NOTE E -- INVENTORIES
Inventories consist of the following:
December 31,
1995 1994
Finished equipment ................................. $ 43.7 $ 26.8
Replacement parts .................................. 71.5 68.9
Work-in-process .................................... 22.6 13.5
Raw materials and supplies ......................... 45.7 57.9
183.5 167.1
Less: Excess of FIFO inventory value over LIFO cost (2.7) (2.9)
Net inventories .................................... $ 180.8 $ 164.2
In 1994, 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 $0.5 in
1994.
NOTE F -- PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
December 31,
1995 1994
Property ........................ $ 2.5 $ 8.4
Plant ........................... 20.6 32.2
Equipment ....................... 42.6 83.4
65.7 124.0
Less: Accumulated depreciation .. (25.6) (37.8)
Net property, plant and equipment $ 40.1 $ 86.2
<PAGE>
NOTE G -- LONG-TERM OBLIGATIONS
Long-term debt is summarized as follows:
December 31,
1995 1994
13.25% Senior Secured Notes
due May 15, 2002 ("Senior Secured Notes") ............ $ 247.0 $ ---
Credit Facility maturing May 9, 1998 ................... 66.8 ---
13.0% Senior Secured Notes
due August 1, 1996
("Old Senior Secured Notes") .......................... --- 127.2
13.5% Secured Senior Subordinated Notes
due July 1, 1997 ("Subordinated Notes") ............ --- 24.5
Lending Facility maturing August 24, 1997 .............. --- 24.1
Secured term note bearing interest at
9.0% payable in equal semiannual
installments from August 1994 to
February 1998 ......................................... --- 0.6
Note payable ........................................... 4.5 ---
Capital lease obligations .............................. 8.3 12.4
Other .................................................. 2.4 ---
Total long-term debt ................................. 329.0 188.8
Current portion of long-term debt .................... 4.8 25.8
Long-term debt, less current portion ................. $ 324.2 $ 163.0
The Senior Secured Notes
On May 9, 1995, the Company issued $250 of Senior Secured Notes due May 15,
2002. The Senior Secured Notes were issued in conjunction with the PPM
Acquisition and a refinancing of the Old Senior Secured Notes, and Subordinated
Notes. 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 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 ("1995 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 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. 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 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 Company must
pay a fee of 0.25% per annum on the unused portion of the Credit Facility. 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.
Old Senior Secured Notes and Subordinated Notes
The Old Senior Secured Notes and Subordinated Notes were retired on May 9, 1995
in conjunction with the PPM Acquisition and the issuance of the Senior Secured
Notes. The Company realized an extraordinary loss of $5.7 and $1.6 on the early
extinguishment of the Old Senior Secured Notes and the Subordinated Notes,
respectively. The Old Senior Secured Notes, were issued during July 1992 for a
total of $160.0 in conjunction with the CMH Acquisition and a refinancing of the
Company's bank debt. Proceeds from the issuance of the Old Senior Secured Notes
were used for the cash portion of the CMH Acquisition purchase price ($85.0),
for the settlement of all amounts outstanding under its previous credit facility
($58.0), and for working capital and transaction costs. Interest on the Senior
Secured Notes was due semiannually on February 1 and August 1.
The indenture for the Old Senior Secured Notes required that proceeds from the
sale of collateral be used to make an offer to repurchase, at par, an equivalent
amount of Old Senior Secured Notes. During 1994, as a result of sales of 5.4
million shares of Fruehauf common stock during 1994 and 1.0 million shares in
the last quarter of 1993, the Company repurchased $27.3 principal amount of the
Old Senior Secured Notes. The Company realized an extraordinary loss of $0.7 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 $5.0 principal
amount of Old Senior Secured Notes for approximately $4.5, 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 $0.5,
net of unamortized debt discount and debt issuance costs.
The Subordinated Notes were initially issued as unsecured subordinated notes for
a total amount of $50.0. Interest on the Subordinated Notes was due semiannually
on January 2 and July 1.
Lending Facility
The Lending Facility was terminated in May 1995 in conjunction with the PPM
Acquisition and entering into the Credit Facility. The Company realized an
extraordinary loss of $0.2 to write-off the unamortized debt issuance cost at
termination. 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 was secured by
substantially all the Company's domestic receivables and proceeds thereof.
Interest on Lending Facility borrowings was 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 provided for up to $30.0 of cash advances and guarantees through April
30, 1995, and $25.0 thereafter through the extended maturity date. The balance
outstanding under the Lending Facility at December 31, 1994 was $24.1.
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 $2.0 to write off the unamortized debt issuance costs.
TEL Facility
In 1995, the Company's subsidiary, Terex Equipment Limited ("TEL") located in
Motherwell, Scotland, entered into a bank facility (the "TEL Facility") which
provides up to (pound)30.5 ($47.4) including up to (pound)10.0 ($15.5)
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 this and the prior
facility were $11.7 and $11.9 at December 31, 1995 and 1994, respectively.
In 1993, the Company's subsidiary, Terex Equipment Limited ("TEL") located in
Motherwell, Scotland, entered into a bank facility (the "Old TEL Facility")
which provides up to (pound)28.0 ($42.0) including up to (pound)13.0 ($19.5)
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 Old TEL Facility is
collateralized primarily by the related accounts receivable. The Old TEL
Facility requires no performance covenants. Proceeds from the Old TEL Facility
are primarily used for working capital purposes.
Note Payable
As part of the PPM Acquisition, the Company assumed the obligation for a note
payable to Harnischfeger Corporation. The note is non-interest bearing.
Schedule of Debt Maturities
Scheduled annual maturities of long-term debt outstanding at December 31, 1995
in the successive five-year period are summarized below. Amounts shown are
exclusive of minimum lease payments disclosed in Note H -- "Lease Commitments":
1996 ..... $ 1.8
1997 ..... 0.7
1998 ..... 67.2
1999 ..... 0.4
2000 ..... 0.3
Thereafter .. 250.2
Total .... $ 320.6
Based on quoted market values, the Company believes that the fair value of the
Senior Secured Notes was approximately $218.8 as of December 31, 1995. The
Company believes that, based on quoted market values, 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 $43.0, $30.0 and $31.1 of interest in 1995, 1994 and 1993,
respectively.
The weighted average interest rate on short term borrowings outstanding was
10.0% at December 31, 1995 and 10.2% at December 31, 1994.
NOTE H -- 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 $12.3 and $5.9 at December 31, 1995 and 1994,
respectively, net of accumulated amortization of $3.5 and $2.9 at December 31,
1995 and 1994, respectively.
Future minimum capital and noncancelable operating lease payments and the
related present value of capital lease payments at December 31, 1995 are as
follows:
Capital Operating
Leases Leases
1996 ......................................... $ 3.8 $ 4.0
1997 ......................................... 2.7 3.2
1998 ......................................... 1.5 1.7
1999 ......................................... 0.5 1.6
2000 ......................................... 0.2 1.1
Thereafter ................................... 0.2 1.1
Total minimum obligations ................ 8.9 $ 12.7
Less amount representing interest ............ 0.7
Present value of net minimum obligations . 8.2
Less current portion ......................... 3.3
Long-term obligations .................... $ 4.9
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 $6.5, $7.4 and $6.3 in 1995, 1994, and 1993,
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
$11.0 and will lease the facility under the terms of a five year lease for a
total rental of $1.9 per year. The Company realized a gain of $4.0 which was
deferred and will be amortized as a reduction of rental expense over the lease
term ($0.8 per year).
NOTE I -- INCOME TAXES
The components of Income (Loss) Before Income Taxes and Extraordinary Items are
as follows:
Year ended
December 31,
1995 1994 1993
United States ................... $ (36.1) $ (2.4) $ (45.0)
Foreign ......................... 4.0 7.1 4.3
Income (loss) before income taxes
and extraordinary items ....... $ (32.1) $ 4.9 $ (40.7)
<PAGE>
The major components of the Company's provision for income taxes are summarized
below:
Year ended December 31,
1995 1994 1993
Current:
Federal ........................................ $ -- $ -- $ --
State .......................................... -- -- --
Foreign ........................................ 3.8 1.8 1.2
Utilization of foreign
net operating loss ("NOL")
carryforward ................................. (3.8) (1.8) (1.2)
Current income tax provision ............... -- -- --
Deferred:
Deferred federal income tax benefit ............ -- -- --
Total provision for income taxes ............... $ -- $ -- $ --
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, 1995 and 1994 are summarized below for major
balance sheet captions:
1995 1994
Net inventories .................................... $ -- $ (7.1)
Fixed assets ....................................... (0.9) (9.6)
Other .............................................. (1.1) (0.5)
Total deferred tax liabilities ................ (2.0) (17.2)
Receivables ........................................ 1.0 1.4
Net inventories .................................... 3.4 3.1
Warranties and product liability ................... 5.8 20.8
Investments ........................................ -- 1.0
Net assets of discontinued operations .............. 16.9 --
All other items .................................... 2.8 6.1
Benefit of net operating loss carryforward ......... 121.7 126.5
Total deferred tax assets ..................... 151.6 155.8
Deferred tax assets valuation allowance ............ (149.6) (138.6)
Net deferred tax liabilities .................. $ -- $ --
The valuation allowance for deferred tax assets as of January 1, 1994 was
$137.1. The net change in the total valuation allowance for the years ended
December 31, 1994 and 1995 were increases of $1.5 and $11.0, respectively.
<PAGE>
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,
1995 1994 1993
Statutory federal income tax rate ................... $ (11.2) $ 1.7 $ (14.3)
Recognition of previously unrecognized tax assets ... -- -- --
NOL with no current benefit ......................... 11.4 0.7 13.8
Foreign tax differential on
income/losses of foreign subsidiaries ............... (1.4) (2.5) (1.3)
Goodwill ............................................ 1.1 -- 1.8
State tax ........................................... -- -- --
Other ............................................... 0.1 0.1 --
Total provision for income taxes .................. $ -- $ -- $ --
The effective tax rate for discontinued operations differs from the statutory
rate due primarily to NOL's with no current benefit and foreign tax differential
on the income of foreign subsidiaries.
The Company has not provided for U.S. federal and foreign withholding taxes on
$19.0 of foreign subsidiaries' undistributed earnings as of December 31, 1995,
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 $3.4.
At December 31, 1995, the Company had domestic federal net operating loss
carryforwards of $297.7. Approximately $69.7 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
1996 .... $ 45.2
1997 .... 8.0
1998 .... 11.9
1999 .... ---
2000 .... 4.6
2006 .... 20.7
2007 .... 35.7
2008 .... 97.3
2009 .... 34.2
2010 .... 40.1
Total .... $ 297.7
The Company also has various state net operating loss and tax credit
carryforwards expiring at various dates through 2010 available to reduce future
state taxable income and income taxes. In addition, the Company's foreign
subsidiaries have approximately $22.6 of loss carryforwards, $11.9 in U.K. and
$10.7 in other countries, which are available to offset future foreign taxable
income. The loss carryforwards in the U.K. and other countries are available
without expiration.
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 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
plus interest and penalties and the ultimate outcome cannot presently be
determined or estimated.
The Company made income tax payments of $0.0, $0.0 and $0.0 in 1995, 1994 and
1993, respectively.
NOTE J -- PREFERRED STOCK
The Company's certificate of incorporation was amended in October 1993 to
authorize 10.0 million shares of preferred stock, $.01 par value per share. As
of December 31, 1995, a total of 1.2 million shares of preferred stock are
issued and outstanding as described below.
Series A Cumulative Redeemable Convertible Preferred Stock
As of December 31, 1995, the Company had 1.2 million 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 1.3 million
Common Stock Purchase Warrants (the "Series A Warrants," see Note J --
"Stockholders' Deficit"). 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 $39.2 at December 31, 1995.
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 $27.2. The Company
allocated $10.3 and $16.9 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 1995 and
1994 was $7.3 and $6.0, respectively.
Series B Cumulative Redeemable Convertible Preferred Stock
As of December 31, 1995, the Company had 38.8 thousand issued and outstanding
shares of Series B Cumulative Redeemable Convertible Preferred Stock (the
"Series B Preferred Stock"). These shares constitute the remaining balance
outstanding of the Series B Preferred Stock issued to certain individuals on
December 9, 1994 in consideration for the early termination of a contract
between the Company and KCS Industries, L.P., a Connecticut limited partnership
("KCS"), a related party (see Note M -- "Related Party Transactions"). 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 $2.0 at December 31, 1995.
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, as described below,
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 allocated $0.9 and $0.7 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.
NOTE K -- STOCKHOLDERS' DEFICIT
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 30.0 million. As of December 31, 1995, there were 10.6
million shares issued and outstanding. Of the 19.4 million unissued shares at
that date, 6.7 million shares were reserved for issuance for conversion of
Series A and B Preferred Stock (Note I) and the exercise of stock options and
Series A and B Warrants.
In December 1993, the Company issued 0.4 million shares of Common Stock as a
contribution to two of the Company's pension plans. The Company valued these
shares at $2.3, 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
1.3 million 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. As of December 31, 1995, upon the exercise or redemption of a
Warrant, the holder thereof was entitled to receive 2.35 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 issuance of the Series B Preferred
Stock (see Note I -- "Series B Preferred Stock"), the Company issued 107.0
thousand 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. At December 31, 1995,
approximately 16 thousand warrants remain unexercised.
Stock Options. The Company maintains a qualified incentive stock option ("ISO")
plan covering certain officers and key employees. The exercise price of the ISO
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
expire after ten years. At December 31, 1995, 4.8 thousand stock options were
available for grant under the plan.
The following table is a summary of stock options:
Number of Exercise Price per
Options Option
Outstanding at December 31, 1992 .............. 59,666 $ 6.40 to 14.80
Granted ..................................... 23,750 7.13 to 10.50
Exercised ................................... (3,750) 10.2
Canceled or expired ......................... (3,750) 14.8
Outstanding at December 31, 1993 .............. 75,916 $ 6.40 to 14.80
Granted ..................................... 10,000 6.63
Exercised ................................... ---
Canceled or expired ......................... (3,750) 14.8
Outstanding at December 31, 1994 .............. 82,166 $ 6.40 to 14.80
Granted ..................................... 27,900 4.25
Exercised ................................... ---
Canceled or expired ......................... (6,666) 7.13 to 14.80
Outstanding at December 31, 1995 .............. 103,400 $ 4.25 to 14.80
Exercisable at December 31, 1995 .............. 62,168 $ 6.40 to 14.80
Long-Term Incentive Plans. In December 1995, the Board of Directors approved,
subject to shareholder approval, the 1996 Terex Corporation Long-Term Incentive
Plan (the "1996 Plan"). The 1996 Plan authorizes the granting of (i) options
("Stock Option Awards") to purchase shares of Common Stock, including Restricted
Stock, (ii) shares of Common Stock, including Restricted Stock ("Stock Awards"),
and (iii) cash bonus awards based upon a participant's job performance
("Performance Awards"). Subject to adjustment as described below under
"Adjustments," the aggregate number of shares of Common Stock (including
Restricted Stock, if any) optioned or granted under the 1996 Plan shall not
exceed 300 thousand shares. The 1996 Plan provides that a committee (the
"Committee") of the Board of Directors consisting of two or more members thereof
who are non-employee directors, shall administer the 1996 Plan and has provided
the Committee with the flexibility to respond to changes in the competitive and
legal environments, thereby protecting and enhancing the Company's current and
future ability to attract and retain directors and officers and other key
employees and consultants. The 1996 Plan also provides for automatic grants of
Stock Option Awards to non-employee directors. 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 was approved by Stockholders at the 1994 annual meeting. 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 thousand, subject to certain adjustments. In 1995,
options to purchase a total of 290.7 thousand shares of common stock at $4.25 to
$7.00 per share and a total of 50.0 thousand shares of restricted stock were
granted to employees. In June 1994, options to purchase a total of 308.8
thousand shares of common stock at $5.50 per share and a total of 129.4 thousand
shares of restricted common stock were granted to employees and outside
directors.
Stock Appreciation Rights. In connection with the July 1992 sale of the Old
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
658.4 thousand common stock appreciation rights ("1992 SARs"). As of December
31, 1995, there were 624.8 thousand 1992 SARs outstanding. Of the outstanding
1992 SARs, 552.0 thousand may be exercised at the option of the holder thereof
at any time through July 31, 1996, at which time they expire. The remaining 72.8
thousand SARs may be exercised through July 1, 1997, at which time they expire.
The 1992 SARs 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, 1995, there was no reserve requirement necessary
because the Company's Common Stock price was below $11.00 per share.
In connection with the May 1995 issuance of the Senior Secured Notes, the
Company issued 1.0 million stock appreciation rights (the "1995 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 1995 SAR. The
1995 SARs expire on May 15, 2002. At December 31, 1995 there was no reserve
requirement necessary because the Company's Common Stock price was below $7.288
per share.
NOTE L -- 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 1995, 1994 and 1993:
Year ended December 31,
1995 1994 1993
Service cost for benefits earned during period .... $ 0.1 $ 0.2 $ 0.4
Interest cost on projected benefit obligation ..... 2.2 2.2 2.4
Actual (return) loss on plan assets ............... (3.8) (0.4) (2.1)
Net amortization and deferral ..................... 2.0 (1.2) 0.9
Curtailment (gain) loss ........................... -- -- (0.3)
Net pension expense ............................. $ 0.5 $ 0.8 $ 1.3
<PAGE>
<TABLE>
<CAPTION>
The following table sets forth the US plans' funded status and the amounts
recognized in the Company's financial statements at December 31:
1995 1994 1993
Overfunded Underfunded Overfunded Underfunded Overfunded Underfunded
Plans Plans Plans Plans Plans Plans
<S> <C> <C> <C> <C> <C> <C>
Actuarial present value of:
Vested benefits ............................... $ 9.4 $ 20.9 $ 8.0 $ 19.0 $ 9.3 $ 22.5
Accumulated benefits .......................... $ 9.9 $ 20.9 $ 8.1 $ 19.1 $ 9.5 $ 22.7
Projected benefits ............................ $ 9.9 $ 20.9 $ 8.1 $ 19.1 $ 9.5 $ 22.7
Fair value of plan assets ..................... 10.2 16.5 9.2 14.7 9.7 14.7
Projected benefit obligation
(in excess of) less than
plan assets ................................. 0.4 (4.4) 1.1 (4.4) 0.2 (8.0)
Unrecognized net loss from past
experience different than
assumed ..................................... 2.6 2.7 2.5 1.8 3.7 4.2
Unrecognized prior service cost ............... 0.9 -- 0.5 -- 0.5 --
Adjustment to recognize minimum
liability ................................... -- (2.7) -- (1.8) -- (4.2)
Pension asset (liability)
recognized in the balance
sheet ....................................... $ 3.9 $ (4.4) $ 4.1 $ (4.4) $ 4.4 $ (8.0)
</TABLE>
The expected long-term rate of return on plan assets was 9% for the periods
presented. The discount rate assumption was 7.5% for 1995, 8.5% for 1994 and
7.0% for 1993. The assumption for the rate of compensation increase, if
applicable per plan provisions, was 5.5% for 1993 (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 $2.7 and $1.8 to recognize
a minimum pension liability at December 31, 1995 and 1994, respectively. This
liability is offset by a direct reduction of stockholders' deficit.
In December 1993, Terex contributed 350.0 thousand shares of Terex Common Stock
to the Master Trust for the benefit of two of the Terex plans, which were valued
by the Company at $2.3 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 $1.7 at December 31, 1995.
In addition, the Master Trust held 6.0 thousand 1992 SARs, valued at $0.10 per
right (total value of less than $0.1) at December 31, 1995 and 6.0 thousand
Terex SARs, valued at $1.00 per right (less than $0.1) at December 31, 1994.
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 $0.3, $0.3 and $0.2 for the years ended December 31, 1995, 1994
and 1993, respectively.
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 Postemployment Benefits
The Company provides postemployment 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 $4.5. 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:
1995 1994
Actuarial present value of accumulated
postretirement benefit obligation:
Retirees .................................. $ 4.4 $ 4.6
Active participants ....................... -- --
Total accumulated postretirement
benefit obligation ...................... 4.4 4.6
Unamortized transition obligation ......... (3.4) (3.7)
Liability recognized in the balance sheet . $ 1.0 $ 0.9
Health care trend rates used in the actuarial assumptions range from 12.0% to
13.5%. These rates decrease to 6.5% over a period of 8 to 10 years. The effect
of a one percentage-point change in the health care cost trend rates would
change the accumulated postretirement benefit obligation approximately 7%. The
discount rate used in determining the accumulated postretirement benefit
obligation was 7.5% and 8.25% for the years ended December 31, 1995 and 1994,
respectively.
Net periodic postretirement benefit expense includes the following components
for 1995 and 1994:
Year Ended December 31,
1995 1994
Service cost $ --- $ ---
Interest cost 0.3 0.4
Net amortization 0.4 0.4
Total $ 0.7 $ 0.8
The Company's postretirement benefit obligations are not funded. Net periodic
postretirement benefit expense for the years ended December 31, 1995, 1994 and
1993 was approximately $0.6, $0.5 and $0.4 greater on the accrual basis than it
would have been on the cash basis.
NOTE M -- LITIGATION AND CONTINGENCIES
In December 1992, a Class Action complaint was filed against Fruehauf, the
Company, certain of Fruehauf's then officers and directors and certain of the
underwriters of the initial public offering of Fruehauf, in the United States
District Court for the Eastern District of Michigan, Southern Division,
alleging, among other things, violations of certain provisions of the federal
securities laws, and seeking unspecified compensatory and punitive damages. The
Company has settled this litigation, with court approval, and recorded a
provision of $0.3 million in the quarter ended March 31, 1995.
In the Company's lines of business, but primarily in the Material Handling
Segment, numerous suits have been filed alleging damages for accidents that have
arisen in the normal course of operations involving the Company's products. 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, 1995, 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. These CMH recorded
liabilites are accrued and are included as a component of the Net Assets of
Discontinued Operations.
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 at its estimated net realizable value.
Any resultant losses are charged against related reserves. The guarantee under
such floor plans aggregated approximately $30.0 at December 31, 1995. The
Company has recorded reserves based on management's estimates of potential
losses arising from these guarantees. Historically, the Company has incurred
only minimal 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 in
the ordinary conduct of its business. Such guarantees approximated $3.8 at
December 31, 1995. Estimated losses, if any, on such guarantees are accrued as a
component of the Net Assets of Discontinued Operations.
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 equipment 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
of approximately $200.0 at December 31, 1995 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 minimal losses
relating to these arrangements.
The Company's outstanding letters of credit totaled $6.9. 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 I -- "Income Taxes," the Internal Revenue Service is
currently examining the Company's federal tax returns for the years 1987 through
1989.
The Company 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. In 1993, the Company recorded liabilities for these contingent
obligations representing management's estimate of the maximum potential losses
which the Company might incur.
NOTE N -- RELATED PARTY TRANSACTIONS
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 (upon the recommendation of 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 200.0
thousand 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. In addition to indebtedness pursuant to the retirement
agreement, an affiliate of Mr. Lenz is indebted to the Company in the
approximate amount of $33.45 thousand representing shipping charges incurred by
the Company for such affiliate during 1994. The affiliate of Mr. Lenz has not
paid such charges to date.
Under a contract dated July 1, 1987, as amended, KCS Industries, L.P., a
Connecticut limited partnership ("KCS"), principally owned by Mr. Lenz provided
administrative, financial, marketing, technical, real estate and legal services
to the Company and its subsidiaries. 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. During 1993 the Company made payments to KCS
of $2.9.
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. Certain
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 89.8 thousand shares of the Company's Series B Cumulative Redeemable
Convertible Preferred Stock (valued at $0.9) and 106.95 thousand Series B
Warrants (valued at $0.7), 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 38.8 thousand shares
of preferred stock and warrants exercisable for 15.7 thousand shares of Terex
Common Stock and other KCS employees each received 25.5 thousand shares of
preferred stock and warrants exercisable for 45.6 thousand shares of Terex
Common Stock. The employees converted their shares and warrants to Common Stock
in 1995. In addition, Mr. Lenz received cash payments of approximately $0.5.
The Company, certain directors and executives of the Company, and KCS have been
named parties in various legal proceedings. During 1995, 1994 and 1993, the
Company incurred $0.3, $0.3 and $0.4 of legal fees and expenses on behalf of the
Company, directors and executives of the Company, and KCS named in the lawsuits.
In conjunction with the Company's acquisition of its Material Handling business
in 1992, the Company financed the acquisition and refinanced a major component
of its previously outstanding bank debt through a private placement of Secured
Notes and 1992 SARs, and the establishment of the Bank Lending Agreement. A
director of the Company was at the time 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 Old Senior
Secured Notes and 1992 SARs. Jefferies was paid fees of $6.5 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 $2.5 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 250.0 thousand Series
A Warrants and 180.0 thousand shares of Series A Preferred Stock from the
Company in connection with the Company's private placement on December 20, 1993.
In 1995, the Company retained Jefferies & Company, Inc., of which a director of
the Company was then Executive Vice President, in connection with the offering
of the Company's $250 million Senior Secured Notes and acquisition of PPM which
was completed in May 1995. Jefferies & Company, Inc. was paid $9.2 as an
underwriting discount and for services rendered.
A director of the Company was affiliated with the Airlie Group L.P. ("Airlie"),
a limited partnership which owned approximately 9% of the Company's Common Stock
(including Common Stock issuable upon conversion of Series A Preferred Stock)
and 40 thousand Warrants. Until May 1994, this director 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 the director was affiliated with
Airlie, Airlie received all director fees to which the director was entitled by
reason of his service as a director of the Company. On December 20, 1993, Airlie
purchased 40 thousand Warrants and 40 thousand shares of Series A Preferred
Stock from the Company as part of the Company's private placement.
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 O-- BUSINESS SEGMENT INFORMATION
The Company operates in three industry segments: Material Handling, Terex Trucks
and Terex Cranes.
The Material Handling Segment designs, manufactures and markets a complete line
of internal combustion ("IC") and electric lift trucks, electric walkies,
automated pallet trucks 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. On July 25, 1996, the Company announced the signing of
a definitive agreement for the sale for $135.0 in cash of the Material Handling
Segment. Therefore, the Material Handling Segment has been accounted for as a
discontinued operation.
Terex Trucks 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. Terex Trucks
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.
Terex Cranes 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. Terex Cranes 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.
<PAGE>
Industry segment information is presented below:
1995 1994 1993
Sales
Terex Trucks ................ $ 250.3 $ 226.8 $ 203.8
Terex Cranes ................ 252.3 90.4 71.4
Eliminations ................ (1.2) (3.1) (0.5)
Total ..................... $ 501.4 $ 314.1 $ 274.7
Income (Loss) from Operations
Terex Trucks ................ $ 13.0 $ 11.2 $ 11.0
Terex Cranes ................ 7.2 7.9 (12.8)
General/Corporate ........... (7.4) (8.7) (6.4)
Total ..................... $ 12.8 $ 10.4 $ (8.2)
Depreciation and Amortization
Terex Trucks ................ $ 2.3 $ 2.2 $ 7.2
Terex Cranes ................ 7.6 1.0 1.5
General/Corporate ........... 3.0 2.9 4.0
Discontinued Operations ..... 14.8 11.0 9.7
Total ..................... $ 27.7 $ 17.1 $ 22.4
Capital Expenditures
Terex Trucks ................ $ 2.7 $ 4.2 $ 2.1
Terex Cranes ................ 2.4 0.4 0.5
General/Corporate ........... 0.1 0.3 --
Discontinued Operations ..... 5.3 7.8 8.9
Total ..................... $ 10.5 $ 12.7 $ 11.5
Identifiable Assets
Terex Trucks ................ $ 169.4 $ 147.4 $ 130.4
Terex Cranes ................ 239.9 40.3 37.8
General/Corporate ........... 27.8 18.9 16.9
Discontinued Operations ..... 41.8 195.0 205.6
Total ..................... $ 478.9 $ 401.6 $ 390.7
<PAGE>
Geographic segment information is presented below:
1995 1994 1993
Sales
North America ............... $ 292.3 $ 206.5 $ 179.7
Europe ...................... 223.0 103.2 101.0
All other ................... 12.9 7.2 (3.2)
Eliminations ................ (26.8) (2.8) (2.8)
Total ..................... 501.4 314.1 274.7
Income (Loss) from Operations
North America ............... $ 8.6 $ 9.4 $ (14.4)
Europe ...................... 12.0 (0.5) 4.8
All other ................... (4.2) 0.7 0.3
Eliminations ................ (3.6) 0.8 1.1
Total ..................... 12.8 10.4 (8.2)
Identifiable Assets
North America ............... $ 170.2 $ 250.6 $ 241.6
Europe ...................... 247.7 167.5 150.0
All other ................... 23.1 8.8 10.8
Eliminations ................ 37.9 (25.3) (11.7)
Total ..................... $ 478.9 $ 401.6 $ 390.7
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 Company is not dependent upon any single customer.
Export sales from U.S. continuing operations were as follows:
Year Ended December 31,
1995 1994 1993
North and South America ...... $ 20.1 $ 17.3 $ 14.2
Europe, Africa and Middle East 21.5 13.1 18.6
Asia and Australia ........... 33.5 33.6 29.8
$ 75.1 $ 64.0 $ 62.6
NOTE P -- LIQUIDITY, FINANCING AND SEVERANCE ACTIONS
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. Debt reduction and an
improved capital structure are major focal points for the Company. In this
regard, the Company reviews on a regular basis its alternatives to improve its
capital structure and to reduce debt through debt refinancings, issuance of
equity, asset sales, the sales of business units or any combination thereof.
Net cash of $28.6 was used in operating activities during the year ended
December 31, 1995. Net cash used by investing activities was $94.1 during the
year ended December 31, 1995 principally due to the PPM Acquisition as described
below. Net cash provided by financing activities during the year ended December
31, 1995 was $121.8, primarily from the Refinancing discussed below. Cash and
cash equivalents totaled $7.0 at December 31, 1995.
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 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; these costs are
included in Income (Loss) from Discontinued Operations.
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 of the Senior Secured Notes, repayment of the Company's Old Senior Secured
Notes and Senior Subordinated Notes, totaling approximately $152.6 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 1.0 million 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 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 $5.0. The
remainder of the purchase price consisted of the issuance of redeemable
preferred stock of Terex Cranes having an aggregate liquidation preference of
127 French francs (approximately $26.1), 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 (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 in outstanding letters of credit)
up to $100. 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 on November 15, 1995 on the Senior
Secured Notes. The Company's debt service obligations for 1996 include
approximately $17.1 on May 15 and November 15, 1996 on the Senior Secured Notes
and approximately $0.6 monthly on the Credit Facility. Management believes that,
absent significant unanticipated declines in operating performance, cash
generated from operations and the Refinancing provide the Company with adequate
liquidity to meet the Company's operating and debt service requirements. The
balance outstanding under the Credit Facility as of December 31, 1995 was $66.8,
and the additional amount the Company could have borrowed was $8.8 as of that
date. As of March 20, 1996, the amount available to the Company under the Credit
Facility was approximately $13.0. TEL entered into a new bank working capital
facility in 1995, and PPM Europe is in negotiations to secure a working capital
facility in 1996. Management intends to seek additional working capital
financing facilities for the Company's international operations to provide
additional liquidity worldwide.
<PAGE>
NOTE Q -- CONSOLIDATING FINANCIAL STATEMENTS
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 wholly-owned subsidiary, completed the acquisition of substantially
all of the outstanding stock of PPM. S.A. and Legris Industries, Inc. See Note C
for information related to the acquisition.
Clark Material Handling Company, Terex Cranes, Inc., Koehring Cranes, Inc., CMH
Acquisition Corp., CMH Acquisition International Corp. (the "Wholly-owned
Guarantors"), and PPM Cranes, Inc. (collectively, the "Guarantors"), all
subsidiaries of Terex, provide a joint and several, unconditional guarantee of
the obligations under the Senior Secured Notes and will provide the same
guarantee for the obligations of any registered notes exchanged for the Senior
Secured Notes.
With the exception of PPM Cranes, Inc. and Clark Material Handling Company, each
of the Guarantors is a corporation organized and existing under the laws of the
state of Delaware and is a wholly-owned subsidiary of the Company. PPM Cranes,
Inc. is a corporation organized and existing under the laws of the state of
Delaware and is 92.4% owned by Terex. Clark Material Handling Company is a
corporation organized and existing under the laws of the Commonwealth of
Kentucky and is wholly-owned by Terex.
The following summarized condensed consolidating financial information for the
Company segregates the financial information of Terex Corporation, the
Wholly-owned Guarantors, PPM Cranes, Inc. and the Non-guarantor Subsidiaries.
Separate financial statements of the Wholly-owned Guarantors are not presented
because management has determined that they would not be material to investors.
Separate audited financial statements of PPM Cranes, Inc. have been provided
pursuant to Rule 3-10 of Regulation S-X.
Terex Corporation consists of parent company operations. Subsidiaries of the
parent company are reported on the equity basis.
Wholly-owned Guarantors combine the operations of the Wholly-owned Guarantor
Subsidiaries (Clark Material Handling Company, Terex Cranes, Inc., Koehring
Cranes, Inc., CMH Acquisition Corp. and CMH Acquisition International Corp.).
Non-guarantor subsidiaries of Wholly-owned Guarantors are reported on the equity
basis.
PPM Cranes, Inc. presents the operations of PPM Cranes, Inc. and its
subsidiaries (PPM Pty Ltd and PPM Far East Ltd) reported on an equity basis.
Non-Guarantor Subsidiaries combine the operations of subsidiaries which have not
provided a guarantee of the obligations of Terex Corporation under the Senior
Secured Notes. These subsidiaries include Terex Equipment Limited, Unit Rig
Australia (Pty) Ltd., Unit Rig South Africa (Pty) Ltd., Unit Rig (Canada) Ltd.,
Clark Material Handling GmbH, Clark Forklift Korea, PPM S.A., Bendini S.P.A.,
Brimont Agraire, PPM Kranes, Baulift, PPM Pty Ltd., and PPM Far East Ltd.
Debt and Goodwill allocated to subsidiaries is presented on an accounting
"push-down" basis.
<PAGE>
<TABLE>
<CAPTION>
TEREX CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 1995
(in millions)
Wholly- Non-
Terex owned PPM guarantor Intercompany
Corporation Guarantors Cranes, Inc. Subsidiaries Eliminations Consolidated
<S> <C> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents ........................ $ 3.1 $ -- $ 0.3 $ 3.6 $ -- $ 7.0
Cash securing letters of credit .................. 2.1 0.2 -- 4.6 -- 6.9
Trade receivables - net .......................... 19.6 9.7 10.7 47.7 -- 87.7
Intercompany receivables ......................... 0.3 0.8 1.5 15.9 (18.5) --
Customer deposit ................................. -- -- -- 19.1 -- 19.1
Inventories - net ................................ 46.1 24.6 23.5 86.9 (0.3) 180.8
Other current assets ............................. 1.1 -- 0.2 9.2 -- 10.5
Total current assets ............................. 72.3 35.3 36.2 187.0 (18.8) 312.0
Property, plant & equipment - net ................ 11.1 4.9 3.6 20.5 -- 40.1
Investment in and advances to (from) subsidiaries. 93.8 (56.4) (0.5) (137.7) 100.8 --
Goodwill - net ................................... -- -- 29.4 31.9 -- 61.3
Debt issuance costs and intangible assets - net... 7.1 1.1 2.8 3.5 -- 14.5
Other assets ..................................... 3.7 2.5 -- 3.0 -- 9.2
Net assets of discontinued operations ............ -- (13.6) -- 55.4 -- 41.8
TOTAL ASSETS ..................................... $ 188.0 $ (26.2) $ 71.5 $ 163.6 $ 82.0 $ 478.9
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Notes payable and current portion of
long-term debt ................................... $ -- $ -- $ 0.9 $ 4.8 $ -- $ 5.7
Trade accounts payable ........................... 14.5 10.1 5.4 69.5 -- 99.5
Intercompany payables ............................ 12.3 -- 3.9 2.3 (18.5) --
Customer deposit ................................. -- -- -- 19.1 -- 19.1
Accruals and other current liabilities ........... 25.9 4.9 12.0 29.2 -- 72.0
Total current liabilities ........................ 52.7 15.0 22.2 124.9 (18.5) 196.3
Long-term debt less current portion .............. 194.7 17.9 51.5 60.1 -- 324.2
Other long-term liabilities ...................... 12.5 1.6 1.0 6.2 -- 21.3
Minority interest and redeemable preferred stock.. -- 9.4 -- -- -- 9.4
Redeemable convertible preferred stock ........... 24.6 -- -- -- -- 24.6
Stockholders' deficit ............................ (96.5) (70.1) (3.2) (27.6) 100.5 (96.9)
TOTAL LIABILITIES AND STOCKHOLDERS'
DEFICIT .......................................... $ 188.0 $ (26.2) $ 71.5 $ 163.6 $ 82.0 $ 478.9
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TEREX CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(in millions)
Wholly- Non-
Terex owned PPM guarantor Intercompany
Corporation Guarantors Cranes, Inc. Subsidiaries Eliminations Consolidated
<S> <C> <C> <C> <C> <C> <C>
NET SALES ......................................... $ 146.7 $ 99.2 $ 54.5 $ 237.6 $ (36.6) $ 501.4
Cost of goods sold ................................ 129.4 83.4 48.1 206.4 (36.3) 431.0
GROSS PROFIT ...................................... 17.3 15.8 6.4 31.2 (0.3) 70.4
Engineering, selling & administrative expenses..... 21.3 6.3 4.2 25.8 -- 57.6
Severance charges ................................. -- -- -- -- -- --
INCOME (LOSS) FROM OPERATIONS ..................... (4.0) 9.5 2.2 5.4 (0.3) 12.8
Interest income ................................... 0.7 -- -- -- -- 0.7
Interest expense .................................. (20.5) (1.7) (4.7) (11.8) -- (38.7)
Income (loss) from equity investees ............... 0.1 (13.9) (0.5) -- 14.3 --
Other income (expense) - net ...................... (5.0) (0.1) (0.2) (1.6) -- (6.9)
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES AND
EXTRAORDINARY ITEMS ............................... (28.7) (6.2) (3.2) (8.0) 14.0 (32.1)
Provision for income taxes ........................ -- -- -- -- -- --
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE EXTRAORDINARY ITEMS ............. (28.7) (6.2) (3.2) (8.0) 14.0 (32.1)
Income (loss) from discontinued
operations, net of tax benefits ................... -- 4.4 -- 4.5 (4.5) 4.4
Extraordinary loss on retirement of debt........... (6.2) (0.8) -- (0.5) -- (7.5)
NET INCOME (LOSS) ................................. (34.9) (2.6) (3.2) (4.0) 9.5 (35.2)
Less preferred stock accretion .................... (7.3) -- -- -- -- (7.3)
INCOME (LOSS) APPLICABLE TO COMMON
STOCK ............................................. $ (42.2) $ (2.6) $ (3.2) $ (4.0) $ 9.5 $ (42.5)
</TABLE>
<TABLE>
<CAPTION>
TEREX COPORATION
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1995
(in millions)
Wholly- Non-
Terex owned PPM guarantor Intercompany
Corporation Guarantors Cranes, Inc. Subsidiaries Eliminations Consolidated
<S> <C> <C> <C> <C> <C> <C>
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES .............................. $ 59.2 $ 1.9 $ (46.7) $ (43.0) $ -- $ (28.6)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of business, net of cash acquired...... (92.4) -- -- -- -- (92.4)
Capital expenditures .............................. (0.9) (2.2) (0.2) (1.9) -- (5.2)
Proceeds from sale of property, plant and equipment -- 0.3 0.1 0.2 -- 0.6
Proceeds from sale of Fruehauf stock .............. 2.7 -- -- -- -- 2.7
Other - net ....................................... 0.1 -- -- 0.1 -- 0.2
Net cash used in investing activities ............. (90.5) (1.9) (0.1) (1.6) -- (94.1)
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings (repayments) under
revolving line of credit agreements ............... 35.9 -- -- -- -- 35.9
Principal repayments of long-term debt ............ (116.9) (18.0) -- (19.0) -- (153.9)
Proceeds from issuance of long-term
debt, net of issuance costs ....................... 112.0 18.0 47.1 62.7 -- 239.8
Other ............................................. -- -- -- -- -- --
Net cash provided by financing activities.......... 31.0 -- 47.1 43.7 -- 121.8
Effect of exchange rates on cash and
cash equivalents .................................. (0.3) -- -- -- -- (0.3)
Net increase (decrease) in cash and
cash equivalents .................................. (0.6) -- 0.3 (0.9) -- (1.2)
Cash and cash equivalents, beginning
of period ......................................... 3.7 -- -- 4.5 -- 8.2
Cash and cash equivalents, end of period........... $ 3.1 $ -- $ 0.3 $ 3.6 -- $ 7.0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TEREX CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEET
December 31, 1994
(in millions)
Wholly- Non-
Terex owned PPM guarantor Intercompany
Corporation Guarantors Cranes, Inc. Subsidiaries Eliminations Consolidated
<S> <C> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents ..................... $ 3.7 $ -- $ -- $ 6.0 $ -- $ 9.7
Cash securing letters of credit ............... 2.3 -- -- 4.4 -- 6.7
Trade receivables - net ....................... 26.3 36.6 -- 28.8 -- 91.7
Intercompany receivables ...................... 3.0 2.0 -- 28.2 (33.2) --
Inventories - net ............................. 45.9 73.0 -- 45.6 (0.3) 164.2
Other current assets .......................... 2.3 0.4 -- 3.1 -- 5.8
Total current assets .......................... 83.5 112.0 -- 116.1 (33.5) 278.1
Property, plant & equipment - net ............. 9.8 29.6 -- 46.8 -- 86.2
Investment in and advances to (from) .......... 9.2 (84.0) -- (58.6) 133.4 --
subsidiaries
Goodwill - net ................................ -- 5.3 -- -- -- 5.3
Debt issuance costs and intangible ............ 1.4 0.9 -- 1.0 -- 3.3
assets - net
Other assets .................................. 7.9 5.7 -- 15.1 -- 28.7
TOTAL ASSETS .................................. $ 111.8 $ 69.5 $ -- $ 120.4 $ 99.9 $ 401.6
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Notes payable and current portion of
long-term debt ................................ $ 23.2 $ 0.1 $ -- $ 4.6 $ -- $ 27.9
Trade accounts payable ........................ 17.0 55.5 -- 39.7 -- 112.2
Intercompany payables ......................... 11.5 16.7 -- 5.0 (33.2) --
Accruals and other current liabilities ........ 36.5 27.6 -- 17.4 -- 81.5
Total current liabilities ..................... 88.2 99.9 -- 66.7 (33.2) 221.6
Long-term debt less current portion ........... 49.5 48.6 -- 64.9 -- 163.0
Other long-term liabilities ................... 7.4 32.6 -- 15.4 -- 55.4
Redeemable convertible preferred stock ........ 17.3 -- -- -- -- 17.3
Stockholders' deficit ......................... (50.6) (111.6) -- (26.6) 133.1 (55.7)
TOTAL LIABILITIES AND STOCKHOLDERS'
DEFICIT ....................................... $ 111.8 $ 69.5 $ -- $ 120.4 $ 99.9 $ 401.6
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TEREX CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1994
(in millions)
Wholly- Non-
Terex owned PPM guarantor Intercompany
Corporation Guarantors Cranes, Inc. Subsidiaries Eliminations Consolidated
<S> <C> <C> <C> <C> <C> <C>
NET SALES ..................................... $ 139.7 $ 87.4 $ -- $ 117.5 $ (30.5) $ 314.1
Cost of goods sold ............................ 120.2 73.1 -- 102.9 (30.2) 266.0
GROSS PROFIT .................................. 19.5 14.3 -- 14.6 (0.3) 48.1
Engineering, selling & administrative expenses. 22.0 6.4 -- 8.6 -- 37.0
Severance charges ............................. 0.4 -- -- 0.3 -- 0.7
INCOME (LOSS) FROM OPERATIONS ................. (2.9) 7.9 -- 5.7 (0.3) 10.4
Interest income ............................... 0.1 -- -- 0.4 -- 0.5
Interest expense .............................. (27.3) -- -- (1.0) -- (28.3)
Income (loss) from equity investees ........... 7.3 -- -- -- (7.3) --
Other income (expense) - net .................. 24.1 (0.8) -- (1.0) -- 22.3
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES AND
EXTRAORDINARY ITEMS ........................... 1.3 7.1 -- 4.1 (7.6) 4.9
Provision for income taxes .................... -- -- -- -- -- --
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE EXTRAORDINARY ITEMS ......... 1.3 7.1 -- 4.1 (7.6) 4.9
Income (loss) from discontinued
operations, net of tax benefits ............... -- (3.7) -- (4.9) 4.9 (3.7)
Extraordinary loss on retirement of debt....... (0.5) (0.1) -- (0.1) -- (0.7)
NET INCOME (LOSS) ............................. 0.8 3.3 -- (0.9) (2.7) 0.5
Less preferred stock accretion ................ (6.0) -- -- -- -- (6.0)
INCOME (LOSS) APPLICABLE TO COMMON STOCK ...... $ (5.2) $ 3.3 $ -- $ (0.9) $ (2.7) $ (5.5)
</TABLE>
<TABLE>
<CAPTION>
TEREX COPORATION
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1994
(in millions)
Wholly- Non-
Terex owned PPM guarantor Intercompany
Corporation Guarantors Cranes, Inc. Subsidiaries Eliminations Consolidated
<S> <C> <C> <C> <C> <C> <C>
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES .......................... $ (5.6) $ (1.5) $ -- $ (2.2) $ -- $ (9.3)
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures .......................... (3.9) (5.5) -- (3.3) -- (12.7)
Proceeds from sale of property, plant
and equipment ................................. -- 3.0 -- 0.3 -- 3.3
Proceeds from sale of Fruehauf stock .......... 24.9 -- -- -- -- 24.9
Proceeds from sale of Drexel business ......... -- 10.3 -- -- -- 10.3
Proceeds from sale-leaseback of Saarn property. -- -- -- 10.0 -- 10.0
Other - net ................................... 1.0 -- -- -- -- 1.0
Net cash provided by (used in)
investing activities .......................... 22.0 7.8 -- 7.0 -- 36.8
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings (repayments) under
revolving line of credit agreements ........... 13.0 -- -- -- -- 13.0
Principal repayments of long-term debt ........ (27.0) (6.5) -- (8.0) -- (41.5)
Other ......................................... 0.2 -- -- -- -- 0.2
Net cash provided by financing activities...... (13.8) (6.5) -- (8.0) -- (28.3)
Effect of exchange rates on cash and
cash equivalents .............................. -- -- -- 1.3 -- 1.3
Net increase (decrease) in cash and
cash equivalents .............................. 2.6 (0.2) -- (1.9) -- 0.5
Cash and cash equivalents, beginning of period 1.1 0.2 -- 7.9 -- 9.2
Cash and cash equivalents, end of period ...... $ 3.7 $ -- $ -- $ 6.0 $ -- $ 9.7
</TABLE>
<TABLE>
<CAPTION>
TEREX CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1993
(in millions)
Wholly- Non-
Terex owned PPM guarantor Intercompany
Corporation Guarantors Cranes, Inc. Subsidiaries Eliminations Consolidated
<S> <C> <C> <C> <C> <C> <C>
NET SALES ..................................... $ 120.0 $ 71.4 $ -- $ 103.2 $ (19.9) $ 274.7
Cost of goods sold ............................ 101.3 69.4 -- 91.4 (19.9) 242.2
GROSS PROFIT .................................. 18.7 2.0 -- 11.8 -- 32.5
Engineering, selling & administrative expenses 19.5 14.8 -- 6.4 -- 40.7
Severance charges ............................. -- -- -- -- -- --
INCOME (LOSS) FROM OPERATIONS ................. (0.8) (12.8) -- 5.4 -- (8.2)
Interest income ............................... 0.5 -- -- 0.4 -- 0.9
Interest expense .............................. (20.5) (7.8) -- (1.7) -- (30.0)
Income (loss) from equity investees ........... (41.4) -- -- -- 41.4 --
Other income (expense) - net .................. (3.0) (0.2) -- (0.2) -- (3.4)
INCOME (LOSS)FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES AND EXTRAORDINARY ITEMS ... (65.2) (20.8) -- 3.9 41.4 (40.7)
Provision for income taxes .................... -- -- -- -- -- --
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE EXTRAORDINARY ITEMS ......... (65.2) (20.8) -- 3.9 41.4 (40.7)
Income (loss) from discontinued
operations, net of tax benefits ............... -- (24.3) -- (1.0) 1.0 (24.3)
Extraordinary loss on retirement of debt ...... (1.3) (0.1) -- (0.1) -- (1.5)
NET INCOME (LOSS) ............................. (66.5) (45.2) -- 2.8 42.4 (66.5)
Less preferred stock accretion ................ (0.2) -- -- -- -- (0.2)
INCOME (LOSS) APPLICABLE TO COMMON STOCK ...... $ (66.7) $ (45.2) $ -- $ 2.8 $ 42.4 $ (66.7)
</TABLE>
<TABLE>
<CAPTION>
TEREX COPORATION
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1993
(in millions)
Wholly- Non-
Terex owned PPM guarantor Intercompany
Corporation Guarantors Cranes, Inc. Subsidiaries Eliminations Consolidated
<S> <C> <C> <C> <C> <C> <C>
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES .......................... $ (31.6) $ 6.2 $ -- $ (20.8) $ -- $ (46.2)
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures .......................... (1.3) (6.8) -- (3.4) -- (11.5)
Proceeds from sale of property, plant
and equipment ................................. 1.3 -- -- 10.0 -- 11.3
Proceeds from sale of Fruehauf stock .......... 2.5 -- -- -- -- 2.5
Other - net ................................... -- -- -- 1.1 -- 1.1
Net cash used in investing activities ......... 2.5 (6.8) -- 7.7 -- 3.4
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings (repayments) under
revolving line of credit agreements ........... 11.9 -- -- -- -- 11.9
Principal repayments of long-term debt ........ (9.7) (1.2) -- (1.5) -- (12.4)
Issuance of preferred stock and warrants....... 27.2 -- -- -- -- 27.2
Net cash provided by financing activities...... 29.4 (1.2) -- (1.5) -- 26.7
Effect of exchange rates on cash and
cash equivalents .............................. -- -- -- (0.4) -- (0.4)
Net increase (decrease) in cash and
cash equivalents .............................. 0.3 (1.8) -- (15.0) -- (16.5)
Cash and cash equivalents, beginning of period. 0.8 2.0 -- 22.9 -- 25.7
Cash and cash equivalents, end of period....... $ 1.1 $ 0.2 $ -- $ 7.9 $ -- $ 9.2
</TABLE>
<PAGE>
TEREX CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in millions, except per share data)
For the Six Months
Ended June 30,
1996 1995
Net sales ....................................... $ 356.0 $ 213.5
Cost of goods sold .............................. 305.6 183.9
Gross profit .................................... 50.4 29.6
Engineering, selling and
administrative expenses ......................... 32.6 24.1
Income from operations .......................... 17.8 5.5
Other income (expense):
Interest income ................................. 0.1 0.5
Interest expense ................................ (22.8) (16.0)
Amortization of debt issuance costs ............. (1.3) (1.1)
Other income (expense) - net .................... 1.8 (1.4)
Income (loss) from continuing
operations before income taxes
and extraordinary items ......................... (4.4) (12.5)
Provision for income taxes ...................... -- --
Income (loss) from continuing
operations before extraordinary items ........... (4.4) (12.5)
Income (loss) from discontinued operations ...... 9.4 (5.6)
Income (loss) before extraordinary items ........ 5.0 (18.1)
Extraordinary loss on retirement of debt ........ -- (7.5)
NET INCOME (LOSS) ............................... 5.0 (25.6)
Less preferred stock accretion .................. (3.8) (3.5)
Income (loss) applicable to common stock ........ $ 1.2 $ (29.1)
The accompanying notes are an integral part of these financial statements.
<PAGE>
TEREX CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in millions, except per share data)
For the Six Months
Ended June 30,
1996 1995
PER COMMON AND COMMON EQUIVALENT SHARE:
Primary:
Income (loss) from continuing operations ........ $ (0.66) $ (1.57)
Income (loss) from discontinued operations ...... 0.76 (0.55)
Income (loss) before extraordinary items ........ 0.10 (2.12)
Extraordinary items ............................. -- (0.72)
Net income (loss) ............................... $ 0.10 $ (2.84)
Fully diluted:
Income (loss) from continuing operations ........ $ (0.66) $ (1.57)
Income (loss) from discontinued operations ...... 0.76 (0.55)
Income (loss) before extraordinary items ........ 0.10 (2.12)
Extraordinary items ............................. -- (0.72)
Net income (loss) ............................... $ 0.10 $ (2.84)
Weighted average common shares
outstanding including dilutive
securities (See Exhibit 11.1)
Primary ......................................... 12.4 10.3
Fully diluted ................................... 12.4 10.3
The accompanying notes are an integral part of these financial statements.
<PAGE>
TEREX CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
(in millions)
June 30, December 31,
1996 1995
ASSETS
Current assets
Cash and cash equivalents ........................... $ 9.5 $ 7.0
Cash securing letters of credit ..................... 3.5 6.9
Trade receivables (less allowance of
$5.6 at June 30, 1996 and
$7.4 at December 31, 1995) ........................ 108.3 87.7
Customer deposit .................................... 1.0 19.1
Net inventories ..................................... 180.3 180.8
Other current assets - net .......................... 14.7 10.5
Total current assets ................................ 317.3 312.0
Long-term assets
Property, plant and equipment - net ................. 35.4 40.1
Goodwill - net ...................................... 59.0 61.3
Other assets - net .................................. 23.1 22.7
Net assets of discontinued operations ............... 42.9 41.8
Total assets ........................................ $ 477.7 $ 478.9
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Notes payable ....................................... $ 7.2 $ 1.0
Current portion of long-term debt and
capital lease obligations ......................... 5.4 4.7
Trade accounts payable .............................. 103.2 99.5
Accrued compensation and benefits ................... 14.0 12.2
Accrued warranties and product liability ............ 20.5 19.6
Accrued interest .................................... 4.4 4.7
Accrued income taxes ................................ 0.5 1.4
Customer deposit .................................... 1.0 19.1
Other current liabilities ........................... 32.1 34.1
Total current liabilities ........................... 188.3 196.3
Long-term liabilities
Long-term debt and capital lease
obligations less current portion .................. 328.1 324.2
Accrued warranties and product
liability - long-term ............................. 1.7 1.5
Accrued pension ..................................... 5.8 5.8
Other long-term liabilities ......................... 13.6 14.0
Minority interest, including redeemable
preferred stock of a subsidiary
(liquidation preference $24.7,
subject to adjustment) ............................ 9.4 9.4
Redeemable convertible preferred stock
(liquidation preference $43.1 at June 30, 1996
and $41.2 at December 31, 1995) ................... 27.6 24.6
Commitments and contingencies
Stockholders' deficit
Warrants to purchase common stock ................... 12.2 17.2
Common stock, $.01 par value -
authorized 30.0 shares;
issued and outstanding 11.5 at June 30, 1996
and 10.6 at December 31, 1995 ..................... 0.1 0.1
Additional paid-in capital .......................... 46.4 40.5
Accumulated deficit ................................. (149.8) (150.9)
Pension liability adjustment ........................ (2.7) (2.7)
Unrealized holding gain on equity securities ........ 0.2 1.0
Cumulative translation adjustment ................... (3.2) (2.1)
Total stockholders' deficit ......................... (96.8) (96.9)
Total liabilities and stockholders' deficit ......... $ 477.7 $ 478.9
The accompanying notes are an integral part of these financial statements.
<PAGE>
TEREX CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
For the Six Months
Ended June 30,
1996 1995
OPERATING ACTIVITIES
Net income (loss) ................................ $ 5.0 $ (25.8)
Adjustments to reconcile
net income (loss) to cash
used in operating activities:
Depreciation ..................................... 4.3 8.4
Amortization ..................................... 2.4 5.9
Gain on sale of property,
plant and equipment ............................. (2.4) (0.2)
Gain on sale of Fruehauf stock ................... -- (1.0)
Property impairment charge ....................... -- 3.0
Other ............................................ 0.4 0.3
Changes in operating assets
and liabilities:
Restricted cash .................................. 3.4 2.2
Trade receivables ................................ (22.9) (0.4)
Net inventories .................................. 0.5 (12.9)
Net assets of discontinued operations ............ (1.1) --
Trade accounts payable ........................... 3.7 (6.5)
Accrued interest ................................. (0.4) (3.8)
Other, net ....................................... (3.1) 6.7
Net cash used in operating activities ............ (10.2) (24.1)
INVESTING ACTIVITIES
Acquisition of businesses,
net of cash acquired ............................ -- (92.4)
Capital expenditures ............................. (1.3) (3.6)
Proceeds from sale of
property, plant and equipment ................... 3.8 0.8
Proceeds from sale of Fruehauf stock ............. -- 2.7
Other ............................................ -- 0.2
Net cash provided by
(used in) investing activities .................. 2.5 (92.3)
FINANCING ACTIVITIES
Net incremental borrowings
under revolving line of credit agreements ....... 12.7 35.2
Principal repayments of long-term debt ........... (1.0) (153.9)
Issuance of long-term debt,
net of issuance costs ........................... -- 239.8
Other ............................................ (1.5) (0.5)
Net cash provided by
(used in) financing activities .................. 10.2 120.6
EFFECT OF EXCHANGE RATE CHANGES
ON CASH AND CASH EQUIVALENTS .................... -- (0.6)
NET INCREASE IN CASH AND CASH EQUIVALENTS ........ 2.5 3.6
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD .......................... 7.0 9.7
CASH AND CASH EQUIVALENTS
AT END OF PERIOD ................................ $ 9.5 $ 13.3
The accompanying notes are an integral part of these financial statements.
<PAGE>
TEREX CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, unless otherwise denoted)
June 30, 1996
NOTE A -- BASIS OF PRESENTATION
Basis of Presentation. As set forth in Note B below, on July 25, 1996 the
Company announced the signing of a definitive agreement to sell its Material
Handling business for $135.0 in cash. Subject to the fulfillment of customary
closing conditions and regulatory clearances, closing of the sale is expected to
take place within ninety days of the announcement. The sale will result in a
gain which will be recognized in the period of the closing. The Material
Handling business is accounted for as a discontinued operation in the June 30,
1996 and December 31, 1995 balance sheets, and in the statements of operations
for the six months ended June 30, 1996 and June 30, 1995.
Generally accepted accounting principles permit, but do not require, the
allocation of interest expense between continuing and discontinued operations.
Because the methods allowed under generally accepted accounting principles for
calculating interest expense to be allocated to discontinued operations are not
necessarily indicative of the use of proceeds from the sale of the Material
Handling business by the Company, and the effect on interest expense of the
continuing operations of the Company, the Company has elected not to allocate
interest expense to discontinued operations. The results of this election is
that loss from continuing operations includes substantially all of the interest
expense of the Company, and income from discontinued operations does not include
any material interest expense.
The accompanying condensed consolidated financial statements of Terex
Corporation and subsidiaries as of June 30, 1996 and for the six months ended
June 30, 1996 and 1995 have been prepared in accordance with generally accepted
accounting principles for interim financial information and 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 to be included in full year financial statements. The accompanying
condensed consolidated balance sheet as of December 31, 1995, 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.
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. Certain 1995 amounts have been reclassified to conform with
the 1996 presentation. Operating results for the three and six months ended June
30, 1996 are not necessarily indicative of the results that may be expected for
the year ending December 31, 1996. For further information, refer to the audited
consolidated financial statements and footnotes thereto for the year ended
December 31, 1995, included herein.
<PAGE>
NOTE B -- DISCONTINUED OPERATIONS
On July 25, 1996 the Company signed a definitive agreement to sell its worldwide
Material Handling business ("CMHC") for $135.0 in cash. CMHC comprises the
Company's Material Handling Segment. The accompanying condensed consolidated
statement of operations for the three months and six months ended June 30, 1996
and 1995 include the results of CMHC in "Income (Loss) from Discontinued
Operations." Net assets of the discontinued operations at June 30, 1996 have
been segregated in the Condensed Consolidated Balance Sheet. Please refer to
Note A - Basis of Presentation for a discussion of allocation of interest
expense. Summary operating results of discontinued operations are as follows:
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
Net Sales ............................. $ 115.4 $ 136.1 $ 224.2 $ 270.1
Income (loss) before income taxes ..... 6.2 (6.8) 9.4 (5.5)
Provision for income taxes ............ -- -- -- 0.1
Income (loss) from
discontinued operations ............... 6.2 (6.8) 9.4 (5.6)
NOTE C -- INVENTORIES
Net inventories consist of the following:
June 30, December 31,
1996 1995
Finished equipment ......................... $ 46.4 $ 43.7
Replacement parts .......................... 56.7 71.5
Work-in-process ............................ 18.2 22.6
Raw materials and supplies ................. 61.6 45.7
182.9 183.5
Less: Excess of FIFO inventory
value of LIFO cost ....................... (2.6) (2.7)
Net inventories ............................ $ 180.3 $ 180.8
NOTE D -- PROPERTY, PLANT AND EQUIPMENT
Net property, plant and equipment consists of the following:
June 30, December 31,
1996 1995
Property, plant and equipment .............. $ 62.2 $ 65.7
Less: Accumulated depreciation ............. (26.8) (25.6)
Net property, plant and equipment .......... $ 35.4 $ 40.1
<PAGE>
NOTE E -- LITIGATION AND CONTINGENCIES
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.
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 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
plus interest and penalties and the ultimate outcome cannot presently be
determined or estimated. Additionally, if a change in control for tax purposes
were to occur, such a change in control could possibly result in a significant
reduction in the amount of NOL's available to the Company to offset future
taxable income.
NOTE F -- CONSOLIDATING FINANCIAL STATEMENTS
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 wholly-owned subsidiary, completed the acquisition of substantially
all of the outstanding stock of PPM. S.A. and Legris Industries, Inc.
Clark Material Handling Company, Terex Cranes, Inc., Koehring Cranes, Inc., CMH
Acquisition Corp., CMH Acquisition International Corp. (the "Wholly-owned
Guarantors"), and PPM Cranes, Inc. (collectively, the "Guarantors"), all
subsidiaries of Terex, provide a joint and several, unconditional guarantee of
the obligations under the Senior Secured Notes and will provide the same
guarantee for the obligations of any registered notes exchanged for the Senior
Secured Notes.
With the exception of PPM Cranes, Inc. and Clark Material Handling Company, each
of the Guarantors is a corporation organized and existing under the laws of the
state of Delaware and is a wholly-owned subsidiary of the Company. PPM Cranes,
Inc. is a corporation organized and existing under the laws of the state of
Delaware and is 92.4% owned by Terex. Clark Material Handling Company is a
corporation organized and existing under the laws of the Commonwealth of
Kentucky and is wholly-owned by Terex.
The following summarized condensed consolidating financial information for the
Company segregates the financial information of Terex Corporation, the
Wholly-owned Guarantors, PPM Cranes, Inc. and the Non-guarantor Subsidiaries.
Terex Corporation consists of parent company operations. Subsidiaries of the
parent company are reported on the equity basis.
Wholly-owned Guarantors combine the operations of the Wholly-owned Guarantor
Subsidiaries (Clark Material Handling Company, Terex Cranes, Inc., Koehring
Cranes, Inc., CMH Acquisition Corp. and CMH Acquisition International Corp.).
Non-guarantor subsidiaries of Wholly-owned Guarantors are reported on the equity
basis.
PPM Cranes, Inc. presents the operations of PPM Cranes, Inc. and its
subsidiaries (PPM Pty Ltd and PPM Far East Ltd) reported on an equity basis.
Non-Guarantor Subsidiaries combine the operations of subsidiaries which have not
provided a guarantee of the obligations of Terex Corporation under the Senior
Secured Notes. These subsidiaries include Terex Equipment Limited, Unit Rig
Australia (Pty) Ltd., Unit Rig South Africa (Pty) Ltd., Unit Rig (Canada) Ltd.,
Clark Material Handling GmbH, Clark Forklift Korea, PPM S.A., Bendini S.P.A.,
Brimont Agraire, PPM Kranes, Baulift, PPM Pty Ltd., and PPM Far East Ltd.
Debt and Goodwill allocated to subsidiaries is presented on an accounting
"push-down" basis.
<PAGE>
<TABLE>
<CAPTION>
TEREX CORPORATION
UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEET
JUNE 30, 1996
(in millions)
Wholly- Non-
Terex owned PPM guarantor Intercompany
Corporation Guarantors Cranes, Inc. Subsidiaries Eliminations Consolidated
<S> <C> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents .................... $ 6.6 $ -- $ -- $ 2.9 $ -- $ 9.5
Cash securing letters of credit .............. 2.9 -- -- 0.6 -- 3.5
Trade receivables - net ...................... 15.1 18.6 16.1 58.5 -- 108.3
Intercompany receivables ..................... 0.6 1.5 1.4 23.9 (27.4) --
Customer deposit ............................. -- -- -- 1.0 -- 1.0
Inventories - net ............................ 53.6 20.8 28.4 77.8 (0.3) 180.3
Other current assets ......................... 0.9 0.1 0.1 13.6 -- 14.7
Total current assets ......................... 79.7 44.2 45.7 175.4 (27.7) 317.3
Property, plant & equipment - net ............ 8.4 4.7 3.4 18.9 -- 35.4
Investment in and advances to (from)
subsidiaries ................................. 64.5 (57.0) (10.3) (96.3) 99.1 --
Goodwill - net ............................... -- -- 28.3 30.7 -- 59.0
Net assets of discontinued operations ........ -- (4.1) -- 47.3 (0.3) 42.9
Other assets ................................. 9.5 1.0 2.6 10.0 -- 23.1
TOTAL ASSETS ................................. $ 162.1 $ (14.4) $ 70.0 $ 188.9 $ 71.1 $ 477.7
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Notes payable and current portion of
long-term debt ............................... $ -- $ -- $ 0.7 $ 11.9 $ -- $ 12.6
Trade accounts payable ....................... 14.1 13.0 9.3 66.8 -- 103.2
Intercompany payables ........................ 20.5 -- 1.5 5.1 (27.1) --
Customer deposit ............................. -- -- -- 1.0 -- 1.0
Accruals and other current liabilities ....... 31.5 3.8 12.2 24.1 (0.1) 71.5
Total current liabilities .................... 66.1 20.0 23.4 106.0 (27.2) 188.3
Long-term debt less current portion .......... 168.2 14.1 49.7 96.1 -- 328.1
Other long-term liabilities .................. 12.9 2.5 -- 6.3 (0.6) 21.1
Minority interest and redeemable
preferred stock .............................. -- 8.8 0.6 -- -- 9.4
Redeemable convertible preferred stock ....... 27.6 -- -- -- -- 27.6
Stockholders' deficit ........................ (112.7) (56.6) (4.0) (22.4) 98.9 (96.8)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT .. $ 162.1 $ (14.4) $ 10.0 $ 188.9 $ 71.1 $ 477.7
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TEREX CORPORATION
UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996
(in millions)
Wholly- Non-
Terex owned PPM guarantor Intercompany
Corporation Guarantors Cranes, Inc. Subsidiaries Eliminations Consolidated
<S> <C> <C> <C> <C> <C> <C>
NET SALES ..................................... $ 85.6 $ 75.9 $ 46.4 $ 186.4 $ (38.3) $ 356.0
Cost of goods sold ............................ 76.4 64.7 40.1 162.4 (38.0) 305.6
GROSS PROFIT .................................. 9.2 11.2 6.3 24.0 (0.3) 50.4
Engineering, selling & administrative expenses. 9.0 3.7 3.8 16.0 0.1 32.6
INCOME (LOSS) FROM OPERATIONS ................. 0.2 7.5 2.5 8.0 (0.4) 17.8
Interest income ............................... 0.1 -- -- -- -- 0.1
Interest expense .............................. (12.3) (1.0) (3.2) (6.3) -- (22.8)
Income (loss) from equity investees ........... 16.2 (0.7) 0.1 -- (15.6) --
Other income (expense) - net .................. 0.4 (0.8) (0.1) 1.9 (0.1) 0.5
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES AND
EXTRAORDINARY ITEMS ........................... 3.8 5.0 (0.7) 3.6 (16.1) (4.4)
Provision for income taxes .................... -- -- -- -- -- --
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE EXTRAORDINARY ITEMS ......... 3.8 5.0 (0.7) 3.6 (16.1) (4.4)
Income (loss) from discontinued
operations, net of tax benefits ............... -- 7.8 -- 1.6 -- 9.4
NET INCOME (LOSS) ............................. 3.8 12.8 (0.7) 5.2 (16.1) 5.0
Less preferred stock accretion ................ (3.8) -- -- -- -- (3.8)
INCOME (LOSS) APPLICABLE TO COMMON STOCK ...... $ -- $ 12.8 $ (0.7) $ 5.2 $ (16.1) $ 1.2
</TABLE>
<TABLE>
<CAPTION>
TEREX COPORATION
UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1996
(in millions)
Wholly- Non-
Terex owned PPM guarantor Intercompany
Corporation Guarantors Cranes, Inc. Subsidiaries Eliminations Consolidated
<S> <C> <C> <C> <C> <C> <C>
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES .......................... $ (2.3) $ (0.1) $ 0.7 $ (8.5) $ -- $ (10.2)
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures .......................... (0.3) -- (0.3) (0.7) -- (1.3)
Proceeds from sale of property, plant
and equipment ................................. 0.3 0.1 0.1 3.3 -- 3.8
Net cash provided by (used in)
investing activities .......................... -- 0.1 (0.2) 2.6 -- 2.5
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings (repayments) under
revolving line of credit agreements ........... 5.4 -- 0.1 7.2 -- 12.7
Principal repayments of long-term debt ........ -- -- (1.0) -- -- (1.0)
Other ......................................... -- -- -- (1.5) -- (1.5)
Net cash provided by (used in)
financing activities .......................... 5.4 -- (0.9) 5.7 -- 10.2
Effect of exchange rates on cash and
cash equivalents .............................. 0.4 -- 0.1 (0.5) -- --
Net increase (decrease) in cash and
cash equivalents .............................. 3.5 -- (0.3) (0.7) -- 2.5
Cash and cash equivalents, beginning
of period ..................................... 3.1 -- 0.3 3.6 -- 7.0
Cash and cash equivalents, end of period ...... $ 6.6 $ -- $ -- $ 2.9 $ -- $ 9.5
</TABLE>
<PAGE>
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
<PAGE>
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
============= =============
<PAGE>
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 othe
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.
<PAGE>
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.
<PAGE>
<TABLE>
<CAPTION>
PPM S.A. and Legris Industries, Inc.
Combined Statements of Shareholders' Equity
Foreign
Currency
Common Stock Paid-In Accumulated Translation
Shares Amount Capital Deficit Adjustments Total
----------- ----------- ----------- ----------- ----------- -----------
(In thousands except share amounts)
Balance at
<S> <C> <C> <C> <C> <C> <C>
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
=========== =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes.
<PAGE>
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) decrease 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.
<PAGE>
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.
<PAGE>
PPM S.A. and Legris Industries, Inc.
Notes to Combined Financial Statements (continued)
(In thousands)
2. Summary of Significant Accounting Policies (continued)
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.
<PAGE>
PPM S.A. and Legris Industries, Inc.
Notes to Combined Financial Statements (continued)
(In thousands)
2. Summary of Significant Accounting Policies (continued)
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 109"). 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 through
April 10, 1996, annual payments of $750
beginning April 10, 1997 through
April 10, 2001 and quarterly payments of
$125 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 Eurodollar rate plus .5%
(6.875% at December 31, 1994)
payable on demand............................. 11,500 ---
Indebtedness to Groupe Legris bearing
interest at the Eurodollar 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 Eurodollar 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
Notespayable 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
==========
PPM S.A. and Legris Industries, Inc.
Notes to Combined Financial Statements (continued)
(In thousands)
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.
<PAGE>
PPM S.A. and Legris Industries, Inc.
Notes to Combined Financial Statements (continued)
(In thousands)
7. Income Taxes (continued)
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.................. $ --- $ ---
========== =========
<PAGE>
PPM S.A. and Legris Industries, Inc.
Notes to Combined Financial Statements (continued)
(In thousands)
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
==========
<PAGE>
PPM S.A. and Legris Industries, Inc.
Notes to Combined Financial Statements (continued)
(In thousands)
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
========= ========= =========
<PAGE>
PPM S.A. and Legris Industries, Inc.
Notes to Combined Financial Statements (continued)
(In thousands)
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
certain 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.
<PAGE>
PPM S.A. AND LEGRIS INDUSTRIES, INC.
UNAUDITED CONDENSED COMBINED
STATEMENT OF OPERATIONS
(in millions)
January 1
through
May 9,
1995 1994
NET SALES ............................................ $ 64.9 $ 46.9
COST OF GOODS SOLD ................................... 66.6 40.1
Gross Profit ......................................... (1.7) 6.8
ENGINEERING, SELLING AND ADMINISTRATIVE EXPENSES...... 14.1 10.7
Income (loss) from operations ........................ (15.8) (3.9)
OTHER INCOME (EXPENSE):
Interest expense ..................................... (2.3) (2.2)
Other income (expense) - net ......................... (2.3) --
Loss before income taxes and minority interest ....... (20.4) (6.1)
PROVISION FOR INCOME TAXES ........................... -- --
Loss before minority interest ........................ (20.4) (6.1)
Minority interest in loss of consolidated subsidiaries -- 0.2
NET LOSS ........................................... $ (20.4) $ (5.9)
<PAGE>
PPM S.A. AND LEGRIS INDUSTRIES, INC.
UNAUDITED CONDENSED COMBINED
BALANCE SHEETS
(in millions except share amounts)
May 9,
1995 1994
Assets:
Current assets:
Cash and cash equivalents .......................... $ 1.4 $ 3.8
Trade accounts receivable, less allowances of $3.1
and $2.3 in 1995 and 1994, respectively ........... 33.8 26.8
Due from affiliates................................. 1.6 1.8
Refundable taxes.................................... 6.1 5.5
Inventories, net.................................... 69.1 68.6
Other current assets................................ 12.1 13.0
Total current assets................................ 124.1 119.5
Property, plant and equipment, net.................. 20.3 22.3
Intangible assets:
Cost in excess of net assets acquired, less
accumulated amortization of $9.1 and $7.4 in
1995 and 1994, respectively ....................... 34.4 36.0
Other identified intangible assets, less accumulated
amortization of $1.0 and $0.7 in 1995 and 1994,
respectively ...................................... 0.4 0.6
34.8 36.6
Total assets ...................................... $ 179.2 $ 178.4
<PAGE>
PPM S.A. AND LEGRIS INDUSTRIES, INC.
UNAUDITED CONDENSED COMBINED
BALANCE SHEETS
(in millions except share amounts)
(continued)
May 9,
1995 1994
Liabilities and shareholders' equity
Current liabilities:
Trade accounts payable ............................ $ 41.7 $ 34.1
Due to affiliates ................................. 7.8
27.3
Product liability reserve ......................... 4.5
5.9
Product warranty reserve .......................... 1.4
2.4
Accrued expenses................................... 15.2 16.1
Current portion of long-term debt
and other short-term borrowings .................. 72.7 50.9
Other current liabilities ......................... 0.7
1.0
Total current liabilities.......................... 166.2 115.5
Long-term debt, less current portion............... 5.9 28.3
Other liabilities and obligations
under capital leases, less
current portion .................................. 3.4 6.0
Minority interest in subsidiaries ................. 1.9 2.4
Total liabilities ................................. 177.4 152.2
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.................................... 90.5 81.2
Accumulated deficit................................ (85.5) (51.9)
Foreign currency translation adjustments........... (3.2) (3.1)
Total shareholders' equity......................... 1.8 26.2
Total liabilities and shareholders' equity ........ $ 179.2 $ 178.4
<PAGE>
PPM S.A. AND LEGRIS INDUSTRIES, INC.
UNAUDITED CONDENSED COMBINED
STATEMENT OF CASH FLOWS
(in millions except share amounts)
January 1 through May 9,
1995 1994
Net cash provided by operating activities .............. $ (1.9) $ (12.0)
Investing activities
Purchases of property, plant and equipment ............. 0.3 0.2
Financing activities
Proceeds from revolving credit with banks and from notes
payable to an affiliated company, net .................. -- 13.9
Payments on capital leases ............................. (0.1) (0.1)
Net cash provided by financing activities .............. (0.1) 13.8
Effect of exchange rate changes on cash ................ (0.5) (0.4)
Net increase (decrease) in cash and cash equivalents ... (2.2) 1.6
Cash at beginning of period ............................ 3.6 2.2
Cash at end of period .................................. $ 1.4 $ 3.8
Supplemental disclosure of cash flow information
Cash paid for interest ................................. $ 2.3 $ 2.3
Cash paid for income taxes ............................. $ -- $ --
<PAGE>
PPM S.A. AND LEGRIS INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED COMBINED
FINANCIAL INFORMATION
Basis of Presentation
The accompanying unaudited condensed combined financial information of PPM S.A.
and Legris Industries, Inc. (collectively, "PPM") 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 Baumaschinen 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%)
<PAGE>
TEREX CORPORATION
PRO FORMA FINANCIAL INFORMATION
PPM ACQUISITION AND REFINANCING
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, 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 period indicated, nor does it purport to represent the results of
operations for future periods.
<PAGE>
<TABLE>
<CAPTION>
TEREX CORPORATION
UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(in millions except per share amounts)
Terex
Corporation Pro Forma Pro Forma
and Business Acquisition Refinancing
Subsidiaries Acquired Adjustments Adjustments Pro Forma
<S> <C> <C> <C> <C> <C>
NET SALES............................. $ 501.4 $ 64.9 $ 0 $ 0 $ 566.3
COST OF GOODS SOLD.................... 431.0 66.6 0.7 (2a) 0 498.3
---------- -------- ----------- ---------- ---------
Gross Profit..................... 70.4 (1.7) (0.7) 0 68.0
ENGINEERING, SELLING AND
ADMINISTRATIVE EXPENSES.......... 57.6 14.1 0 0 71.7
SEVERANCE AND EXIT
CHARGES.......................... 0 0 0 0 0
---------- -------- ----------- ---------- ---------
Income (loss) from operations.... 12.8 (15.8) (0.7) 0 (3.7)
OTHER INCOME (EXPENSE):
Interest income.................. 0.7 0 0 0 0.7
Interest expense................. (38.7) (2.3) 1.8 (2b) (5.7) (2d) (44.9)
Amortization of debt issuance costs (2.3) 0 0 (0.2) (2d) (2.5)
Gain on sale of Fruehauf stock... 1.0 0 0 0 1.0
Other income (expense) - net..... (5.6) (2.4) 0 0 (8.0)
---------- -------- ----------- ---------- ---------
Loss from continuing operations
before extraordinary items
and income taxes............. (32.1) (20.5) 1.1 (5.9) (57.4)
PROVISION FOR INCOME TAXES............ 0 0 0 0 0
---------- -------- ----------- ---------- ---------
Loss from continuing operations
before extraordinary items... (32.1) (20.5) 1.1 (5.9) (57.4)
INCOME FROM DISCONTINUED
OPERATIONS....................... 4.4 0 0 0 4.4
LESS PREFERRED STOCK
ACCRETION........................ (7.3) 0 (0.8) (2c) 0 (8.1)
---------- -------- ----------- ---------- ---------
LOSS BEFORE EXTRAORDINARY
ITEMS APPLICABLE TO
COMMON STOCK..................... $ (35.0) $ (20.5) $ 0.3 $ (5.9) $ (61.1)
========== ======== =========== ========== =========
PER SHARE............................. $ (3.37) $ (5.89)
========== =========
AVERAGE NUMBER OF COMMON
AND COMMON EQUIVALENT
SHARES OUTSTANDING IN
PER SHARE CALCULATION ........... 10.4 10.4
========== =========
</TABLE>
<PAGE>
TEREX CORPORATION
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL INFORMATION
1) The unaudited pro forma condensed consolidated financial information is
presented for the years ended December 31, 1994 and 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 Consolidated Balance Sheet as of
December 31, 1995. The estimated fair values of assets and liabilities acquired
in the PPM Acquisition are summarized as follows (in millions):
Cash ........................................................ $ 1.0
Accounts receivable ......................................... 33.8
Inventories ................................................. 69.1
Other current assets ........................................ 11.9
Property, plant and equipment ............................... 20.5
Other assets ................................................ 0.3
Goodwill .................................................... 68.0
Accounts payable and other current liabilities .............. (86.6)
Other liabilities ........................................... (13.5)
------
$ 104.5
======
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Stockholder of PPM Cranes, Inc.
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations and shareholders' deficit and of cash
flows present fairly, in all material respects, the financial position of PPM
Cranes, Inc. and its subsidiaries at December 31, 1995, and the results of their
operations and their cash flows for the eight-month period then ended 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 audit. We conducted our audit 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 audit provides a reasonable basis for the opinion expressed
above.
Price Waterhouse LLP
Stamford, Connecticut
March 22, 1996
<PAGE>
PPM Cranes, Inc.
Consolidated Balance Sheet
(in millions, except share amounts)
December 31,
1995
Assets
Current assets:
Cash ....................................................... $ 0.5
Trade accounts receivable, less allowance of $0.5 .......... 11.9
Net inventories ............................................ 25.0
Due from affiliates ........................................ 1.0
Prepaid expenses and other current assets .................. 0.6
Total current assets ....................................... 39.0
Property, plant and equipment, net ......................... 3.9
Intangible assets:
Goodwill, less accumulated amortization of $1.4 ............ 30.9
Other identified intangible assets,
less accumulated amortization of $0.3 .................... 2.8
Total assets ............................................. $ 76.6
The accompanying notes are an integral part of these financial statements.
<PAGE>
PPM Cranes, Inc.
Consolidated Balance Sheet
(in millions, except share amounts)
(continued)
December 31,
1995
Liabilities and shareholders' deficit Current liabilities:
Trade accounts payable ..................................... $ 5.5
Accrued product liability .................................. 6.3
Accrued product warranty ................................... 1.9
Accrued expenses ........................................... 4.1
Due to affiliates .......................................... 3.9
Due to Terex Corporation ................................... 2.1
Current portion of long-term debt .......................... 0.9
Total current liabilities .................................. 24.7
Non-current liabilities:
Long-term debt, less current portion ....................... 54.0
Other non-current liabilities .............................. 1.0
Total non-current liabilities .............................. 55.0
Commitments and contingencies (Note 8)
Shareholders' deficit:
Common stock, Class A, $.01 par value -- authorized
8,000 shares;
issued and outstanding 5,000 shares ........................ --
Common stock, Class B, $.01 par value -- authorized
2,000 shares;
issued and outstanding 413 shares .......................... --
Accumulated deficit ........................................ (3.2)
Foreign currency translation adjustments ................... 0.1
Total shareholders' deficit ................................ (3.1)
Total liabilities and shareholders' deficit ................ $ 76.6
The accompanying notes are an integral part of these financial statements.
<PAGE>
PPM Cranes, Inc.
Consolidated Statement of Operations
(in millions)
Eight Months Ended
December 31,
1995
Net sales .............................................. $ 57.1
Cost of products sold .................................. 49.4
Gross profit ........................................... 7.7
Engineering, selling and administrative expenses ....... 5.8
Income from operations ................................. 1.9
Interest expense ....................................... 4.8
Amortization of debt issuance costs .................... 0.3
Loss before income taxes ............................... (3.2)
Provision for income taxes ............................. 0.0
Net loss ............................................... $ (3.2)
The accompanying notes are an integral part of these financial statements.
<PAGE>
PPM Cranes, Inc.
Consolidated Statement of Shareholders' Deficit
(in millions)
Foreign
Currency
Common Accumulated Translation
Stock Deficit Adjustments Total
Balance at May 9, 1995 ......... $ -- $ -- $ -- $ --
Net loss ....................... -- (3.2) -- (3.2)
Translation adjustment ......... -- -- 0.1 0.1
Balance at December 31, 1995 ... $ -- $ (3.2) $ 0.1 $ (3.1)
The accompanying notes are an integral part of these financial statements.
<PAGE>
PPM Cranes, Inc.
Consolidated Statement of Cash Flows
(in millions)
Eight Months Ended
December 31, 1995
Operating activities
Net loss ....................................... $ (3.2)
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization .................. 2.1
Changes in operating assets and liabilities:
Accounts receivable ............................ (3.3)
Net inventories ................................ 2.7
Prepaid expenses and other current assets ...... 0.4
Accounts payable ............................... (1.2)
Net amounts due to affiliates .................. 3.2
Accrued product liability ...................... (1.6)
Accrued warranty ............................... 0.6
Accrued expenses ............................... 0.3
Other (net) .................................... 0.3
Net cash provided by operating activities ...... 0.3
Investing activities
Purchases of property, plant and equipment ..... (0.2)
Financing activities
Effect of exchange rate changes on cash ........ 0.1
Net increase in cash and cash equivalents ...... 0.2
Cash at beginning of period .................... 0.3
Cash at end of period .......................... $ 0.5
Supplemental disclosure of cash flow information
Cash paid for interest ......................... $ --
Cash paid for income taxes ..................... $ --
The accompanying notes are an integral part of these financial statements.
<PAGE>
PPM Cranes, Inc.
Notes to Consolidated Financial Statements
December 31, 1995
(In millions of dollars)
1. Description of the Business and Basis of Presentation
PPM Cranes, Inc. (the "Company" or "PPM") is engaged in the design, manufacture,
marketing and worldwide distribution and support of construction equipment,
primarily hydraulic and lattice boom cranes and related spare parts.
On May 9, 1995 (the "date of acquisition"), Terex Corporation, through its
wholly-owned subsidiary Terex Cranes, Inc., completed the acquisition of all of
the capital stock of Legris Industries, Inc., a Delaware Corporation which owns
92.4% of the capital stock of PPM Cranes, Inc. Terex Corporation and Terex
Cranes, Inc., are both Delaware corporations.
The financial statements reflect Terex Corporation's basis in the assets and
liabilities of the Company which was accounted for as a purchase transaction. As
a result, the debt and goodwill associated with the acquisition have been
"pushed down" to the Company's financial statements.
2. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries; PPM of Australia Pty. Ltd., and PPM Far East
Private Ltd., a Singapore company. All material intercompany transactions and
profits have been eliminated. During 1995, management closed the operations in
PPM Far East Private Ltd.
Inventories
Inventories are stated at the lower of cost or market. Cost is determined by the
last-in, first-out (LIFO) method for domestic inventories and by the first-in,
first-out (FIFO) method for inventories of foreign subsidiaries. Approximately
94% of consolidated inventories at December 31, 1995 are accounted for under the
LIFO method.
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 the Company are depreciated using
the straight-line method over their estimated useful lives, which range from
three to twenty years.
<PAGE>
2. Summary of Significant Accounting Policies (continued)
Excess of Cost Over Net Assets
Goodwill, representing the difference between the total purchase price and the
fair value of assets (tangible and intangible) and liabilities at the date of
acquisition, is amortized on a straight-line basis over fifteen years.
Accumulated amortization is $1.4 at December 31, 1995. It is the Company's
policy to periodically evaluate the carrying value of goodwill, and to recognize
impairments when the estimated related future net operating cash flows is less
than its carrying value. The amount of any impairment then recognized would be
calculated as the difference between estimated future discounted cash flows and
the carrying value of the goodwill.
Debt Issuance Costs
Debt issuance costs incurred by Terex Corporation in securing the financing
related to acquiring the Company have been capitalized and are reflected in the
financial statements. Capitalized debt issuance costs are amortized over the
term of the related debt.
Product Liability and Warranty
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 claims and for claims anticipated to
have been incurred which have not yet been reported. Prior to August 1, 1995,
the Company maintained product liability insurance; therefore, the product
liability accrual was equal to the estimated product liability less expected
recoveries under insurance policies. Product liability payments, including
expenses, are estimated to be approximately $2.0 per year.
Income Taxes
Income taxes are provided using the liability method in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes."
The Company is a part of a group that files a consolidated income tax return.
The method used to allocate income taxes to members of the group is one in which
current and deferred income taxes are calculated on a separate return basis as
if the Company had not been included in a consolidated income tax return with
its parent. The tax benefit associated with the acquisition debt has been taken
into account in the Company's tax provision.
<PAGE>
2. Summary of Significant Accounting Policies (continued)
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.
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' Deficit. Gains or
losses resulting from foreign currency transactions were not material in 1995.
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, 1995 the Company had no material
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 were not material at December 31,
1995.
<PAGE>
2. Summary of Significant Accounting Policies (continued)
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
$0.1 in 1995.
3. Inventories
Inventories at December 31, 1995 consist of the following:
1995
Raw materials and supplies $ 9.4
Work in process .......... 2.5
Replacement parts ........ 8.6
Finished goods equipment . 4.5
$ 25.0
At December 31, 1995 approximately 94% of inventories were valued using the LIFO
method. The LIFO value is approximately equivalent to the corresponding FIFO
value at December 31, 1995.
4. Property, Plant and Equipment
Property, plant and equipment at December 31, 1995 consists of the following:
1995
Property .................... $ 0.1
Plant ....................... 1.6
Machinery and equipment ..... 2.6
4.3
Less accumulated depreciation 0.4
$ 3.9
Depreciation expense for 1995 was $0.4.
<PAGE>
5. Long Term Debt
Long-term debt is summarized as follows:
13.25% Senior Secured Notes due May 15, 2002 $ 49.4
Note payable ................................ 5.5
Total long-term debt ........................ 54.9
Current portion long-term debt .............. 0.9
Long-term debt less current portion ......... $ 54.0
The Senior Secured Notes
On May 9, 1995, Terex Corporation issued $250 of Senior Secured Notes due May
15, 2002. The Senior Secured Notes were issued in conjunction with Terex
Corporation's acquisition of substantially all of the capital stock of PPM
Cranes, Inc. and P.P.M. S.A. and the refinancing of Terex Corporation's debt. Of
the total amount $50 relates to the acquisition of substantially all of the
capital stock of PPM Cranes, Inc. and has been included in the Company's balance
sheet. Except in the event of certain asset sales, there are no principal
repayment or sinking fund requirements prior to maturity. The notes bear
interest at 13 3/4% per annum. Upon the earlier of (i) the consummation of an
exchange offer or (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.
Repayments of the Senior Secured Notes are guaranteed by certain domestic
subsidiaries of Terex Corporation (the "Guarantors"), including PPM Cranes, Inc.
The Senior Secured Notes are secured by a first priority security interest on
substantially all of the assets of Terex Corporation 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. The indenture for the Senior Secured Notes places certain limits on
Terex Corporation'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.
<PAGE>
5. Debt (continued)
Note payable - Harnischfeger Corporation
The note payable to Harnischfeger Corporation is not interest bearing and is
payable as follows:
1996 $ 1.0
1997 0.8
1998 0.8
1999 0.8
2000 0.8
Thereafter 5.7
9.9
Imputed Interest (4.4)
$ 5.5
Schedule of debt maturities
Scheduled annual maturities of long-term debt outstanding at December 31, 1995
in the successive five-year period are summarized as follows:
Pushed
Harnischfeger Down
Debt Debt Total
1996 $ 1.0 $ 0.0 $ 1.0
1997 0.8 0.0 0.8
1998 0.8 0.0 0.8
1999 0.8 0.0 0.8
2000 0.8 0.0 0.8
Thereafter 5.7 49.4 55.1
9.9 49.4 59.3
Imputed Interest (4.4) 0.0 (4.4)
$ 5.5 $ 49.4 $ 54.9
<PAGE>
6. Employee Benefit Plan
The Company participates in a defined contribution plan which is sponsored by
Terex Corporation. The plan covers U.S. employees. Under the plan, the Company
matches a portion of an employee's contribution to the plan. The related expense
to the Company was $0.1 for 1995.
7. Income Taxes
The components of income (loss) before income taxes consisted of the following:
1995
Domestic .............. $ (3.6)
Foreign ............... 0.4
$ (3.2)
The Company has no provision for federal, foreign and state income taxes
(benefit).
The Company has not provided deferred taxes on $1.0 of cumulative undistributed
earnings of foreign subsidiaries as of December 31, 1995 as these earnings will
be either permanently re-invested or remitted substantially free of additional
income tax.
Deferred tax assets and liabilities result from differences in the basis of
assets and liabilities for tax and financial statements purposes. In accordance
with SFAS No. 109, "Accounting for income taxes," a valuation allowance fully
offsetting the net deferred tax asset, has been recognized. The tax effects of
the basis differences and Net Operating Loss ("NOL") carryforward as of December
31, 1995 are summarized below:
1995
Total deferred tax liabilities ....... $ (0.2)
Inventory ............................ 2.4
Product liability .................... 2.2
Other ................................ 0.9
NOL carryforwards .................... 18.1
Total deferred tax assets ............ 23.6
Deferred tax asset valuation allowance (23.4)
Net deferred taxes ................. $ 0.0
<PAGE>
7. Income Taxes (continued)
The valuation allowance for deferred tax assets at acquisition date, May 9,
1995, was $22.7. Any future reduction of this valuation allowance attributable
to the pre-acquisition period will reduce goodwill. The net change in the
valuation allowance for the current year was an increase of $0.7.
At December 31, 1995, the Company has loss carryforwards for federal income tax
purposes of approximately $51.7 available to offset future taxable income. The
expiration of the Company's loss carryforwards are as follows:
Year Expiring Amount
2004 $ 21.9
2005 0.8
2006 5.8
2007 16.3
2008 5.8
2009 0.0
2010 1.1
Total $ 51.7
The utilization of approximately $50.7 of loss carryforwards is limited
annually, as a result of an "ownership change" (as defined by Section 382 of the
Internal Revenue code), which occurred in 1995. Further, the use of these
pre-acquisition losses is limited to future taxable income of PPM Cranes.
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. The reasons for the difference are
summarized below:
Statutory federal income tax rate ............... $ (1.1)
Utilization of foreign NOLs ..................... (0.1)
Goodwill ........................................ 0.5
NOL and basis differences with no current benefit 0.7
Total provision for income taxes ................ $ 0.0
There were no income taxes paid during 1995.
<PAGE>
8. Commitments and Contingencies
The Company 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
the Company to pay maintenance, property taxes and insurance. Rent expense for
1995 was $0.6.
Future minimum payments under noncancelable operating leases at December 31,
1995 are as follows:
1996 $ 0.8
1997 0.7
1998 0.6
1999 0.4
Thereafter 0.0
$ 2.5
The Company is involved in product liability and other lawsuits incident to the
operation of its business. Insurance with third parties is maintained for
certain of these items. It is management's opinion that none of these lawsuits
will have a materially adverse effect on the Company's financial position.
<PAGE>
9. Foreign Operations
Summarized financial data relating to the foreign subsidiaries included in the
accompanying consolidated financial statements at December 31, 1995 are as
follows:
Assets ............... $ 4.8
Liabilities .......... $ 2.5
Net loss ............. $ 0.5
Assets and liabilities of the Company's foreign subsidiaries are translated into
United States dollars at year-end exchange rates. Adjustments resulting from the
translation of financial statements of the foreign subsidiaries and translation
gains or losses related to long-term intercompany investments are included in
the foreign currency translation adjustments account in shareholders' deficit.
10. Related Party Transactions
During the eight months ended December 31, 1995 the Company had transactions
with various unconsolidated affiliates as follows:
Product sales and service revenues $ 1.2
Management fee expense ........... $ 0.7
Interest expense ................. $ 4.8
Included in management fee expense are expenses paid by Terex Corporation on
behalf of the Company (e.g. Legal, Treasury and Tax Expense).
<PAGE>
PPM CRANES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in millions)
For the Six
Months Ended
June 30, 1996
Net sales .................................................... $ 50.7
Cost of goods sold ........................................... 44.6
Gross profit ................................................. 6.1
Engineering, selling and administrative expenses ............. 4.3
Income from operations ....................................... 1.8
Other income (expense):
Interest expense ............................................. (3.8)
Amortization of debt issuance costs .......................... (0.2)
Loss before income taxes ..................................... (2.2)
Provision for income taxes ................................... --
NET LOSS .................................................... $ (2.2)
The accompanying notes are an integral part of these financial statements.
<PAGE>
PPM CRANES, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
(in millions, except share amounts)
June 30,
1996
ASSETS
Current assets:
Cash and cash equivalents .............................. $ 0.2
Trade accounts receivables
(less allowance of $0.5) ............................... 18.0
Net inventories ........................................ 29.6
Due from affiliates .................................... 1.6
Prepaid expenses and other current assets .............. 0.2
Total current assets ................................... 49.6
Property, plant and equipment - net .................... 3.6
Goodwill - net ......................................... 29.9
Other identified intangible assets - net ............... 2.6
Total assets ........................................... $ 85.7
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Trade accounts payable ................................. $ 9.7
Accrued product liability and product warranty ......... 8.5
Accrued expenses ....................................... 3.8
Due to affiliates ...................................... 3.0
Due to Terex Corporation ............................... 11.2
Current portion of long-term debt ...................... 1.0
Total current liabilities .............................. 37.2
Non-current liabilities:
Long-term debt, less current portion ................... 53.4
Other non-current liabilities .......................... 0.6
Total non-current liabilities .......................... 54.0
Commitments and contingencies
Shareholders' deficit
Common stock, Class A, $.01 par value -
authorized 8,000 shares;
issued and outstanding 5,000 shares .................... --
Common stock, Class B, $.01 par value -
authorized 2,000 shares;
issued and outstanding 413 shares ...................... --
Accumulated deficit .................................... (5.4)
Foreign currency translation adjustment ................ (0.1)
Total shareholders' deficit ............................ (5.5)
Total liabilities and shareholders' deficit ............ $ 85.7
The accompanying notes are an integral part of these financial statements.
<PAGE>
PPM CRANES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
For the
Six
Months
Ended
June 30,
1996
OPERATING ACTIVITIES
Net loss .................................................. $ (2.2)
Adjustments to reconcile net income (loss)
to cash used in operating activities:
Depreciation and amortization ............................. 1.4
Changes in operating assets
and liabilities:
Trade accounts receivable ................................. (6.1)
Net inventories ........................................... (4.6)
Prepaid expenses and other current assets ................. 0.4
Trade accounts payable .................................... 4.2
Net amounts due to affiliates ............................. 7.6
Accrued product liability and product warranty ............ 0.3
Accrued expenses .......................................... (0.3)
Other, net ................................................ (0.2)
Net cash used in operating activities ..................... (0.5)
INVESTING ACTIVITIES
Capital expenditures ...................................... (0.1)
Net cash used in investing activities ..................... (0.1)
FINANCING ACTIVITIES
Principal repayments of long-term debt .................... (0.5)
Net cash provided by financing activities ................. (0.5)
EFFECT OF EXCHANGE RATE CHANGES ON
CASH AND CASH EQUIVALENTS ................................. (0.2)
NET DECREASE IN CASH AND CASH EQUIVALENTS ................. (0.3)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD .......... 0.5
CASH AND CASH EQUIVALENTS AT END OF PERIOD ................ $ 0.2
The accompanying notes are an integral part of these financial statements.
<PAGE>
PPM Cranes, Inc.
Notes to Condensed Consolidated Financial Statements
June 30, 1996
(In millions unless otherwise denoted)
1. Description of the Business and Basis of Presentation
PPM Cranes, Inc. (the "Company" or "PPM") is engaged in the design, manufacture,
marketing and worldwide distribution and support of construction equipment,
primarily hydraulic and lattice boom cranes and related spare parts.
On May 9, 1995 (the "date of acquisition"), Terex Corporation, through its
wholly-owned subsidiary Terex Cranes, Inc., completed the acquisition of all of
the capital stock of Legris Industries, Inc., a Delaware Corporation which owns
92.4% of the capital stock of PPM Cranes, Inc. Terex Corporation and Terex
Cranes, Inc., are both Delaware corporations.
The condensed consolidated financial statements reflect Terex Corporation's
basis in the assets and liabilities of the Company which was accounted for as a
purchase transaction. As a result, the debt and goodwill associated with the
acquisition have been "pushed down" to the Company's financial statements.
In the opinion of management, all adjustments considered necessary for a fair
presentation have been made. Such adjustments consist only of those of a
recurring nature. Operating results for the six months ended June 30, 1996 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1996.
2. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries; PPM of Australia Pty. Ltd., and PPM Far East
Private Ltd., a Singapore company. All material intercompany transactions and
profits have been eliminated. During 1995, management closed the operations in
PPM Far East Private Ltd.
Inventories
Inventories are stated at the lower of cost or market. Cost is determined by the
last-in, first-out (LIFO) method for domestic inventories and by the first-in,
first-out (FIFO) method for inventories of foreign subsidiaries.
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 the Company are depreciated using
the straight-line method over their estimated useful lives, which range from
three to twenty years.
Excess of Cost Over Net Assets
Goodwill, representing the difference between the total purchase price and the
fair value of assets (tangible and intangible) and liabilities at the date of
acquisition, is amortized on a straight-line basis over fifteen years. It is the
Company's policy to periodically evaluate the carrying value of goodwill, and to
recognize impairments when the estimated related future net operating cash flows
is less than its carrying value. The amount of any impairment then recognized
would be calculated as the difference between estimated future discounted cash
flows and the carrying value of the goodwill.
Debt Issuance Costs
Debt issuance costs incurred by Terex Corporation in securing the financing
related to acquiring the Company have been capitalized and are reflected in the
financial statements. Capitalized debt issuance costs are amortized over the
term of the related debt.
<PAGE>
Product Liability and Warranty
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 claims and for claims anticipated to
have been incurred which have not yet been reported. Prior to August 1, 1995,
the Company maintained product liability insurance; therefore, the product
liability accrual was equal to the estimated product liability less expected
recoveries under insurance policies.
Income Taxes
Income taxes are provided using the liability method in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes."
The Company is a part of a group that files a consolidated income tax return.
The method used to allocate income taxes to members of the group is one in which
current and deferred income taxes are calculated on a separate return basis as
if the Company had not been included in a consolidated income tax return with
its parent. The tax benefit associated with the acquisition debt has been taken
into account in the Company's tax provision.
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.
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 Shareholders' Deficit.
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.
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.
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.
<PAGE>
3. Inventories
Inventories at June 30, 1996 consist of the following:
Raw materials and supplies $ 13.8
Work in process .......... 0.7
Replacement parts ........ 6.8
Finished goods equipment . 8.3
$ 29.6
The LIFO value is approximately equivalent to the corresponding FIFO value at
June 30, 1996.
4. Property, Plant and Equipment
Net property, plant and equipment at June 30, 1996 consists of the following:
Property, plant and equipment ..... $ 4.2
Less accumulated depreciation ..... (0.6)
Net property, plant and equipment . $ 3.6
5. Contingencies
The Company is involved in product liability and other lawsuits incident to the
operation of its business. Insurance with third parties is maintained for
certain of these items. It is management's opinion that none of these lawsuits
will have a materially adverse effect on the Company's financial position.
<PAGE>
Report of Independent Auditors
The Board of Directors and Shareholders
PPM Cranes, Inc.
We have audited the accompanying consolidated balance sheets of PPM Cranes, Inc.
as of December 31, 1994 and 1993, and the related consolidated 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 did not audit the
financial statements of PPM of Australia Pty. Ltd., a wholly-owned subsidiary,
which statements reflect total assets of 3.5% and 3.0T as of December 31, 1994
and 1993, respectively, and total revenues of 5.3%, 4.2% and 5.5% for each of
the three years in the period ended December 31, 1994. Those statements were
audited by other auditors whose report has been furnished to us, and our
opinion, insofar as it relates to data included for PPM of Australia Pty. Ltd.
is based solely on the report of the other auditors.
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 and the report of other auditors provide a reasonable
basis for our opinion.
In our opinion, based on our audits and the report of other auditors, the
financial statements referred to above present fairly, in all material respects,
the consolidated financial position of PPM Cranes, Inc. at December 31, 1994 and
1993, and the consolidated 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.
Greenville, South Carolina
August 22, 1995
PPM Cranes, Inc.
Consolidated Balance Sheets
December 31
1994 1993
(In thousands of dollars
except share amounts)
Assets
Current Assets:
Cash and cash equivalents ............... $ 2,124 $ 850
Trade accounts receivable, less
allowance of $268 and $429 in
1994 and 1993, respectively ............ 10,293 5,827
Due from affiliates ..................... 185 633
Inventories ............................. 27,523 25,446
Prepaid expenses and other current assets 897 911
------- -------
Total current assets ..................... 41,022 33,667
Property, plant, and equipment, net ...... 4,550 4,606
Intangible assets:
Cost in excess of net assets acquired,
less accumulated amortization of
$8,739 and $6,592 in 1994 and 1993,
respectively ........................... 36,852 38,999
Other identified intangible assets,
less accumulated amortization of $731
and $502 in 1994 and 1993, respectively 413 642
------- -------
37,265 39,641
------- -------
Total assets ............................. $82,837 $77,914
======= =======
December 31
1994 1993
(In thousands of dollars
except share amounts)
Liabilities and shareholders' equity
Current liabilities:
Trade accounts payable ................. $ 5,518 $ 5,655
Due to affiliates ...................... 4,526 2,373
Product liability reserve .............. 4,850 4,432
Product warranty reserve ............... 616 299
Accrued interest ....................... 1,610 1,157
Accrued expenses ....................... 1,884 1,208
Bank overdraft ......................... 350 113
Current portion of long-term debt ...... 32,155 150
-------- --------
Total current liabilities ............... 51,509 15,387
Long-term debt, less current portion .... 5,851 28,927
Shareholders' equity:
Common stock, Class A, $.01 par value
-- authorized 8,000 shares;
issued and outstanding 5,000 shares ... -- --
Common stock, Class B, $.01 par value
-- authorized 2,000 shares;
issued and outstanding 413 shares ..... -- --
Additional paid-in capital ............. 52,782 52,782
Accumulated deficit .................... (27,274) (18,791)
Foreign currency translation adjustments (31) (391)
-------- --------
Total shareholders' equity .............. 25,477 33,600
-------- --------
Total liability and shareholders' equity $ 82,837 $ 77,914
======== ========
See accompanying notes
PPM Cranes, Inc.
Consolidated Statements of Operations
Year Ended December 31
1994 1993 1992
(In thousands of dollars)
Net sales ....................... $ 74,814 $ 74,125 $ 69,797
Cost of products sold ........... 65,470 68,581 58,584
Selling, general, and
administrative expenses ........ 12,990 13,545 12,319
Amortization of intangible assets 2,376 2,397 2,550
-------- -------- --------
Loss from operations ............ (6,022) (10,398) (3,656)
Other (income) expense:
Interest expense ............... 2,509 2,021 1,777
Interest income ................ (48) (12) (28)
-------- -------- --------
Loss before income taxes ........ (8,483) (12,407) (5,405)
Income tax (benefit) provision .. -- (5) 147
-------- -------- --------
Net loss ........................ $ (8,483) $(12,402) $ (5,552)
======== ======== ========
See accompanying notes
<TABLE>
<CAPTION>
PPM Cranes, Inc.
Consolidated Statements of Shareholders' Equity
Foreign
Additional Accumu- Currency
Common Stock Paid-in lated Translation
Shares Amount Capital Deficit Adjustments Total
(In thousands of dollars, except share amounts)
<S> <C> <C> <C> <C> <C> <C>
Balance at
December 31, 1991 5,000 $-- $ 49,282 $ (837) $ (62) $ 48,383
Issuance of
common stock
-- Class B .... 413 -- 3,500 -- -- 3,500
Net loss ....... -- -- -- (5,552) -- (5,552)
Translation
adjustment for
period ........ -- -- -- -- (295) (295)
-------- ----- -------- -------- -------- --------
Balance at
December 31, 1992 5,413 -- 52,782 (6,389) (357) 46,036
Net loss ....... -- -- -- (12,402) -- (12,402)
Translation
adjustment .... -- -- -- -- (34) (34)
-------- ----- -------- -------- -------- --------
Balance at
December 31, 1993 5,413 -- 52,782 (18,791) (391) 33,600
Net loss ....... -- -- -- (8,483) -- (8,483)
Translation
adjustment .... -- -- -- -- 360 360
-------- ----- -------- -------- -------- --------
Balance at
December 31, 1994 5,413 $-- $ 52,782 $(27,274) $ (31) $ 25,477
======== ===== ======== ======== ======== ========
</TABLE>
PPM Cranes, Inc.
Consolidated Statements of Cash Flows
Year Ended December 31
1994 1993 1992
(In thousands of dollars)
Operating activities
Net loss ................................... $ (8,483) $(12,402) $ (5,552)
Adjustments to reconcile net income
to net cash used in operating
activities:
Depreciation and amortization ............ 3,144 3,211 3,225
Changes in operating assets and
liabilities:
Accounts receivable ..................... (4,466) 927 4,415
Inventories ............................. (2,077) 7,455 (2,139)
Prepaid expenses and other .............. 14 (135) (567)
Accounts payable ........................ (137) (174) (1,070)
Net amounts due to affiliates ........... 2,601 -- --
Product liability reserve ............... 418 493 (3,123)
Product warranty reserve ................ 317 (117) (433)
Accrued expenses ........................ 1,129 (471) (968)
-------- -------- --------
Net cash used in operating activities ...... (7,540) (1,213) (6,212)
Investing activities
Purchases of property, plant,
and equipment ............................. (712) (1,061) (1,271)
Increase in other intangible assets ........ -- -- --
-------- -------- --------
Net cash used in investing activities ...... (712) (1,061) (1,632)
Financing activities
Proceeds from revolving credit
with banks ................................ 237 35,028 8,999
Principal payments on revolving
credit with banks ......................... (179) (35,409) (8,631)
Proceeds from notes payable to
parent company ............................ 20,408 10,025 3,142
Principal payments on notes payable
to parent company ......................... (11,300) (6,925) --
Proceeds from sale of common stock ......... -- -- 3,500
-------- -------- --------
Net cash provided by financing
activities ................................ 9,166 2,719 7,010
Effect of exchange rate changes on cash .... 360 (34) (57)
-------- -------- --------
Net increase (decrease) in cash
and cash equivalents ...................... 1,274 411 (891)
Cash and cash equivalents at
beginning of period ....................... 850 439 1,330
-------- -------- --------
Cash and cash equivalents at
end of period ............................. $ 2,124 $ 850 $ 439
======== ======== ========
Supplemental disclosure of cash flow
information
Cash paid for interest ..................... $ 2,203 $ 2,024 $ 1,974
======== ======== ========
Cash paid for income taxes ................. $ -- $ 130 $ 100
======== ======== ========
See accompanying notes.
PPM Cranes, Inc.
Notes to Consolidated Financial Statements
December 31, 1994
(In thousands of dollars)
1. Basis of Presentation and Description of Business
Basis of Presentation
As more fully described in Note 13 (unaudited), Terex Corporation ("Terex"),
through its wholly owned subsidiary Terex Cranes, Inc. ("Terex Cranes"),
completed the acquisition of substantially all of the common stock of Legris
Industries, Inc. ("Legris"), a Delaware corporation on May 9,1995. Prior to the
acquisition, PPM Cranes, Inc. ("the Company"), a Delaware corporation, was owned
92.4% by Legris, which in turn was wholly owned by Legris Industries S.A., a
French corporation. The remaining 7.6% of the Company is owned by Harnischfeger
Corporation from whom the business was purchased in 199 1.
The Company has two classes of capital stock issued and outstanding - common
Class A and common Class B. These are equal in all respects except that Class B
(to be issued exclusively toHamischfeger Corporation) is entitled to elect one
director and Class A is entitled to elect the remaining directors.
The accompanying consolidated financial statements were prepared on the basis of
generally accepted accounting principles and include the consolidated financial
position, results of operations and cash flows of the Company and its wholly
owned subsidiaries, PPM of Australia Pty. Ltd. and PPM Far East Pte. Ltd. All
significant intercompany balances have been eliminated.
Description of Business
The Company operates in one business segment - the design, manufacture,
marketing and worldwide distribution and support of construction equipment,
primarily hydraulic and lattice boom cranes and related spare parts.
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.
2. Summary of Significant Accounting Policies
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 domestic inventories and by the first-in,
first-out (FIFO) method for inventories of foreign subsidiaries.
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 the Company 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. Other identified intangibles are primarily 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
The Company 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 109"). Under FAS 109, the deferred tax assets and liabilities are
determined based on temporary differences between the basis of certain assets
and liabilities for income tax and financial reporting purposes.
The Company is a part of a group that files a consolidated income tax return.
The method used to allocate income taxes to members of the group is one in which
current and deferred income taxes are allocated on a separate return basis as if
the Company had not been included in a consolidated income tax return with its
parent.
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 $1,576, $1,937 and $2,063,
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. Gains and
losses on foreign currency transactions are recognized in earnings. Adjustments
resulting from the translation of financial statements of the foreign
subsidiaries and translation gains or losses related to long-term intercompany
investments are included in the foreign currency translation adjustments account
in shareholders' equity.
Reclassifications
Certain reclassifications were made to the 1993 and 1992 financial statements to
conform to the 1994 presentation.
3. Inventories
Inventories at December 31, 1994 and 1993 consist of the following:
1994 1993
Raw materials and parts ........ $18,647 $17,906
Work in process ................ 5,876 3,994
Finished goods and subassemblies 2,228 3,193
Consigned inventory ............ 772 353
------- -------
$27,523 $25,446
======= =======
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 ....... $ 98 $ 98
Buildings ................... 2,318 2,191
Machinery and equipment ..... 5,116 4,531
------- -------
7,532 6,820
Less accumulated depreciation (2,982) (2,214)
------- -------
$ 4,550 $ 4,606
======= =======
Depreciation expense for 1994, 1993 and 1992 was $768, $814 and $675,
respectively.
5. Debt
At December 31, 1994 and 1993, PPM Far East Pte. Ltd. has a bank overdraft of
approximately $350 and $113, respectively. This overdraft is collateralized by a
building located in Singapore and a guarantee of PPM and bears interest based on
various bank benchmark rates.
Long-term debt at December 31, 1994 and 1993 consists of the following:
1994 1993
Notes payable to Legris $ 38,006 $ 28,898
Note payable to bank .. -- 179
-------- --------
38,006 29,077
Less current maturities (32,155) (150)
-------- --------
$ 5,851 $ 28,927
======== ========
Approximately $12,686 of the indebtedness to Legris bears interest at an annual
fixed rate of 9%. The remainder of this indebtedness bears interest at annual
rates based on various bank benchmark rates ranging from 6.875% to 8.5% at
December 31, 1994. At December 31, 1993, Legris represented to the Company that
this indebtedness should be classified as long-term. In connection with the
acquisition by Terex on May 9, 1995 (see Note 13), all debt obligations of
Legris and its subsidiaries, other than a note payable to Harnischfeger
Corporation, were satisfied. Accordingly, all debt obligations other than the
long-term portion of the note payable toHamischfeger Corporation have been
classified as current at December 31, 1994.
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
The Company 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. 'Me related expense to the Company was $119, $118 and $82 for 1994, 1993
and 1992, respectively.
7. Income Taxes
Effective January 1, 1992, the Company adopted the provisions of Statement of
FAS 109. There was no cumulative effect of this change in accounting for income
taxes on the consolidated financial statements.
(Loss) income before income taxes consisted of the following:
1994 1993 1992
Domestic ................. $ (8,703) $(11,980) $ (5,566)
Foreign .................. 220 (427) 161
-------- -------- --------
$ (8,483) $(12,407) $ (5,405)
======== ======== ========
Federal, foreign, and state income taxes (benefit) consisted of the following:
1994 1993 1992
Federal ...................... $-- $-- $--
Foreign ...................... -- (5) 147
State ........................ -- -- --
----- ----- -----
$-- $ (5) $ 147
===== ===== =====
The Company has not provided U.S. income taxes for undistributed earnings of
foreign subsidiaries which are considered to be 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 rate differed from the
benefit at the statutory rate as follows:
1994 1993 1992
Computed tax (benefit) at
expected statutory rate ................... $(2,884) $(4,218) $(1,838)
State taxes ................................ (364) (620) (270)
Change in state tax rate ................... 165 -- --
Increase in valuation allowance ............ 426 2,182 2,147
Nondeductible goodwill ..................... 837 852 --
Adjustment of prior years' estimated
deferred tax accruals ..................... 1,548 1,620 --
Foreign taxes .............................. -- (5) 147
Meals and entertainment .................... 20 12 13
Other ...................................... 252 172 (52)
------- ------- -------
Income tax (benefit) provision ............. $ -- $ (5) $ 147
======= ======= =======
At December 31, 1994, the Company has net operating loss carryforwards for
Federal income tax purposes of approximately $50,532 available to offset future
taxable income, which included net operating losses of approximately $2,000 that
existed at the date the business was acquired. 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. Components of the Company's deferred taxes at
December 31, 1994 and 1993 are as follows:
1994 1993
Total deferred tax liabilities ................. $ (2,253) $ (277)
Total deferred tax assets, principally
net operating loss carryforwards .............. 25,663 23,261
Total valuation allowance ...................... (23,410) (22,984)
-------- --------
Net deferred taxes ............................. $ -- $ --
======== ========
The expiration of the Company's net operating loss carryforwards are as follows:
Year Expiring Amount
2003 $493
2004 667
2005 22,421
2006 835
2007 5,837
2008 15,125
2009 5,154
-------
$50,532
=======
8. Commitments and Contingencies
The Company 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
the Company to pay maintenance, property taxes and insurance. Rent expense for
1994, 1993 and 1992 was $1,148, $1,079 and $656, respectively.
Future minimum payments under noncancelable operating leases at December 31,
1994 are as follows:
1995 $904
1996 620
1997 537
1998 508
1999 303
Thereafter 75
-------
2,947
=======
The Company is involved in product liability and other lawsuits incident to the
operation of its business. Insurance coverages and accruals 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 financial position.
The Company 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 the Company.
9. Foreign Operations
Summarized financial data relating to the foreign subsidiaries included in the
accompanying consolidated financial statements at December 31, 1994, 1993 and
1992 are as follows:
1994 1993 1992
Assets .............................. $ 4,832 $ 4,071 $ 4,879
Liabilities ............................ 1,584 830 1,010
Net income (loss) ...................... 220 (422) 14
10. Related Party Transactions
In addition to borrowings from Legris (see Note 5), the Company had transactions
with various unconsolidated affiliates as follows:
1994 1993 1992
Product sales and service revenues ...... $ 2,405 $ 2,141 $ 4,338
Purchases of inventory .................. 14,876 10,531 3,344
Management fee expense .................. 1,500 1,500 331
Interest expense ........................ 2,470 1,643 1,697
11. 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, from Potain S.A., a societe anonyme, and 100% of the capital stock of
Legris, which owns 92.4% of the capital stock of PPM Cranes, Inc., from Legris
Industries S.A., a societe anonyme. PPM Cranes, Inc. together with PPM S.A.
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 Cranes, Inc., subject to security interests granted
under the Credit Facility as described below and by liens on certain of Terex's
foreign subsidiaries, including PPM S.A.
Simultaneously with the acquisition, Terex, PPM Cranes, Inc. 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 and subject to participation commitments to be
obtained from additional lenders. The Credit Facility is secured by
substantially all of the companies domestic receivables and inventory (including
PPM Cranes, Inc.). 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 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.
<PAGE>
PPM CRANES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in millions)
January 1
through May 9,
1995
Net sales ................................................... $ 27.0
Cost of goods sold .......................................... 22.8
Gross profit ................................................ 4.2
Engineering, selling and administrative expenses ............ 4.1
Income from operations ...................................... 0.1
Other income (expense):
Interest expense ............................................ (0.7)
Other income (expense), net ................................. (4.5)
Loss before income taxes .................................... (5.1)
Provision for income taxes .................................. --
NET LOSS .................................................... $ (5.1)
The accompanying notes are an integral part of these financial statements.
<PAGE>
PPM CRANES, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
(in millions, except share amounts)
May 9,
1995
ASSETS
Current assets:
Cash and cash equivalents ................................... $ 0.7
Trade accounts receivables (less allowance of $0.2) ......... 8.4
Inventories - net ........................................... 28.0
Due from affiliates ......................................... 0.8
Prepaid expenses and other current assets ................... 0.7
Total current assets ........................................ 38.6
Property, plant and equipment - net ......................... 4.2
Cost in excess of net assets acquired,
less accumulated amortization of $9.5 ....................... 36.2
Other identified intangible assets,
less accumulated amortization of $0.8 ....................... 0.3
Total assets ................................................ $ 79.3
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable ...................................... $ 7.5
Accrued product liability and product warranty .............. 7.2
Accrued expenses ............................................ 2.7
Due to affiliates ........................................... 2.6
Other current liabilities ................................... 0.5
Current portion of long-term debt ........................... 32.4
Total current liabilities ................................... 52.9
Non-current liabilities:
Long-term debt, less current portion ........................ 5.9
Commitments and contingencies
Shareholders' equity:
Common stock, Class A, $.01 par value -
authorized 8,000 shares;
issued and outstanding 5,000 shares ......................... --
Common stock, Class B, $.01 par value -
authorized 2,000 shares;
issued and outstanding 413 shares ........................... --
Additional paid-in capital .................................. 52.8
Accumulated deficit ......................................... (32.3)
Foreign currency translation adjustment ..................... --
Total shareholders' equity .................................. 20.5
Total liabilities and shareholders' equity .................. $ 79.3
The accompanying notes are an integral part of these financial statements.
<PAGE>
PPM CRANES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
January 1
through
May 9, 1995
NET CASH USED IN OPERATING ACTIVITIES .............................. $ (1.5)
INVESTING ACTIVITIES
Purchases of property, plant and equipment ......................... (0.1)
FINANCING ACTIVITIES
Proceeds from revolving credit with
banks and from notes payable to an
affiliated company, net ............................................ 0.2
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS ....... --
NET DECREASE IN CASH AND CASH EQUIVALENTS .......................... (1.4)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ................... 2.1
CASH AND CASH EQUIVALENTS AT END OF PERIOD ......................... $ 0.7
The accompanying notes are an integral part of these financial statements.
<PAGE>
PPM Cranes, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
January 1 through May 9, 1995
(In millions unless otherwise denoted)
1. Description of the Business and Basis of Presentation
PPM Cranes, Inc. (the "Company" or "PPM") is engaged in the design, manufacture,
marketing and worldwide distribution and support of construction equipment,
primarily hydraulic and lattice boom cranes and related spare parts.
On May 9, 1995 (the "date of acquisition"), Terex Corporation, through its
wholly-owned subsidiary Terex Cranes, Inc., completed the acquisition of all of
the capital stock of Legris Industries, Inc., a Delaware Corporation which owns
92.4% of the capital stock of PPM Cranes, Inc. Terex Corporation and Terex
Cranes, Inc., are both Delaware corporations.
2. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries; PPM of Australia Pty. Ltd., and PPM Far East
Private Ltd., a Singapore company. All material intercompany transactions and
profits have been eliminated. During 1995, management closed the operations in
PPM Far East Private Ltd.
Inventories
Inventories are stated at the lower of cost or market. Cost is determined by the
last-in, first-out (LIFO) method for domestic inventories and by the first-in,
first-out (FIFO) method for inventories of foreign subsidiaries.
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 the Company are depreciated using
the straight-line method over their estimated useful lives.
Product Warranty
The Company 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."
The Company is a part of a group that files a consolidated income tax return.
The method used to allocate income taxes to members of the group is one in which
current and deferred income taxes are calculated on a separate return basis as
if the Company had not been included in a consolidated income tax return with
its parent.
<PAGE>
Revenue Recognition
Revenue and costs are generally recorded when products are shipped and invoiced
to either independently owned and operated dealers or to customers.
Foreign Currency Translation
Assets and liabilities of the Company's international operations are translated
at period-end exchange rates. Income and expenses are translated at average
exchange rates prevailing during the period. For operations whose functional
currency is the local currency, translation adjustments are accumulated in the
Cumulative Translation Adjustment component of Shareholders' Equity.
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.
3. Inventories
Inventories at May 9, 1995 consist of the following:
Raw materials and parts ......... $ 19.3
Work in process ................. 6.2
Finished goods and sub assemblies 2.5
$ 28.0
The LIFO value is approximately equivalent to the corresponding FIFO value at
May 9, 1995.
4. Property, Plant and Equipment
Net property, plant and equipment at May 9, 1995 consists of the following:
Property, plant and equipment ..... $ 7.5
Less accumulated depreciation ..... (3.3)
Net property, plant and equipment . $ 4.2
5. Contingencies
The Company is involved in product liability and other lawsuits incident to the
operation of its business. Insurance with third parties is maintained for
certain of these items. It is management's opinion that none of these lawsuits
will have a materially adverse effect on the Company's financial position.
<PAGE>
TEREX CORPORATION
PRO FORMA FINANCIAL INFORMATION
DISCONTINUED OPERATIONS
The following unaudited pro forma condensed consolidated financial information
of the Company gives effect to the discontinued operations of the Material
Handling Segment 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, 1995 and the six months ended June 30, 1996 as
if the Material Handling Segment had been sold at the beginning of each period
presented giving effect to the adjustments as reflected in the accompanying
notes. Additionally, the pro forma balance sheet of the Company is based on the
historical balance sheet as of June 30, 1996 as if the Material Handling Segment
had been sold as of June 30, 1996, giving effect to the adjustments as reflected
in the accompanying notes.
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 period indicated, nor does it purport to represent the results of
operations for future periods.
<PAGE>
TEREX CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 1995
(in millions except per share amounts)
Terex Pro
Corporation Forma
and Disposition
Subsidiaries Adjustments Pro Forma
NET SALES ................................ $ 501.4 $ -- $ 501.4
COST OF GOODS SOLD ....................... 431.0 -- 431.0
Gross Profit ............................. 70.4 -- 70.4
ENGINEERING, SELLING AND
ADMINISTRATIVE EXPENSES .................. 57.6 -- 57.6
Income (loss) from operations ............ 12.8 -- 12.8
OTHER INCOME (EXPENSE)
Interest income .......................... 0.7 -- 0.7
Interest expense ......................... (38.7) 7.0 (31.7)
Amortization of debt issuance costs ...... (2.3) -- (2.3)
Gain on sale of Fruehauf stock ........... 1.0 -- 1.0
Other income (expense) - net ............. (5.6) -- (5.6)
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME
TAXES AND EXTRAORDINARY ITEMS ............ (32.1) 7.0 (25.1)
PROVISION FOR INCOME TAXES ............... -- -- --
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE
EXTRAORDINARY ITEMS ...................... (32.1) 7.0 (25.1)
INCOME (LOSS) FROM DISCONTINUED OPERATIONS
(net of tax expense of $0) ............... 4.4 (4.4) --
INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS . (27.7) 2.6 (25.1)
EXTRAORDINARY LOSS ON RETIREMENT OF DEBT . (7.5) -- (7.5)
NET INCOME (LOSS) ........................ (35.2) 2.6 (32.6)
LESS PREFERRED STOCK ACCRETION ........... (7.3) -- (7.3)
INCOME (LOSS) APPLICABLE TO COMMON STOCK . $ (42.5) $ 2.6 $ (39.9)
PER COMMON AND COMMON EQUIVALENT SHARE:
Income (loss) from continuing operations . $ (3.79) $ (3.12)
Income (loss) from discontinued operations 0.42 --
Loss before extraordinary items .......... (3.37) (3.12)
Extraordinary loss on retirement of debt . (0.72) (0.72)
Net income (loss) ........................ $ (4.09) $ (3.84)
AVERAGE NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES OUTSTANDING
IN PER SHARE CALCULATION ................ 10.4 10.4
The accompanying notes are an integral part of these financial statements.
<PAGE>
TEREX CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Six Months Ended June 30, 1996
(in millions except per share amounts)
Terex Pro
Corporation Forma
and Disposition
Subsidiaries Adjustments Pro Forma
NET SALES .................................... $ 356.0 $ -- $ 356.0
COST OF GOODS SOLD ........................... 305.6 -- 305.6
Gross Profit ................................. 50.4 -- 50.4
ENGINEERING, SELLING AND
ADMINISTRATIVE EXPENSES ...................... 32.6 -- 32.6
Income (loss) from operations ................ 17.8 -- 17.8
OTHER INCOME (EXPENSE)
Interest income .............................. 0.1 -- 0.1
Interest expense ............................. (22.8) 3.5 (19.3)
Amortization of debt issuance costs .......... (1.3) -- (1.3)
Other income (expense) - net ................. 1.8 -- 1.8
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES ............... (4.4) 3.5 (0.9)
PROVISION FOR INCOME TAXES ................... -- -- --
INCOME (LOSS) FROM CONTINUING OPERATIONS ..... (4.4) 3.5 (0.9)
INCOME (LOSS) FROM DISCONTINUED OPERATIONS
(net of tax expense of $0) ................... 9.4 (9.4) --
NET INCOME (LOSS) ............................ 5.O (5.9) (0.9)
LESS PREFERRED STOCK ACCRETION ............... (3.8) -- (3.8)
INCOME (LOSS) APPLICABLE TO COMMON STOCK ..... $ 1.2 $ (5.9) $ (4.7)
PER COMMON AND COMMON EQUIVALENT SHARE:
Income (loss) from continuing operations ..... $ (0.66) $ (0.38)
Income (loss) from discontinued operations ... 0.76 --
Net income (loss) ............................ $ 0.10 $ (0.38)
AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING IN PER SHARE CALCULATION .. 12.4 12.4
The accompanying notes are an integral part of these financial statements.
<PAGE>
TEREX CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED BALANCE SHEET
June 30, 1996
(in millions)
Terex Pro
Corporation Forma
and Disposition
Subsidiaries Adjustments Pro Forma
ASSETS
Current assets
Cash and cash equivalents ...................... $ 9.5 $ 57.8 $ 67.3
Cash securing letters of credit ................ 3.5 -- 3.5
Trade receivables
(less allowance of $5.6) ...................... 108.3 -- 108.3
Net inventories ................................ 180.3 -- 180.3
Other current assets - net ..................... 15.7 -- 15.7
Total current assets ........................... 317.3 57.8 375.1
Long-term assets
Property, plant and equipment - net ............ 35.4 -- 35.4
Goodwill - net ................................. 59.0 -- 59.0
Other assets - net ............................. 23.1 -- 23.1
Net assets of discontinued operations .......... 42.9 (42.9) --
Total assets ................................... $ 477.7 $ 14.9 $ 492.6
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Notes payable .................................. $ 7.2 $ -- $ 7.2
Current portion of long-term debt
and capital lease obligations ................. 5.4 -- 5.4
Trade accounts payable ......................... 103.2 -- 103.2
Accrued compensation and benefits .............. 14.0 -- 14.0
Accrued warranties and product liability ....... 20.5 -- 20.5
Accrued interest ............................... 4.4 -- 4.4
Other current liabilities ...................... 33.6 -- 33.6
Total current liabilities ...................... 188.3 -- 188.3
Long-term liabilities
Long-term debt and capital lease
obligations less current portion .............. 328.1 (72.2) 255.9
Accrued pension ................................ 5.8 -- 5.8
Other long-term liabilities .................... 15.3 -- 15.3
Minority interest, including redeemable
preferred stock of a subsidiary
(liquidation preference $24.7,
subject to adjustment) ........................ 9.4 -- 9.4
Redeemable convertible preferred stock
(liquidation preference $43.1) ................ 27.6 -- 27.6
Commitments and contingencies
Stockholders' deficit
Warrants to purchase common stock .............. 12.2 -- 12.2
Common stock, $.01 par value -
authorized 30.0 shares;
issued and outstanding 11.5 ................... 0.1 -- 0.1
Additional paid-in capital ..................... 46.4 -- 46.4
Accumulated deficit ............................ (149.8) 87.1 (62.7)
Pension liability adjustment ................... (2.7) -- (2.7)
Unrealized holding gain on equity securities ... 0.2 -- 0.2
Cumulative translation adjustment .............. (3.2) -- (3.2)
Total stockholders' deficit .................... (96.8) 87.1 (9.7)
Total liabilities and stockholders' deficit .... $ 477.7 $ 14.9 $ 492.6
The accompanying notes are an integral part of these financial statements.
<PAGE>
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, 1995 and the six months ended June 30,
1996 as if the Material Handling Segment had been sold at the beginning of each
period presented giving effect to the adjustments as reflected below.
Additionally, the pro forma balance sheet of the Company is based on the
historical balance sheet as of June 30, 1996 as if the Material Handling Segment
had been sold as of June 30, 1996, giving effect to the adjustments as reflected
below.
2) The pro forma statement of operations adjustments are summarized as follows:
a) Pro forma adjustments to "Interest expense" ($7.0 and $3.5 for
1995 and the six months ended June 30, 1996, respectively)
represent the interest on the $70.0 working capital facility
at 10% per annum which would not have been incurred assuming
that the proceeds from the sale of the Material Handling
business had been received at the start of the period and that
the working capital facility was not used.
b) Pro forma adjustments to "Income (loss) from discontinued
operations" represent the income from the Material Handling
business that would not have been realized during the periods
presented.
3) The pro forma adjustments to the balance sheet are summarized as follows:
a) "Accumulated deficit" was reduced to reflect the estimated net
gain on the disposal of the Material Handling business ($87.1)
calculated as the proceeds ($135.0) less the estimated
transaction fees ($5.0) less the value of the net assets of
discontinued operations ($42.9).
b) "Long-term debt and capital lease obligations less current
portion" was reduced by $72.2 to reflect the repayment of the
June 30, 1996 balance of the working capital facility from the
net proceeds from the sale of the Material Handling business.
c) "Cash" was increased by $57.8 to reflect the cash remaining
from the sales proceeds ($135.0) less the estimated
transaction fees ($5.0) and the repayment of the working
capital facility balance ($72.2).
d) "Net assets of discontinued operations" was reduced to $0.0 to
reflect the sale of the Material Handling business.
<PAGE>
<TABLE>
<CAPTION>
TEREX CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(Amounts in millions)
Additions
Balance ----------------------
Beginning Charges to Balance
of Year Earnings Other Deductions (1) End of Year
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1995:
Deducted from asset accounts:
Allowance for doubtful accounts .............. $ 6.1 $ 6.3 $ -- $ (2.6) $ 9.8
Reserve for excess and obsolete inventory..... 21.1 8.7 0.3 (2) (9.5) 20.6
Totals ....................................... $ 27.2 $ 12.6 $ (9.3) $ (7.2) $ 23.3
Year ended December 31, 1994:
Deducted from asset accounts:
Allowance for doubtful accounts .............. $ 7.5 $ 1.0 $ -- $ (2.4) $ 6.1
Reserve for excess and obsolete inventory..... 20.7 7.6 -- (7.2) 21.1
Totals ....................................... $ 28.2 $ 8.6 $ -- $ (9.6) $ 27.2
Year ended December 31, 1993:
Deducted from asset accounts:
Allowance for doubtful accounts .............. $ 6.3 $ 1.7 $ -- $ (0.5) $ 7.5
Reserve for excess and obsolete inventory..... 22.4 7.5 -- (9.2) 20.7
Totals ....................................... $ 28.7 $ 9.2 $ -- $ (9.7) $ 28.2
<FN>
(1) Utilization of established reserves, net of recoveries.
(2) Added with the acquisition of businesses and the restatement to Net Assets
of Discontinued Operations.
</FN>
</TABLE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. 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.
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 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.
As permitted by Section 102(b)(7) of the DGCL, 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 21. 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 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
(incorporated by reference to Exhibit 4.7 of the Amendment No. 1 to the
Form S-1 Registration Statement of Terex Corporation, Registration No.
33-52711).
4.2 Form of 13-1/4% Senior Secured Notes Due 2002 of Terex Corporation
(incorporated by reference to Exhibit 4.6 of the Amendment No. 1 to the
Form S-1 Registration Statement of Terex Corporation, Registration No.
33-52711).
4.3 Debt Registration Rights Agreement dated as of May 9, 1995 among the
Company and the Purchasers (incorporated by reference to Exhibit 10.30 of
the Amendment No. 1 to the Form S-1 Registration Statement of Terex
Corporation, Registration No. 33-52711).
4.4 Security and Pledge Agreement dated as of May 9, 1995 between the Company
and United States Trust Company of New York, as Collateral Agent
(incorporated by reference to Exhibit 10.32 of the Amendment No. 1 to the
Form S-1 Registration Statement of Terex Corporation, Registration No.
33-52711).
4.5 Subsidiary 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 (incorporated by reference to Exhibit 10.33 of
the Amendment No. 1 to the Form S-1 Registration Statement of Terex
Corporation, Registration No. 33-52711).
4.6 Form of Real Estate Mortgage, dated May 9, 1995, in favor of the Collateral
Agent, covering real estate owned by Terex Corporation or a subsidiary
thereof.**
4.7 Loan 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 (incorporated by reference to Exhibit
10.34 of the Amendment No. 1 to the Form S-1 Registration Statement of
Terex Corporation, Registration No. 33-52711).
4.8 Guarantee dated as of May 9, 1995 from Terex Corporation, Koehring Cranes,
Inc., PPM Cranes, Inc. and CMH Acquisition Corp. and Legris Industries,
Inc. (incorporated by reference to Exhibit 10.35 of the Amendment No. 1 to
the Form S-1 Registration Statement of Terex Corporation, Registration No.
33-52711).
4.9 Guarantee dated as of May 9, 1995 from Terex Corporation, Clark Material
Handling Company, PPM Cranes, Inc. and CMH Acquisition Corp. and Legris
Industries, Inc. (incorporated by reference to Exhibit 10.36 of the
Amendment No. 1 to the Form S-1 Registration Statement of Terex
Corporation, Registration No. 33-52711).
4.10 Guarantee dated as of May 9, 1995 from Terex Corporation, Clark Material
Handling Company, Koehring Cranes, Inc. and CMH Acquisition Corp. and
Legris Industries, Inc. (incorporated by reference to Exhibit 10.37 of the
Amendment No. 1 to the Form S-1 Registration Statement of Terex
Corporation, Registration No. 33-52711).
4.11 Guarantee 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. (incorporated by reference to Exhibit 10.38 of the
Amendment No. 1 to the Form S-1 Registration Statement of Terex
Corporation, Registration No. 33-52711).
4.12 Real Estate Fee Mortgage, Assignment of Rents, Security Agreement,
Financing Statement and Fixture filing, dated as of May 9, 1995, from
Koehring Cranes, Inc. to the United States Trust Company of New York, as
Collateral Agent, regarding Waverly, Iowa.*
4.13 Real Estate Fee Mortgage, Assignment of Rents, Security Agreement,
Financing Statement and Fixture Filing, dated as of May 9, 1995 from
Koehring Cranes, Inc. to United States Trust Company of New York, as
Collateral Agent, regarding Waterloo, Iowa.*
4.14 Real Estate Fee Mortgage, Assignment of Rents, Security Agreement,
Financing Statement and Fixture filing, dated as of May 9, 1995, from Terex
Corporation to United States Trust Company of New York, as Collateral
Agent, regarding Tulsa, Oklahoma.*
4.15 Real Estate Fee Mortgage, Assignment of Rents, Security Agreement,
Financing Statement and Fixture Filing, dated as of May 9, 1995, from Clark
Material Handling Company to United States Trust Company of New York, as
Collateral Agent, regarding Lexington, Kentucky.*
4.16 Real Estate Fee Mortgage, Assignment of Rents, Security Agreement,
Financing Statement and Fixture Filing, dated as of May 9, 1995, from Terex
Corporation to United States Trust Company of New York, as Collateral
Agent, regarding Southaven, Mississippi.*
4.17 Real Estate Fee Mortgage, Assignment of Rents, Security Agreement,
Financing Statement and Fixture filing, dated as of May 9, 1995, from PPM
Cranes, Inc. to United States Trust Company of New York, as Collateral
Agent, regarding Conway, South Carolina.*
4.18 Trademark Security Agreement, dated as of May 9, 1995, between Terex
Corporation and United States Trust Company of New York, as Collateral
Agent.*
4.19 Trademark Security Agreement, dated as of May 9, 1995, between Legris
Industries, Inc. and United States Trust Company of New York, as Collateral
Agent.*
4.20 Trademark Security Agreement, dated as of May 9, 1995, between Clark
Material Handling Company and United States Trust Company of New York, as
Collateral Agent.*
4.21 Patent Security Agreement, dated as of May 9, 1995 between Terex
Corporation and United States Trust Company of New York, as Collateral
Agent.*
4.22 Patent Security Agreement, dated as of May 9, 1995, between Legris
Industries, Inc. and United States Trust Company of New York, as Collateral
Agent.*
4.23 Patent Security Agreement, dated as of May 9, 1995, between PPM Cranes,
Inc. and United States Trust Company of New York, as Collateral Agent.*
4.24 Patent Security Agreement, dated as of May 9, 1995, between Koehring
Cranes, Inc. and United States Trust Company of New York, as Collateral
Agent.*
4.25 Patent Security Agreement, dated as of May 9, 1995, between Clark Material
Handling Company and United States Trust Company of New York, as Collateral
Agent.*
4.26 Intercreditor Agreement, dated as of May 9, 1995, among Congress Financial
Corporation, Foothill Capital Corporation ("Foothill") and United States
Trust Company of New York, as Collateral Agent.*
4.27 Intercompany Security and Pledge Agreement, dated as of May 9, 1995, among
Terex Corporation, Terex Cranes, Inc. and PPM Cranes, Inc.*
4.28 Intercompany Notes, each dated as of May 9, 1995, of PPM Cranes, Inc.,
Terex Cranes, Inc., P.P.M. S.A., PPM Krane GmbH and Baulift GmbH, payable
to the order of Terex Corporation and pledged to United States Trust
Company of New York, as Collateral Agent.*
4.29 Floating Charge, dated May 9, 1995, granted by Terex Equipment Limited in
favor of United States Trust Company of New York, as Collateral Agent.*
4.30 Bond and Floating Charge, dated May 9, 1995, granted by the Terex
Corporation in favor of United States Trust Company of New York, as
Collateral Agent.*
4.31 Standard Security, dated May 9, 1995, granted by Terex Equipment Limited in
favor of United States Trust Company of New York, as Collateral Agent.*
4.32 Ranking Agreement, dated May 9, 1995, among Terex Equipment Limited, United
States Trust Company of New York, as Collateral Agent, and Standard
Chartered Bank.*
5.1 Opinion of Robinson Silverman Pearce Aronsohn & Berman LLP as to the
legality of the notes 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 Trademark 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).
10.7 Trademark 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).
10.8 License 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).
10.9 Registration 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).
10.10Registration 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).
10.11Series 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).
10.12Credit 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).
10.13Amended 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).
10.14Share 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).
10.15Stockholders 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).
10.16Purchase 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") (incorporated by reference to Exhibit 10.28 of the Amendment
No. 1 to the Form S-1 Registration Statement of Terex Corporation,
Registration No. 33-52711).
10.17Common Stock Appreciation Rights Agreement dated as of May 9, 1995 between
the Company and United States Trust Company of New York, as Rights Agents
(incorporated by reference to Exhibit 10.29 of the Amendment No. 1 to the
Form S-1 Registration Statement of Terex Corporation, Registration No.
33-52711).
10.18SAR Registration Rights Agreement dated as of May 9, 1995 among the
Company and the Purchasers (incorporated by reference to Exhibit 10.31 of
the Amendment No. 1 to the Form S-1 Registration Statement of Terex
Corporation, Registration No. 33-52711).
10.19Agreement 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).
10.20Warrant 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).
10.211996 Terex Corporation Long-Term Incentive Plan (incorporated by reference
to Exhibit 10.40 of the Amendment No. 3 to the Form S-1 Registration
Statement of Terex Corporation Registration No. 33-52297).
11.1 Computation of per share earnings. *
12.1 Computation of ratio of earnings to fixed charges.*
21.1 Subsidiaries of Terex Corporation (incorporated by reference to Exhibit
21.1 of the Amendment No. 3 to the Form S-1 Registration Statement of Terex
Corporation Registration No. 33-52297).
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 Independent Accountants' Consent of Price Waterhouse -- Melbourne,
Australia and the Independent Audit Report referred to therein.***
23.4 Consent of Robinson Silverman Pearce Aronsohn & Berman LLP (included as
part of the Exhibit 5.1). *
24.1 Power of Attorney. *
25.1 Statement of Eligibility and Qualification of Trustee on Form T-1. **
99.1 Form of Letter of Transmittal. **
99.2 Form of Notice of Guaranteed Delivery. **
- --------------------
* Filed herewith.
** Filed previously.
*** To be filed by amendment.
<PAGE>
(b) Financial Statement Schedules:
Terex Corporation
Report of Price Waterhouse LLP (included as part of Exhibit 23.1)
Schedule II -- Valuation and Qualifying Accounts and Reserves
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 22. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) 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 of 1933; (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.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, 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.
(3) 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.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 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 Securities and Exchange Commission such
indemnification is against public policy as expressed in the 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 whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(c) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such requests, and to send the incorporated documents by first-class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(d) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment to Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in Westport,
Connecticut, on September 12, 1996.
TEREX CORPORATION
By: /s/ Ronald M. DeFeo *
Name: Ronald M. DeFeo
Title: President, Chief Executive Officer
and Chief Operating Officer
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment to Registration Statement has been signed by the following persons in
the capacities and on the dates indicated:
Signature Title Date
/s/ Ronald M. DeFeo * President, Chief Executive Officer, September 12, 1996
Ronald M. DeFeo Chief Operating Officer
and Director
(Principal Executive Officer)
/s/ David J. Langevin * Executive Vice President September 12, 1996
David J. Langevin (Acting Principal
Financial Officer)
/s/ Joseph F. Apuzzo * Vice President-Finance September 12, 1996
Joseph F. Apuzzo and Controller
(Principal Accounting Officer)
/s/ Marvin B. Rosenberg Senior Vice President, September 12, 1996
Marvin B. Rosenberg General Counsel,
Secretary and Director
/s/ G. Chris Andersen * Director September 12, 1996
G. Chris Andersen
/s/ William H. Fike * Director September 12, 1996
William H. Fike
/s/ Bruce I. Raben * Director September 12, 1996
Bruce I. Raben
/s/ David A. Sachs * Director September 12, 1996
David A. Sachs
/s/ Adam E. Wolf * Director September 12, 1996
Adam E. Wolf
* By /s/ Marvin B. Rosenberg
Marvin B. Rosenberg
Attorney-in-fact
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment to Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in Westport,
Connecticut, on September 12, 1996.
TEREX CRANES, INC.
By: /s/ Fil Filipov *
Name: Fil Filipov
Title: President
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment to Registration Statement has been signed by the following persons in
the capacities and on the dates indicated:
Signature Title Date
/s/ Fil Filipov * President September 12, 1996
Fil Filipov (Principal Executive Officer)
/s/ David J. Langevin * Vice President, Treasurer September 12, 1996
David J. Langevin and Director
(Principal Financial
and Accounting Officer)
/s/ Marvin B. Rosenberg Vice President, Secretary September 12, 1996
Marvin B. Rosenberg and Director
/s/ Ronald M. DeFeo * Director September 12, 1996
Ronald M. Defeo
* By /s/ Marvin B. Rosenberg
Marvin B. Rosenberg
Attorney-in-fact
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment to Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in Westport,
Connecticut, on September 12, 1996.
PPM CRANES, INC.
By: /s/ Fil Filipov *
Name: Fil Filipov
Title: President
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment to Registration Statement has been signed by the following persons in
the capacities and on the dates indicated:
Signature Title Date
/s/ Fil Filipov * President September 12, 1996
Fil Filipov (Principal Executive Officer)
/s/ David J. Langevin * Vice President, Treasurer September 12, 1996
David J. Langevin and Director
(Principal Financial
and Accounting Officer)
/s/ Marvin B. Rosenberg Vice President, Secretary September 12, 1996
Marvin B. Rosenberg and Director
/s/ Ronald M. DeFeo * Director September 12, 1996
Ronald M. DeFeo
Director
K. Thor Lundgren
* By /s/ Marvin B. Rosenberg
Marvin B. Rosenberg
Attorney-in-fact
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment to Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in Westport,
Connecticut, on September 12, 1996.
KOEHRING CRANES, INC.
By: /s/ Fil Filipov *
Name: Fil Filipov
Title: President
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment to Registration Statement has been signed by the following persons in
the capacities and on the dates indicated:
Signature Title Date
/s/ Fil Filipov * President September 12, 1996
Fil Filipov (Principal Executive Officer)
/s/ David J. Langevin * Vice President, Treasurer September 12, 1996
David J. Langevin and Director
(Principal Financial and
Accounting Officer)
/s/ Marvin B. Rosenberg Vice President, Secretary September 12, 1996
Marvin B. Rosenberg and Director
/s/ Ronald M. DeFeo * Director September 12, 1996
Ronald M. DeFeo
* By /s/ Marvin B. Rosenberg
Marvin B. Rosenberg
Attorney-in-fact
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment to Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in Westport,
Connecticut, on September 12, 1996.
CLARK MATERIAL HANDLING COMPANY
By: /s/ Martin Dorio *
Name: Martin Dorio
Title: President and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment to Registration Statement has been signed by the following persons in
the capacities and on the dates indicated:
Signature Title Date
/s/ Martin Dorio * President and Chief September 12, 1996
Martin Dorio Executive Officer
(Principal Executive Officer)
/s/ Joseph F. Lingg * Vice President Finance September 12, 1996
Joseph F. Lingg (Principal Financial and
Accounting Officer)
/s/ Marvin B. Rosenberg Secretary and Director September 12, 1996
Marvin B. Rosenberg
* By /s/ Marvin B. Rosenberg
Marvin B. Rosenberg
Attorney-in-fact
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment to Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in Westport,
Connecticut, on September 12, 1996.
CMH ACQUISITION CORP.
By: /s/ Ronald M. DeFeo *
Name: Ronald M. DeFeo
Title: President
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment to Registration Statement has been signed by the following persons in
the capacities and on the dates indicated:
Signature Title Date
/s/ Ronald M. DeFeo * President September 12, 1996
Ronald M. DeFeo (Principal Executive, Financial
and Accounting Officer)
/s/ Marvin B. Rosenberg Vice President, Secretary September 12, 1996
Marvin B. Rosenberg and Director
* By /s/ Marvin B. Rosenberg
Marvin B. Rosenberg
Attorney-in-fact
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment to Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in Westport,
Connecticut, on September 12, 1996.
CMH ACQUISITION INTERNATIONAL CORP.
By: /s/ Ronald M. DeFeo *
Name: Ronald M. DeFeo
Title: President
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment to Registration Statement has been signed by the following persons in
the capacities and on the dates indicated:
Signature Title Date
/s/ Ronald M. DeFeo * President September 12, 1996
Ronald M. DeFeo (Principal Executive, Financial
and Accounting Officer)
/s/ Marvin B. Rosenberg Vice President, Secretary September 12, 1996
Marvin B. Rosenberg and Director
* By /s/ Marvin B. Rosenberg
Marvin B. Rosenberg
Attorney-in-fact
REAL ESTATE FEE MORTGAGE, ASSIGNMENT OF RENTS, SECURITY
AGREEMENT, FINANCING STATEMENT AND FIXTURE FILING
in the amount of
$250,000,000.00
FROM
KOEHRING CRANES, INC., a Delaware corporation
having an office at:
c/o Terex Corporation
500 Post Road East
Westport, Connecticut 06880
(the "Mortgagor")
TO
UNITED STATES TRUST COMPANY OF NEW YORK, as collateral agent,
having an office at:
114 West 47th Street
New York, New York 10036
New York County
(the "Mortgagee")
This instrument was prepared by and,
after recording, please return to:
Michael A. Woronoff, Esq.
Skadden, Arps, Slate, Meagher & Flom
300 South Grand Avenue
Los Angeles, California 90071
<PAGE>
REAL ESTATE FEE MORTGAGE, ASSIGNMENT OF RENTS,
SECURITY AGREEMENT, FINANCING STATEMENT AND FIXTURE FILING
IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS
AGREEMENT SHOULD BE READ CAREFULLY BECAUSE ONLY THOSE
TERMS IN WRITING ARE ENFORCEABLE. NO OTHER TERMS OR ORAL
PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT MAY BE
LEGALLY ENFORCED. YOU MAY CHANGE THE TERMS OF THIS
AGREEMENT ONLY BY ANOTHER WRITTEN AGREEMENT.
NOTICE: This Mortgage secures credit in the amount of $250,000,000. Loans
and advances up to this amount, together with interest, are senior to
indebtedness to other creditors under subsequently recorded or filed
mortgages and liens.
THIS REAL ESTATE FEE MORTGAGE, ASSIGNMENT OF RENTS, SECURITY
AGREEMENT, FINANCING STATEMENT AND FIXTURE FILING (hereafter, as amended,
modified, replaced, consolidated and extended, this "Mortgage") is made as of
the 9th day of May, 1995 from KOEHRING CRANES, INC., a Delaware corporation
(the "Mortgagor"), a subsidiary of TEREX CORPORATION, a Delaware corporation
("Terex"), with a mailing address of 500 Post Road East, Westport, Connecti-
cut 06880, to UNITED STATES TRUST COMPANY OF NEW YORK, a New York corpo-
ration (the "Mortgagee"), as collateral agent, with a mailing address of 114
West 47th Street, New York, New York 10036.
R E C I T A L S:
1. The Mortgagor is the owner of the fee simple interest in the
Real Property (as hereinafter defined).
2. Pursuant to a certain Indenture (the "Indenture") dated as of
even date herewith between Terex and the Mortgagee as trustee thereunder (in
such capacity, the "Indenture Trustee") for the benefit of the Holders of the
Notes (as defined below), Terex has obtained financing in the amount of
$250,000,000 (the "Loan") with a maturity date of May 15, 2002. All
capitalized terms used but not otherwise defined herein shall have the
meaning ascribed to them in the Indenture.
3. Mortgagor, as a subsidiary of Terex, will receive substantial
benefits from the Loan, and pursuant to Sections 10.7 and 10.8 of the
Indenture, has guaranteed the obligations of Terex under the Indenture and
the Notes.
4. To secure Mortgagor's obligations under the Guaranty and the
repayment of the Notes and performance of all terms and conditions of the
Indenture, the Mortgagor has agreed to create a first mortgage lien on the
Mortgaged Property herein described, in favor of the Mortgagee.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, and (A) in order to secure (i) payment of the
indebtedness under the Indenture, as the same may be amended, modified,
restated, substituted and extended by the terms hereof, aggregating
$250,000,000 in principal amount (the various promissory notes and securities
evidencing said indebtedness and all supplements, substitutions, extensions
and renewals thereof are hereinafter referred to collectively as the
"Notes"), (ii) payment of the interest on such indebtedness according to the
terms of the Indenture and the Notes, (iii) payment of all other sums payable
to the Mortgagee pursuant to the terms of this Mortgage, and (iv) payment of
all other sums owed by the Mortgagor or Terex to the Mortgagee, the Indenture
Trustee or the Holders in accordance with the terms of the Indenture or
pursuant to the Notes, the Security Documents or the Guaranty (the payment
obligations described in the foregoing clauses (i), (ii), (iii) and (iv) are
hereinafter referred to collectively as the "Indebtedness"); and (B) in order
to secure the performance of every obligation contained in the Indenture, the
Notes, this Mortgage, the Security Documents, the Guaranty and all other
instruments now or hereafter evidencing or securing any portion of the
Indebtedness (hereinafter referred to collectively as the "Obligations"), the
Mortgagor by these presents does hereby mortgage, warrant, grant a security
interest in, pledge, assign and transfer to the Mortgagee, and each of its
successors and assigns forever under and subject to the terms and conditions
hereof, all of the Mortgagor's estate, right, title and interest in and to
the following, whether now owned or held or hereafter acquired (hereinafter
collectively referred to as the "Mortgaged Property" or the "Collateral"):
A. That certain real property (the "Real Property") more particu-
larly described in Schedule A attached hereto and made a part hereof by this
reference; and
B. All of the buildings, structures and improvements (hereinafter,
collectively, together with all building equipment, the "Improvements") now
or hereafter located on the Real Property and all of its right, title and
interest, if any, in and to the streets and roads abutting the Real Property
to the center lines thereof, and strips and gores within or adjoining the
Real Property, the air space and right to use said air space above the Real
Property, all rights of ingress and egress by motor vehicles to parking
facilities on or within the Real Property, all easements now or hereafter
affecting the Real Property or the Improvements, all royalties and all rights
appertaining to the use and enjoyment of the Real Property or the Im-
provements, including, without limitation, alley, drainage, crop, timber,
agricultural, horticultural, mineral, water, oil and gas rights; and
C. All fixtures (the "Fixtures"), and all appurtenances and addi-
tions thereto and substitutions or replacements thereof, now or hereafter
attached to the Real Property and/or the Improvements. Without limiting the
foregoing, to the extent permitted under applicable law, this Mortgage shall
be deemed to be a "security agreement" under the Uniform Commercial Code of
the State wherein the Real Property and improvements are located (the "UCC"),
and the Mortgagor hereby grants to the Mortgagee a "security interest" (as
defined in the UCC) in all of its present and future Fixtures and the
Mortgagee shall have, in addition to all rights and remedies provided herein,
and in any other agreements, commitments and undertakings made by the Mort-
gagor to the Mortgagee, all of the rights and remedies of a "secured party"
under the UCC; and
D. To the extent the same does not constitute Fixtures, all
equipment (as such term is defined in Article 9 of the UCC) now owned or
hereafter acquired and owned by the Mortgagor, which is used at or in
connection with the Improvements or the Real Property and is located thereon
or therein (including, without limitation, all machinery, production equip-
ment, furnishings, electronic data-processing and other office equipment to
the extent located on or in the Mortgaged Property), together with all
attachments, components, parts, equipment and accessories installed thereon
or affixed thereto and any and all extensions, additions, improvements,
betterments, renewals, substitutions and replacements to, for or of any of
the foregoing (collectively, the "Equipment"); and
E. All leases, lettings and licenses of the Real Property, the
Improvements and any other property or rights encumbered or conveyed hereby,
or any part thereof, now or hereafter entered into (each a "Lease," and
collectively, the "Leases") and all right, title and interest of the
Mortgagor thereunder, including, without limitation, cash and securities
deposited thereunder, the right to receive and collect the rents, issues and
profits payable thereunder and the right to enforce, whether by action at law
or in equity or by other means, all provisions, covenants and agreements
thereof, including, without limitation, the right (i) to enter upon and take
possession of the Mortgaged Premises (as hereinafter defined) for the purpose
of collecting the said rents, issues and profits, (ii) to dispossess by the
usual summary proceedings (or any other proceedings of the Mortgagee's
selection) any tenant defaulting in the payment thereof to the Mortgagee,
(iii) to let the Mortgaged Premises, or any part thereof, and (iv) subject to
Mortgagor's license as hereinafter set forth, to apply said rents, issues and
profits, after payment of all necessary charges and expenses, on account of
the Indebtedness; and
F. Any and all permits, certificates, approvals and autho-
rizations, however characterized, related to the Real Property or the
Improvements, issued or in any way furnished, whether necessary or not for
the operation and use of the Real Property or the Improvements, including,
without limitation, operating licenses, franchise agreements, contracts,
contract rights, public utility deposits, building permits, certificates of
occupancy, environmental certificates, industrial permits and licenses and
certificates of operation; and
G. All unearned premiums, accrued, accruing or to accrue under
insurance policies related to the Real Property or the Improvements now or
hereafter obtained by the Mortgagor and all proceeds of the conversion,
voluntary or involuntary, of the Real Property, the Improvements and/or any
other property or rights encumbered or conveyed hereby, or any part thereof,
into cash or liquidated claims, including, without limitation, proceeds of
hazard and title insurance and all awards and compensation heretofore and
hereafter made to the present and all subsequent owners of the Real Property,
the Improvements and/or any other property or rights encumbered or conveyed
hereby by any governmental or other lawful authority for the taking by
eminent domain, condemnation or otherwise, of all or any part of the Real
Property, the Improvements and/or any other property or rights encumbered or
conveyed hereby or any easement therein, including, but not limited to,
awards for any change of grade of streets; and
H. All extensions, improvements, betterments, renewals, substitu-
tions and replacements of and all additions and appurtenances to the Real
Property, the Improvements and/or any other property or rights encumbered or
conveyed hereby, hereafter acquired by or released to the Mortgagor or con-
structed, assembled or placed by the Mortgagor on the Real Property, the
Improvements and any other property or rights encumbered or conveyed hereby,
and all conversions of the security constituted thereby which, immediately
upon such acquisition, release, construction, assembling, placement or con-
version, as the case may be, and in each such case without any further
mortgage, conveyance, assignment or other act by the Mortgagor, shall become
subject to the lien of this Mortgage as fully and completely, and with the
same effect, as though now owned by the Mortgagor and specifically described
herein; and
I. All proceeds (as defined in the UCC) of the conversion, volun-
tary or involuntary, of any of the foregoing into cash or liquidated claims,
including, without limitation, proceeds of insurance and condemnation or
other awards or payments with respect thereto, including interest thereon.
TO HAVE AND TO HOLD the Mortgaged Property, with all powers of sale
and right of entry and possession (to the extent permitted by applicable
law), with all privileges and appurtenances to the same belonging, with the
right of possession thereof, unto the Mortgagee and its successors and
assigns, forever, and the Mortgagor hereby binds itself and its successors
and assigns to warrant and forever (but only until such time as the
Indebtedness has been paid in full and the Obligations have been fully
satisfied) defend title to the Mortgaged Property unto the Mortgagee and its
successors and assigns against the claim or claims of all parties claiming or
to claim the same, or any part thereof;
FOR THE PURPOSE OF SECURING THE OBLIGATIONS.
PROVIDED, HOWEVER, that if the Mortgagor shall pay or cause to be
paid indefeasibly in full all of the Indebtedness and if the Mortgagor shall
have kept, performed, observed and satisfied all of the Obligations, then the
Mortgagee shall deliver to the persons legally entitled thereto all such
documents, in recordable form, as shall be necessary to release the Mortgaged
Property from the lien of this Mortgage and to release to the Mortgagor all
deposits held by or on behalf of the Mortgagee, but otherwise this Mortgage
shall remain in full force and effect.
AND the Mortgagor represents, warrants, covenants and agrees as
follows:
ARTICLE I
Representations and Warranties of the Mortgagor
Section 1.1 Title to the Mortgaged Property.
(i) The right, title and interest of the Mortgagor constitutes a good,
marketable and insurable fee simple estate in the Mortgaged Property, subject
to no Liens, except for Liens permitted pursuant to Section 4.12 of the
Indenture (collectively, the "Permitted Liens"). (ii) This Mortgage creates
and constitutes a valid and enforceable lien on the Mortgaged Property, and,
to the extent any of the Mortgaged Property shall consist of personalty (when
taken together with any fixture filings and financing statements delivered in
connection herewith and filed in accordance with the UCC), a perfected
security interest in such Mortgaged Property, subject only to the Permitted
Liens. (iii) The Mortgagor has full power and lawful authority to encumber
the Mortgaged Property in the manner and form set forth hereunder. (iv) The
Mortgagor owns all Fixtures and Equipment now or hereafter comprising part of
the Mortgaged Property, subject only to the matters set forth in this Sec-
tion. (v) This Mortgage is and will remain a valid, enforceable and contin-
uing first priority Lien on the Mortgaged Property subject only to the
Permitted Liens. (vi) The Mortgagor will preserve such title as set forth
herein and in the Indenture, and will forever (but only until such time as
the Indebtedness has been paid in full and the Obligations have been fully
satisfied) warrant and defend the validity and priority of the lien hereof
against the claims of all persons and parties whatsoever.
Section 1.2 Mortgage Authorized. The execution and delivery of
this Mortgage, the Guaranty, the Indenture and each other document or
instrument executed or delivered by Mortgagor in connection with any of the
foregoing or the Notes have been duly authorized by all necessary corporate
action of the Mortgagor and there is no provision in the articles or certifi-
cate of incorporation or by-laws of the Mortgagor requiring further consent
for such action by any other entity or person. The Mortgagor is duly orga-
nized, validly existing and in good standing under the laws of the state of
its formation, and has (i) all necessary licenses, authorizations, registra-
tions, permits and/or approvals and (ii) full power and authority to own or
lease its properties and carry on its business as presently conducted, and
the execution and delivery by it of, and performance of the Obligations under
this Mortgage, the Guaranty, the Indenture and each other document or
instrument executed or delivered by Mortgagor in connection with any of the
foregoing or the Notes will not result in the Mortgagor being in default
under any provision of its articles or certificate of incorporation or by-
laws or of any mortgage, lease, credit or other agreement to which it is a
party or which affects it or the Mortgaged Property, or any part thereof.
Section 1.3 Operation of the Mortgaged Property. (i) The
Mortgagor has all certificates, licenses, authorizations, registrations,
permits and/or approvals and all required environmental permits necessary for
the operation of the Mortgaged Property or any part thereof, the lack of
which would have a Material Adverse Effect (as defined below), all of which
as of the date hereof are in full force and effect and are not, to the knowl-
edge of the Mortgagor, subject to any revocation, amendment, release,
suspension, forfeiture or the like. (ii) The Mortgaged Property is served by
all easements and utility lines and connections reasonably required or neces-
sary for the current use thereof. (iii) The Mortgaged Property has adequate
access to public roadways. As used in this Mortgage, "Material Adverse
Effect" shall mean a material adverse effect, singly or in the aggregate, on
(i) the properties, business, prospects, operations, earnings, assets,
liabilities or condition (financial or otherwise) of Mortgagor or Terex,
taken as a whole, (ii) the ability of Mortgagor to perform its obligations
under this Mortgage, the Guaranty or the Indenture, (iii) the perfection or
priority of the Lien of this Mortgage, or (iv) the value or utility of the
Mortgaged Property, taken as a whole.
ARTICLE II
Covenants of the Mortgagor
Section 2.1 Payment of Indebtedness and Performance of Covenants.
The Mortgagor shall (a) duly and punctually pay or cause to be paid each
payment of the principal of and interest on the Indebtedness and any
prepayments, late charges, premiums and fees provided for in the Indenture
and all other payment Obligations secured by this Mortgage at the time and in
the manner provided in this Mortgage, the Guaranty, the Indenture and each
other document or instrument executed or delivered by Mortgagor in connection
with any of the foregoing or the Notes, and (b) duly and punctually perform
and observe all of the terms, provisions, conditions, covenants and
agreements on the Mortgagor's part to be performed or observed as provided in
the Notes, this Mortgage, the Guaranty, the Indenture and each other document
or instrument executed or delivered by Mortgagor in connection with any of
the foregoing.
Section 2.2 Maintenance of the Mortgaged Property. (i) The
Mortgagor shall maintain the Mortgaged Property in a commercially reasonable
manner for the operation thereof and in accordance with the requirements of
the Indenture, and shall comply (and shall use commercially reasonable
efforts to cause any tenants to comply) with all federal, state and local
laws, statutes, regulations, ordinances, rules, codes, rulings, judgments,
decrees, orders, injunctions and other requirements of every government or
public agency having or claiming jurisdiction over the Mortgaged Property
(and all permits, certificates, consents, licenses, variances, orders, exemp-
tions, approvals and authorizations issued thereby) as the same relate to the
Mortgaged Property and the use and occupancy thereof and all covenants,
conditions, restrictions, declarations and easements that affect or are
binding upon the Mortgaged Property (each, a "Requirement"). The Mortgagor
shall permit the Mortgagee to enter upon the Mortgaged Property and inspect
the same at all reasonable hours and with reasonable prior notice. The
Mortgagor shall not, without the prior written consent of the Mortgagee,
threaten, commit, permit or suffer to occur any alterations or changes to the
Mortgaged Property or any part thereof other than alterations or changes that
do not materially adversely affect the value or utility of the Mortgaged
Property; provided, however, that Fixtures owned by the Mortgagor may be
removed from the Improvements if such Fixtures are obsolete or if the Mort-
gagor concurrently therewith replaces the same with items which do not reduce
the value or utility of the Mortgaged Property or the Improvements, free of
any lien, charge or claim superior to the lien and/or security interest
created thereby.
(ii) Nothing in this Section 2.2 shall require the
Mortgagor to comply with any Requirement so long as (a) the failure
so to do shall not otherwise apart from the provisions of this
Section 2.2 (i) be an Event of Default under this Mortgage, (b) the
failure so to do shall not result in the voiding, rescission or
invalidation of the certificate of occupancy or any other material
license, certificate, permit or registration in respect of the
Mortgaged Property essential to the conduct of the Mortgagor's
business at the Mortgaged Property, (c) the failure so to do shall
not prevent, hinder or materially interfere with the lawful use and
occupancy of the Mortgaged Property or any material portion thereof
for the use and occupancy which the Mortgagor reasonably determines
is most advantageous to its business, (d) the failure so to do
shall not void or invalidate or make unavailable any insurance
required by this Mortgage to be maintained by the Mortgagor in
respect of the Mortgaged Property and (e) the Mortgagor in good
faith and at its own expense shall contest the Requirement or the
validity thereof by appropriate legal proceedings, which
proceedings must operate to prevent (l) the occurrence of any of
the events described in the preceding clauses (a) through (d) of
this paragraph (ii) and (2) the collection or other realization of
any material sums due or payable as a consequence of the
Requirement, the sale of any lien arising in respect of the Re-
quirement, and/or the sale or forfeiture of the Mortgaged Property,
any part thereof or interest therein, or the sale of any lien con-
nected therewith; provided that during such contest the Mortgagor
shall, at the option of the Mortgagee, either establish adequate
reserves in accordance with generally accepted accounting
principles or provide security reasonably satisfactory to the
Mortgagee (in amount and form) assuring the discharge of the
Mortgagor's obligations hereunder and of any interest, charge,
fine, penalty, fee or expense arising from or incurred as a result
of such contest, and, for purposes herein, the Mortgagee agrees
that the deposit of cash or an irrevocable letter of credit drawn
on a bank reasonably acceptable to Mortgagee shall be a satis-
factory form of security; and provided, further, that if at any
time compliance with any obligation imposed upon the Mortgagor by
the Requirement shall become necessary to prevent (l) the
occurrence of any of the events described in clauses (a) through
(d) of this paragraph (ii) or (2) the delivery of a deed conveying
the Mortgaged Property or any portion thereof or interest therein
because of noncompliance, or the sale of a lien in connection
therewith, or (3) the imposition of any material penalty, fine,
charge, fee, cost or expense on the Mortgagee, then the Mortgagor
shall comply with the Requirement in sufficient time to prevent the
occurrence of any such events, the delivery of such deed or the
sale of such lien, or the imposition of such material penalty,
fine, charge, fee, cost or expense on the Mortgagee.
Section 2.3 Insurance; Coverage. (i) The Mortgagor shall keep the
Mortgaged Property insured against (a) loss and damage by fire, casualty and
such other hazards as may be reasonably specified by the Mortgagee, includ-
ing, without limitation, those hazards which are covered by the standard
extended coverage all-risk insurance policy, (b) damage by vandalism and/or
malicious mischief, (c) explosion insurance in respect of any boilers or
similar apparatus located on the Mortgaged Property and (d) such other
hazards as may be reasonably specified by the Mortgagee. Such insurance
shall be on forms and by companies reasonably satisfactory to the Mortgagee.
The amounts and coverage limits of each policy of insurance required pursuant
to this Section 2.3 shall be sufficient to prevent the Mortgagor or the
Mortgagee from becoming a co-insurer of any partial loss under the applicable
policies and otherwise satisfactory to the Mortgagee, but in no event less
than the actual replacement value of such Mortgaged Property as determined by
the Mortgagor in accordance with generally accepted insurance practice and
approved by the Mortgagee, or at the Mortgagee's option, which shall be exer-
cised not more frequently than annually, as determined at the Mortgagor's ex-
pense by the insurer or an expert appraiser approved by the Mortgagee.
Notwithstanding anything to the contrary contained herein, Mortgagor shall be
permitted to maintain self-insurance for all insurance required to be
maintained hereby, provided that such self-insurance is consistent with
Mortgagor's prior practice and has been heretofore adequately disclosed to
Mortgagee.
(ii) The Mortgagor shall maintain in full force
liability insurance against claims of bodily injury, death or
property damage occurring on, in or about the Mortgaged Property,
with policy limits and deductibles in such amounts as from time to
time would be maintained by a prudent operator of property similar
in use and configuration to the Mortgaged Property and located in
the locality where the Mortgaged Property is located (which policy
limits and deductibles shall be reasonably satisfactory to the
Mortgagee), which policies of insurance shall name the Mortgagee as
an additional insured. All insurance policies and endorsements
required pursuant to this Section 2.3 shall be fully paid for,
nonassessable and contain such provisions (including, without limi-
tation, inflation guard or replacement cost endorsements) and expi-
ration dates and shall be in such form and amounts and issued by
such insurance companies with a rating of "A VIII" or better as
established by Best's Rating Guide (or an equivalent rating with
such other publication of a similar nature as shall be in current
use and as approved by the Mortgagee), or such other companies, as
shall be approved by the Mortgagee.
(iii) The Mortgagor shall additionally keep the
Mortgaged Property insured against loss by flood if the Mortgaged
Property is located in an area identified by the Secretary of Hous-
ing and Urban Development as an area having special flood hazards
and which has been so identified under the Flood Insurance Act of
1968 and the Flood Disaster Protection Act of 1973, as the same may
have been or may hereafter be amended or modified (and any
successor acts thereto) in amounts reasonably acceptable to the
Mortgagee, but in no event more than what is available under such
laws.
(iv) In all events and without limitation on the
foregoing, the Mortgagor will deliver the policy or policies (or
true copies or certificates thereof) of all such insurance required
under this Mortgage to the Mortgagee, which policy or policies
shall be endorsed to name the Mortgagee as a mortgagee-loss payee
thereunder, with loss payable to the Mortgagee without contribution
or assessment under a New York Standard Mortgagee clause or similar
clause, and shall provide the Mortgagee with no less than thirty
(30) days' notice from the insurer prior to the expiration,
cancellation or termination (for any reason whatsoever) of any such
policy.
(v) Insurance required hereunder may be carried by
the Mortgagor pursuant to blanket policies, provided that all other
requirements herein set forth are satisfied and that the underlying
policy in respect of the Mortgaged Property is delivered to the
Mortgagee as herein required. In the event that the Mortgagor
fails to keep the Mortgaged Property insured as required hereunder,
the Mortgagee may, but shall not be obligated to, obtain insurance
and pay the premiums therefor and the Mortgagor shall, on demand,
reimburse the Mortgagee for all sums, advances and expenses
incurred in connection therewith and such sums, advances and
expenses shall be deemed a part of the Indebtedness secured hereby
and shall bear interest at the Default Rate (as defined in Section
2.13 of this Mortgage) until reimbursed.
Section 2.4 Insurance; Proceeds. The Mortgagor shall give the
Mortgagee prompt notice of any material loss covered by insurance and the
Mortgagee shall have the right to join the Mortgagor in adjusting any loss
during the continuance of an Event of Default. The proceeds of insurance
paid on account of any damage or destruction to the Mortgaged Property or any
part thereof shall be paid over to the Mortgagee to be applied as hereinafter
provided. Notwithstanding anything to the contrary contained herein or in
any provision of applicable law, the proceeds of insurance policies coming
into the possession of the Mortgagee shall not be deemed trust funds.
Section 2.5 Restoration of the Mortgaged Property. In the event
of any material damage or destruction of the Mortgaged Property, or any part
thereof, as a result of casualty, condemnation, taking or other cause, the
Mortgagor shall give prompt written notice thereof to the Mortgagee. In the
event that the Mortgagee, in accordance with Section 2.6 hereof, makes avail-
able to the Mortgagor the insurance proceeds received by it, if any (or in
the event of condemnation or taking, the award, if any, arising out of such
condemnation or taking), the Mortgagor shall with reasonable promptness
commence and diligently continue to perform the repair, restoration and re-
building of the Mortgaged Property (hereinafter, the "Work") so as to restore
the Mortgaged Property in full compliance with all legal requirements and so
that the Mortgaged Property shall, to the extent reasonably practicable, be
at least equal in value and general utility as it was immediately prior to
the damage or destruction. If the Work to be done is materially structural
(as reasonably determined by the Mortgagee) or if the cost of the Work, as
estimated by the Mortgagee, shall exceed $________________ (hereinafter,
collectively, "Major Work"), the Mortgagor shall, prior to the commencement
of the Major Work, furnish to the Mortgagee for its approval not to be
unreasonably withheld or delayed: (i) complete plans and specifications for
the Major Work, with reasonably satisfactory evidence of the approval thereof
(a) by all governmental authorities whose approval is required for any or all
of the Major Work, (b) by all parties to or having an interest in the leases,
if any, of any portion of the Mortgaged Property whose approval is required,
and (c) by an architect or reputable contractor or construction manager or
engineer satisfactory to the Mortgagee (hereinafter, the "Architect") and
which shall be accompanied by the Architect's signed estimate, bearing the
Architect's seal, of the Architect's good faith estimate of the entire cost
of completing the Major Work; (ii) certified or photostatic copies of all
permits and approvals required by law in connection with the commencement
and/or the conduct of the Work; and (iii) such other documents, instruments
and certificates as Mortgagee may reasonably request. The Mortgagor shall
not be entitled to receive any of the insurance proceeds until the Mortgagor
shall have complied with the applicable requirements referred to in this Sec-
tion 2.5. After commencing any Major Work the Mortgagor shall perform such
Major Work diligently and in good faith in accordance with the plans and
specifications referred to in this Section 2.5.
Section 2.6 Restoration; Advances. Insurance proceeds received by
the Mortgagee (or, in the case of condemnation or taking, the award therefor)
less the cost, if any, to the Mortgagee of recovery of the same and of paying
out such proceeds (including reasonable attorneys' fees and expenses and
administrative costs), shall be applied by the Mortgagee to reduce the
Indebtedness; provided, however, that so long as no Event of Default
hereunder has occurred and is continuing, the Mortgagor shall have the right
to cause Mortgagee to apply such net insurance proceeds to the payment of the
cost of the Work in accordance with the terms of this Section 2.6.
Notwithstanding anything to the contrary contained herein, and so long as no
Event of Default hereunder has occurred and is continuing, Mortgagor shall
have the right, upon written notice to Mortgagee, to not perform the Work, in
which event the net amount of any insurance proceeds received by Mortgagor or
Mortgagee (or, in the case of condemnation or taking, the award therefor)
shall be either (i) applied to repay the Indebtedness, or (ii) invested in
assets related to the business of the Mortgagor, Terex or any of its other
Restricted Subsidiaries. If Mortgagor elects (to the extent such an election
is permitted hereby) to perform or cause the Work to be performed, and the
Work is not Major Work, insurance proceeds will be paid in a lump sum to the
Mortgagor. If Mortgagor elects (to the extent such an election is permitted
hereby) to perform or cause the Work to be performed, and the Work is Major
Work, the proceeds shall be paid out from time to time, but not more often
than monthly, to the Mortgagor as said Major Work progresses, but subject to
the following conditions:
(i) an Architect shall be in charge of such Major
Work;
(ii) each request for payment shall be made on at
least seven (7) days' prior written notice to the Mortgagee and
shall be accompanied by (a) a certificate of the chief financial
officer or other authorized officer of the Mortgagor specifying the
party to whom (and for the account of which) such payment is to be
made, (b) copies of lien releases (in form and substance customary
and appropriate for the jurisdiction in which the Mortgaged
Property is located) from each party to whom payment is to be made,
and (c) a certificate of an Architect if an Architect is required
under Section 2.5 above, otherwise a certificate of the chief
financial officer or other authorized officer of the Mortgagor
stating (x) that all of the Work completed has been done substan-
tially in compliance with the approved plans and specifications, if
any, required under said Section 2.5, and in accordance with all
provisions of law; (y) the sum requested is justly required to
reimburse the Mortgagor for payments by the Mortgagor to, or is
justly due to, the contractor, subcontractors, materialmen, la-
borers, engineers, architects or other persons rendering services
or materials for the Work (giving a brief description of any such
services and materials), and that when added to all sums, if any,
previously paid out by the Mortgagee does not exceed the cost of
the Work done to the date of such certificate and (z) that the
amount of such proceeds remaining in the hands of the Mortgagee
will be sufficient on completion of the Work to pay for the same in
full (giving in such reasonable detail as the Mortgagee may require
an estimate of the cost of such completion) or that, if the pro-
ceeds are inadequate, that a sufficient reserve has been created in
accordance with generally accepted accounting principles to provide
for the payment of such deficiency;
(iii) each request for payment shall be accompanied
by sworn statements and partial or final waivers of liens, as may
be appropriate, or if unavailable, lien bonds, satisfactory to the
Mortgagee covering that part of the Work previously paid for, if
any, and by a search prepared by a title insurance company or a
licensed abstractor reasonably satisfactory to the Mortgagee or by
other evidence satisfactory to the Mortgagee, that there has not
been filed with respect to the Mortgaged Property any mechanic's
lien or other lien or instrument for the retention of title in re-
spect of any part of the Work not discharged of record and that
there exist no encumbrances on or affecting the Mortgaged Property
(or any part thereof) other than Permitted Liens;
(iv) no Event of Default shall have occurred and be
continuing; and
(v) the request for any payment after the Work has
been completed shall be accompanied by certified copies of all
certificates, permits, licenses, waivers and/or other documents
required by law which are customarily issued in the state and
municipality in which the Mortgaged Property is located (or
pursuant to any agreement binding upon the Mortgagor or affecting
the Mortgaged Property or any part thereof) to render occupancy or
use of the Mortgaged Property legal.
Upon completion of any Work and payment in full therefor, and
provided that no Event of Default has occurred and is continuing, the Mort-
gagee shall deliver any excess proceeds to the Mortgagor; provided, however,
that nothing herein contained shall prevent the Mortgagee from applying at
any time the whole or any part of such proceeds to the curing of any Event of
Default.
Section 2.7 Restoration by the Mortgagee. Without limitation on
the foregoing, in the event the Mortgagee, in accordance with the provisions
of Section 2.6 hereof, is making available to the Mortgagor insurance
proceeds (if any) recovered by the Mortgagee, and if there is an Event of
Default which is continuing, then in addition to all other rights herein set
forth and notwithstanding anything to the contrary contained herein, the
Mortgagee, or any lawfully appointed receiver of the Mortgaged Property, may
at its option after giving the Mortgagor ten (10) days' written notice of
such Event of Default, perform or cause to be performed such repair, restora-
tion and rebuilding, and may take such other steps as it deems reasonably
advisable to perform such repair, restoration and rebuilding, and upon
twenty-four (24) hours' prior written notice to the Mortgagor, the Mortgagee
may enter upon the Mortgaged Property to the extent reasonably necessary or
appropriate for any of the foregoing purposes, and the Mortgagor hereby
waives, for the Mortgagor and all others holding under the Mortgagor, any
claim against the Mortgagee and/or such receiver arising out of anything done
by the Mortgagee or such receiver pursuant hereto, and the Mortgagee may, at
its option, apply insurance proceeds, if any (without the need by the
Mortgagee to fulfill any other requirements of this Mortgage), to reimburse
the Mortgagee and/or such receiver for all amounts expended or incurred by
either of them in connection with the performance of such Work, and any
excess costs shall be paid by the Mortgagor to the Mortgagee upon demand, and
such payment of excess costs shall be deemed part of the Indebtedness secured
hereby and shall bear interest at the Default Rate until paid.
Section 2.8 Intentionally Deleted.
Section 2.9 Taxes and Other Charges.
(i) The Mortgagor shall pay and discharge by the
last day payable without penalty or premium all taxes of every kind
and nature, water rates, sewer rents and assessments, levies,
permits, inspection and license fees and all other charges imposed
upon or assessed against the Mortgaged Property or any part thereof
or upon the revenues, rents, issues, income and profits of the
Mortgaged Property or arising in respect of the occupancy, use or
possession thereof (excluding any taxes in the nature of income
taxes). To the extent any such items are payable in installments,
the Mortgagor may elect to pay any such item in installments, but
each payment shall be made before any penalty accrues. The
Mortgagor shall exhibit to the Mortgagee within a reasonable period
of time after request and after the same are required to be paid as
specified herein, validated receipts or other evidence reasonably
satisfactory to the Mortgagee showing the payment of such taxes,
assessments, water rates, sewer rents, levies, fees and/or other
charges. Should the Mortgagor default in the payment of any of the
foregoing taxes, assessments, water rates, sewer rents, levies,
fees or other charges, the Mortgagee may, but shall not be
obligated to, pay the same or any part thereof and the Mortgagor
shall reimburse the Mortgagee for all amounts so paid and such
amounts shall be deemed a part of the Indebtedness secured hereby
and shall bear interest at the Default Rate until reimbursed.
(ii) Nothing in this Section 2.9 shall require the
payment or discharge of any obligation imposed upon the Mortgagor
by subsection (i) of this Section 2.9 so long as the Mortgagor
shall in good faith and at its own expense contest the same or the
validity thereof by appropriate legal proceedings which proceedings
must operate to prevent the collection thereof or other realization
thereon, the sale of the lien thereof and the sale or forfeiture of
the Mortgaged Property or any part thereof, to satisfy the same;
provided that during such contest the Mortgagor shall, at the
option of the Mortgagee, establish reserves in accordance with
generally accepted accounting principles or deposit cash or an
irrevocable letter of credit drawn on a bank reasonably acceptable
to the Mortgagee, assuring the discharge of the Mortgagor's
obligation hereunder and of any additional interest charge, penalty
or expense arising from or incurred as a result of such contest;
and provided, further, that if at any time payment of any
obligation imposed upon the Mortgagor by subsection (i) of this
Section 2.9 shall become necessary to prevent the delivery of a tax
deed or similar instrument conveying the Mortgaged Property or any
portion thereof or the sale of the tax lien therefor because of
non-payment, or the imposition of any penalty, which is not
reserved or secured against, or cost on the Mortgagee not paid by
the Mortgagor, then the Mortgagor shall pay the same in sufficient
time to prevent the delivery of such tax deed or the sale of such
lien, or the imposition of such penalty or cost on the Mortgagee.
(iii) The Mortgagor shall pay when due all (a)
premiums for fire, hazard and other insurance required to be main-
tained by the Mortgagor on the Mortgaged Property pursuant to the
terms of Section 2.3 hereof, (b) title insurance premiums, if any,
relating to the insurance to be obtained on the Mortgaged Property
in connection with this Mortgage, and (c) any and all other costs,
expenses and charges expressly required to be paid hereunder.
Section 2.10 Mechanics' and Other Liens.
(i) To the extent that the following are not
Permitted Liens, within sixty (60) days from the date of the filing
of any such Lien, the Mortgagor shall pay, bond or discharge of
record, from time to time, forthwith, all Liens on the Mortgaged
Property or any part thereof, and, in general, the Mortgagor
forthwith shall do, at the cost of the Mortgagor and without
expense to the Mortgagee, everything necessary to fully preserve
the first priority Lien of this Mortgage. In the event that the
Mortgagor fails in a timely manner to make payment in full of, bond
or discharge, any such Liens, as required under the preceding
sentence, the Mortgagee may, but shall not be obligated to, make
payment, bond, or discharge such Liens, in order fully to preserve
the Lien of this Mortgage and the collateral value of the Mortgaged
Property, and the Mortgagor shall reimburse the Mortgagee for all
sums so expended and such sums shall be deemed a part of the In-
debtedness secured hereby and shall bear interest at the Default
Rate until reimbursed.
(ii) Nothing in this Section 2.10 shall require the
payment or discharge of any obligation imposed upon the Mortgagor
by subsection (i) of this Section 2.10 so long as the Mortgagor
shall bond or discharge any Lien on the Mortgaged Property arising
from such obligation or in good faith and at its own expense
contest the same or the validity thereof by appropriate legal pro-
ceedings which proceedings must operate to prevent the collection
thereof or other realization thereon, the sale of the Lien thereof
and the sale or forfeiture of the Mortgaged Property or any part
thereof, to satisfy the same; provided that during such contest the
Mortgagor shall, at the option of the Mortgagee, either (at the
option of the Mortgagor) establish an adequate reserve in
accordance with generally acceptable accounting principles or pro-
vide security satisfactory to the Mortgagee, assuring the discharge
of the Mortgagor's obligation hereunder and of any additional
interest charge, penalty or expense arising from or incurred as a
result of such contest, which security can take the form of cash or
an irrevocable letter of credit drawn on a bank reasonably
acceptable to the Mortgagee; and provided, further, that if at any
time payment of any obligation imposed upon the Mortgagor by
subsection (i) of this Section 2.10 shall become necessary (a) to
prevent the sale or forfeiture of the Mortgaged Property or any
portion thereof because of non-payment, or (b) to protect the Lien
of this Mortgage, then the Mortgagor shall pay the same in
sufficient time to prevent the sale or forfeiture of the Mortgaged
Property or to protect the Lien of this Mortgage, as the case may
be.
Section 2.11 Condemnation Awards. The Mortgagor, immediately upon
obtaining knowledge in any manner of the institution of any proceedings for
the condemnation of the Mortgaged Property or any portion thereof which could
have a Material Adverse Effect, will notify the Mortgagee of such
proceedings. The Mortgagee may participate in any such proceedings, and the
Mortgagor from time to time will deliver to the Mortgagee all instruments re-
quested by it to permit such participation. The Mortgagor and the Mortgagee
shall both act reasonably and expeditiously in connection with such pro-
ceedings. All awards and compensation payable to the Mortgagor as a result
of any condemnation or other taking or purchase in lieu thereof of the Mort-
gaged Property or any part thereof are hereby assigned to and shall be paid
to the Mortgagee, and shall be treated in accordance with the provisions of
Sections 2.5 and 2.6 hereof. The Mortgagor hereby authorizes the Mortgagee
to collect and receive such awards and compensation, to give proper receipts
and acceptances therefor and to apply the same in accordance with the provi-
sions of Sections 2.5 and 2.6 of this Mortgage. The Mortgagor, upon request
by the Mortgagee, shall make, execute and deliver any and all instruments
requested for the purpose of confirming the assignment of the aforesaid
awards and compensation to the Mortgagee free and clear of any Liens, charges
or encumbrances of any kind or nature whatsoever.
Notwithstanding anything to the contrary in this Section 2.11, the
Mortgagor shall continue to pay the Indebtedness and perform the Obligations
at the time and in the manner provided for in the Notes, the Security Docu-
ments and the Indenture. If the Mortgaged Property or any portion thereof is
sold, through foreclosure or otherwise, prior to the receipt by the Mortgagee
of such payment, the Mortgagee shall have the right, whether or not a
deficiency judgment shall have been sought, recovered or denied, to receive
said payment, or a portion thereof sufficient to pay the Indebtedness,
whichever is less. The Mortgagor shall file and prosecute its claim or
claims for any such payment in good faith and with due diligence and cause
the same to be collected and paid over to the Mortgagee, in the name of the
Mortgagor or otherwise, to collect and give receipt for any such payment and
to file and prosecute such claim or claims, and although it is hereby
expressly agreed that the same shall not be necessary in any event, the
Mortgagor shall, upon demand of the Mortgagee, make, execute and deliver any
and all assignments and other instruments sufficient for the purpose of
assigning any such payment to the Mortgagee, free and clear of any
encumbrances of any kind or nature whatsoever.
Section 2.12 Costs of Defending and Upholding the Lien. If any
action or proceeding is commenced to which action or proceeding the Mortgagee
is made a party or in which it becomes necessary to defend or uphold the
first priority Lien of this Mortgage, the Mortgagor shall reimburse the
Mortgagee for all reasonable expenses (including, without limitation,
reasonable attorneys' fees and expenses) incurred by the Mortgagee in any
such action or proceeding and such expenses shall be deemed a part of the
Indebtedness secured hereby and shall bear interest at the Default Rate until
reimbursed. To the extent the subject of the action is covered by title
insurance, the Mortgagee may be defended by the title insurance counsel
reasonably satisfactory to it; if otherwise covered by insurance, the Mort-
gagee may be defended by counsel for the insurance company reasonably
satisfactory to the Mortgagee. Notwithstanding the foregoing, in an action
not covered by insurance, the Mortgagor may defend with counsel reasonably
satisfactory to the Mortgagee.
Section 2.13 Additional Advances and Disbursements. The Mortgagor
shall pay by the last day payable without premium or penalty all payments and
charges on all liens, encumbrances, ground and other leases and security
interests which affect or may affect or attach or may attach to the Mortgaged
Property, or any part thereof, and in default thereof, the Mortgagee shall
have the right, but shall not be obligated, to pay upon notice to the
Mortgagor, if practicable in order fully to preserve the first priority Lien
of this Mortgage and the collateral value of the Mortgaged Property, such
payments and charges and the Mortgagor shall reimburse the Mortgagee for any
amounts so paid. In addition, upon the occurrence of any material default of
the Mortgagor in the performance of any other terms, covenants, conditions or
obligations by it to be performed hereunder or under any such Lien,
encumbrance, lease or security interest and after the expiration of all
applicable notice and cure periods, if any, the Mortgagee shall have the
right, but shall not be obligated, to cure such default in the name and on
behalf of the Mortgagor. All sums advanced and reasonable expenses incurred
at any time by the Mortgagee pursuant to this Section 2.13 or as otherwise
provided under the terms and provisions of this Mortgage or under applicable
law shall bear interest from the date that such sum is advanced or expenses
incurred, to and including the date of reimbursement, computed at an interest
rate per annum (the "Default Rate") at all times equal to the highest default
rate provided in the Indenture, but in no event to exceed the maximum rate
allowed by law. All interest payable hereunder shall be computed on the
basis of a 360-day year over the actual number of days elapsed. Any such
amounts advanced or incurred by the Mortgagee, together with the interest
thereon, shall be payable on demand, shall, until paid, be secured by this
Mortgage as a Lien on the Mortgaged Property and shall be deemed a part of
the Indebtedness.
Section 2.14 Costs of Enforcement. The Mortgagor agrees to bear
and pay all expenses (including, without limitation, reasonable attorneys'
fees and expenses) of or incidental to (i) the enforcement of any provision
hereof, (ii) the enforcement of this Mortgage, the Notes, the Security Docu-
ments, the Indenture and for the curing thereof, (iii) subject to Section
2.12 hereof, defending the rights and claims of the Mortgagee in respect of
this Mortgage, the Notes, the Indenture and/or the Security Documents, by
litigation or otherwise, and (iv) the appointment of a receiver or receivers
as hereinafter contemplated. All rights and remedies of the Mortgagee shall
be cumulative and may be exercised singly or concurrently. Notwithstanding
anything herein contained to the contrary, the Mortgagor: (i) HEREBY WAIVES
TRIAL BY JURY; and, to the fullest extent allowed by law, (ii) shall not (a)
at any time insist upon, or plead, or in any manner whatever claim or take
any benefit or advantage of any stay or extension or moratorium law, any
exemption from execution or sale of the Mortgaged Property or any part
thereof, wherever enacted, now or at any time hereafter in force, which may
affect the covenants and terms of performance of this Mortgage, nor (b) after
any such sale or sales, claim or exercise any right under any statute
heretofore or hereafter enacted to redeem the property so sold or any part
thereof; (iii) hereby expressly waives all benefit or advantage of any such
law or laws; and (iv) covenants not to hinder, delay or impede the execution
of any power herein granted or delegated to the Mortgagee, but to suffer and
permit the execution of every power as though no such law or laws had been
made or enacted. The Mortgagor, for itself and all who may claim under it,
waives, to the extent that it lawfully may, all right to have the Mortgaged
Property or any part thereof marshalled upon any foreclosure hereof. The ap-
praisement of the Mortgaged Property is hereby expressly waived or not waived
at the option of the Mortgagee, its successors or assigns, such option to be
exercised prior to or at the time judgment is rendered in any foreclosure
hereof.
Section 2.15 Filing Charges, Recording Fees, Taxes, etc. The
Mortgagor shall pay any and all taxes, charges, filing, registration and
recording fees, excises and levies imposed upon the Mortgagee by reason of
its interest in the Mortgaged Property and this Mortgage or any mortgage
supplemental hereto, any security instrument with respect to any interest of
the Mortgagor in and to any fixture or personal property at the Mortgaged
Property or any instrument of further assurance, other than income,
franchise, succession, inheritance, business and similar taxes, and shall pay
all other taxes, if any, required to be paid on the debt evidenced by the
Notes. In the event the Mortgagor fails to make such payment within ten (10)
days after written notice thereof to the Mortgagor, then the Mortgagee shall
have the right, in its sole discretion, to elect either to (i) declare the
entire Indebtedness immediately due and payable or (ii) to pay the amount
due, and the Mortgagor shall reimburse the Mortgagee for said amount,
together with interest thereon computed at the Default Rate.
Section 2.16 Restrictive Covenants and Leasing Requirements.
Promptly following the execution hereof, Mortgagor shall deliver a notice, in
form and substance reasonably satisfactory to Mortgagee, to all existing
tenants or other occupants of the Mortgaged Property, which notice shall
indicate that this Mortgage has been executed and, subject to the terms
hereof, all Leases have been assigned to Mortgagee. Mortgagor shall not
hereafter execute or permit to be executed any lease or other occupancy
agreement, whether singly or in a series of transactions, for all or substan-
tially all of the Mortgaged Property, without first delivering to Mortgagee
a subordination and attornment agreement to and for the benefit of Mortgagee
in form and substance reasonably satisfactory to Mortgagee. Notwithstanding
the foregoing, the Mortgagor shall be permitted, without the delivery of a
separate subordination and attornment agreement, to lease up to one-half of
the Mortgaged Property, provided (i) such lease is to a bona fide third-party
tenant on commercially reasonable terms, (ii) Mortgagor gives notice to the
Mortgagee of such lease, or any such amendment, modification or extension
thereof with a copy thereof, and (iii) Mortgagor gives prior written notice
of this Mortgage to the tenant or other occupant under any such lease, amend-
ment, modification or extension.
Section 2.17 Assignment of Rents. The Mortgagor hereby
absolutely, presently and unconditionally assigns to the Mortgagee, as fur-
ther security for the payment of the Indebtedness and performance of the
Obligations, all of its interest in the rents, issues and profits of the
Mortgaged Property, together with its interest in all Leases of all or any
portion thereof and other documents evidencing such rents, issues and profits
now or hereafter in effect and its interest in any and all deposits held as
security under any such Leases, and shall deliver to the Mortgagee a true and
correct copy of an executed counterpart of each such Lease or other material
documents to which it is a party and which affects the Mortgaged Property.
Nothing contained in the foregoing sentence shall be construed to bind the
Mortgagee to the performance of any of the covenants, conditions or
provisions contained in any such Lease or other document or otherwise to
impose any obligation on the Mortgagee, including, without limitation, any
liability under the covenants contained in any such Lease. To the fullest
extent permitted by applicable laws, the Mortgagor hereby grants to the
Mortgagee the present right (i) to collect and receive any and all rents,
issues and profits and to enter upon and take possession of the Mortgaged
Property for the purpose of collecting the said rents, issues and profits,
(ii) to dispossess by the usual summary proceedings (or any other proceedings
of the Mortgagee's selection) any tenant defaulting in the payment thereof to
the Mortgagee, (iii) to let the Mortgaged Property, or any part thereof, and
(iv) to apply said rents, issues and profits, after payment of all necessary
charges and expenses (including, without limitation, costs of required
maintenance and operation of the Mortgaged Property, costs of collection,
default associated charges, past due interest and late charges and similar
charges and expenses) , on account of the Indebtedness. This Mortgage
constitutes and evidences the irrevocable consent of the Mortgagor to the
entry upon and taking possession of the Mortgaged Property by the Mortgagee
pursuant to such grant, whether foreclosure has been instituted or not and
without applying for a receiver; provided, however, that so long as no Event
of Default shall have occurred and be continuing, the Mortgagor shall have a
revocable license to collect and receive said rents, issues and profits and
to otherwise manage the Mortgaged Property, including, without limitation, a
revocable license to exercise the rights granted to Mortgagee pursuant to
subsections (i), (ii), (iii) and (iv) above. If an Event of Default shall
have occurred and be continuing, any rental or other income from the Mort-
gaged Property received by the Mortgagor shall be deemed to be received by
the Mortgagor in trust for the Mortgagee and shall be paid over to the Mort-
gagee immediately upon receipt by the Mortgagor. This license of the
Mortgagor to collect and receive said rents, issues and profits shall be
automatically revoked without the requirement of any action by the Mortgagee
upon the occurrence and during the continuance of an Event of Default. Upon
the occurrence and during the continuance of an Event of Default, the Mort-
gagor hereby appoints the Mortgagee as its attorney-in-fact, coupled with an
interest, to receive and collect all rent, additional rent and other sums due
under the terms of each Lease to which the Mortgagor is a party and to direct
any such tenant, by written notice or by mail or in person to the Mortgagee.
If an Event of Default shall have occurred and be continuing, Mortgagee may,
without thereby becoming or being deemed a mortgagee in possession or incur-
ring any liability under any Lease, notify any lessee, tenant, conces-
sionaire, licensee or other occupant of all or any part of the Mortgaged
Property to pay all rental or other income payable by it, him or her to the
Mortgagee and all such rental and other income shall thereafter be paid di-
rectly to the Mortgagee until the Mortgagee agrees otherwise. If an Event of
Default has occurred and is continuing, to facilitate the Mortgagee's
collection of rental and other income, the Mortgagor hereby irrevocably
authorizes and empowers the Mortgagee to endorse on behalf of the Mortgagor
and in the Mortgagor's name all checks and other instruments received by the
Mortgagee as payment of rental or other income. The Mortgagee shall apply to
the Indebtedness the net amount (after deducting all costs and expenses,
including attorneys' fees and expenses, incident to the collection thereof,
and after deducting all costs and expenses of operation, maintenance and
repairs of the Mortgaged Property) of any such rental or other income
received by it.
Section HEN\ Transfer Restrictions. Except as either permitted or
not prohibited by the provisions of Section 4.10 of the Indenture, the Mort-
gagor may not, without the prior written consent of the Mortgagee, further
mortgage, encumber, hypothecate, sell, transfer, convey, assign or sublet all
or any part of the Mortgaged Property or the leases and rents affecting the
Mortgaged Property or any other interest in the Mortgaged Property or such
leases and rents or suffer any of the foregoing to occur involuntarily or by
operation of law or otherwise. In the event of a sale, transfer or other
conveyance of any of the Mortgaged Property permitted by this section,
Mortgagee shall, subject to the terms of Section 10.3 of the Indenture, at
the sole cost and expense of Mortgagor, execute such documents as Mortgagor
shall reasonably request to evidence the release of the Lien of this Mortgage
with respect to such Mortgaged Property.
Section 2.19 Indemnity. The Mortgagor agrees that it shall
indemnify, defend and hold harmless the Mortgagee from and against all loss,
liability, obligation, claim, damage, penalty, cause of action, cost and
expense, including, without limitation, any assessments, levies, impositions,
judgments, reasonable attorneys' fees and disbursements, cost of appeal bonds
and printing costs, imposed upon or incurred by or asserted against the
Mortgagee by reason of (a) ownership of this Mortgage (other than taxes, if
any, in the nature of income taxes imposed on the Mortgagee as the result of
its ownership of this Mortgage); (b) any accident, injury to or death of
persons or loss of or damage to property occurring on or about the Mortgaged
Property (except to the extent the same shall be caused by the Mortgagee's
own gross negligence or willful misconduct); (c) any use, non-use or
condition of the Mortgaged Property (except to the extent the same shall be
caused by the Mortgagee's own gross negligence or willful misconduct); (d)
performance of any labor or services or the furnishing of any materials or
other property in respect of the Mortgaged Property or any part thereof for
maintenance or otherwise; (e) the imposition of any mortgage, real estate or
governmental tax incurred as a result of this Mortgage or the Notes, other
than income, franchise, succession, inheritance, business and similar taxes
payable by the Mortgagee, or (f) any violation or alleged violation by the
Mortgagor of any law. Any amounts payable under this Section 2.19 shall be
immediately due and payable without demand, shall be deemed a part of the
Indebtedness secured hereby, and until paid shall bear interest at the
Default Rate. If any action is brought against the Mortgagee by reason of
any of the foregoing occurrences, the Mortgagor will have the right to defend
and resist such action, suit or proceeding, at the Mortgagor's sole cost and
expense by counsel reasonably approved by the Mortgagee. The Mortgagor's
obligations under this Section 2.19 shall survive any change in law, the
payment in full of the Indebtedness, any discharge, release or satisfaction
of this Mortgage and/or the delivery of one or more deeds in lieu of
foreclosure with respect to this Mortgage.
Section 2.20 Security Interest in Fixtures.
(i) As provided in the granting clauses herein-
above, this Mortgage shall constitute a security agreement and
shall create and evidence a security interest in all Fixtures in
which a security interest or lien may be granted or a common law
pledge created pursuant to the UCC as in effect in the state in
which the Mortgaged Property is located or under common law in such
state, which security interest is hereby granted to Mortgagee as
"secured party" (as such term is defined in the UCC), securing the
Indebtedness and the Obligations of the Mortgagor hereunder and
upon recordation in the real property records of the County in
which the Mortgaged Property is located, shall constitute a
"fixture filing" within the meaning of Article 9 of the UCC cre-
ating a perfected security interest in all fixtures now or
hereafter located upon the Mortgaged Property. The Mortgagor,
immediately upon the execution and delivery of this Mortgage, and
thereafter from time to time, shall cause this Mortgage, any secu-
rity instrument evidencing or perfecting the Lien hereof in the
Fixtures, and each instrument of further assurance, including,
without limitation, UCC financing statements and continuation
statements, to be filed, registered or recorded in such manner and
in such places as may be required by any present or future law in
order to publish notice of and fully to perfect, preserve and pro-
tect the lien hereof upon the Mortgaged Property. The Mortgagor
hereby appoints and authorizes the Mortgagee to act on behalf of
the Mortgagor upon the Mortgagor's failure to comply with the
provisions of this Section 2.20.
(ii) To the extent the mortgage foreclosure laws of
the state in which the Mortgaged Property is located do not provide
for foreclosure against some or all of the Fixtures, upon the
occurrence of any Event of Default, in addition to the remedies set
forth in Article III hereof, the Mortgagee shall have the power to
foreclose the Mortgagor's right of redemption in the Fixtures by
sale of the Fixtures in accordance with the UCC as enacted in the
state in which the Mortgaged Property is located or under other ap-
plicable law in such state. It shall not be necessary that any
Fixtures offered be physically present at any such sale or
constructively be in the possession of the Mortgagee or the person
conducting the sale. Upon the occurrence and during the continu-
ance of any Event of Default, the Mortgagee may sell the Fixtures
or any portion thereof at public or private sale with notice to the
Mortgagor as hereinafter provided. The proceeds of any such sale,
after deducting all expenses of the Mortgagee in taking, storing,
repairing and selling the Fixtures or any part thereof (including,
without limitation, attorneys' fees and expenses) shall be applied
in the manner set forth in Section 3.2 hereof. At any sale, public
or private, of the Fixtures or any part thereof, the Mortgagee may
purchase any or all of the Fixtures offered at such sale.
(iii) The Mortgagee shall give Mortgagor notice of
any sale of the Fixtures or any portion thereof pursuant to the
provisions of this Section 2.20. Any such notice shall conclusive-
ly be deemed to be effective if such notice is mailed at least ten
(10) business days prior to any sale, by first class or certified
mail, postage prepaid, to the Mortgagor at its address determined
in accordance with the provisions of Section 4.3 hereof.
Section 2.21 Compliance with Agreements. The Mortgagor shall
timely comply and perform all of the obligations imposed upon it by the
Notes, the Indenture and the Security Documents.
Section 2.22 Environmental. Except as could not, singly or in the
aggregate, have a Material Adverse Effect:
(i) Mortgagor (a) has obtained all Permits that are
required with respect to the operation of the Mortgaged Property
under the Environmental Laws (as defined below) and is in com-
pliance with all terms and conditions of such required Permits, and
(b) is in compliance with all Environmental Laws (including,
without limitation, compliance with standards, schedules and time-
tables therein);
(ii) no portion of or interest in the Mortgaged
Property is listed or proposed for listing on the National Priori-
ties List or the Comprehensive Environmental Response, Compen-
sation, 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
Mortgagor has not received any notification of potential or actual
liability or request for information under CERCLA or any comparable
state or local law;
(iii) no underground storage tank or other under-
ground storage receptacle, or related piping, is located on the
Mortgaged Property;
(iv) there have been no releases (including,
without limitation, any past or present releasing, spilling,
leaking, pumping, pouring, emitting, emptying, discharging, inject-
ing, escaping, leaching, disposing or dumping, on-site or, to the
best of Mortgagor's knowledge after due inquiry, off-site) of Haz-
ardous Materials (as defined below) by Mortgagor or, to the best of
Mortgagor's knowledge after due inquiry, any predecessor in inter-
est, or any person or entity whose liability for any release of
Hazardous Materials, Mortgagor or any of its affiliates has re-
tained or assumed either contractually or by operation of law at,
on, under, from or into any portion of the Mortgaged Property;
(v) neither Mortgagor nor any person or entity
whose liability Mortgagor or any of its affiliates has retained or
assumed either contractually or by operation of law has any lia-
bility, 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, proceed-
ing, notice or demand letter pending or, to the best of their
knowledge after due inquiry, threatened against any of them under
any Environmental Law;
(vi) there are no events, activities, practices,
incidents or actions or, to the best of Mortgagor's knowledge after
due inquiry, conditions, circumstances or plans that may interfere
with or prevent compliance by Mortgagor with any Environmental Law,
or that may give rise to any liability under any Environmental
Laws; and
(vii) in the ordinary course of its businesses,
Mortgagor conducts a periodic review of the effect of Environmental
Laws on the business, operations and properties of Mortgagor in the
course of which it identifies and evaluates associated costs and
liabilities (including, without limitation, any capital or operat-
ing 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 re-
view, Mortgagor has reasonably concluded that such associated costs
and liabilities could not reasonably be expected to, singly or in
the aggregate, have a Material Adverse Effect on Mortgagor, 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 environ-
ment, 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.
ARTICLE III
Default and Remedies
Section 3.1 Events of Default. The following shall each
constitute an "Event of Default" under this Mortgage:
(i) the occurrence of any Event of Default under
the Notes, the Indenture, the Guaranty or any of the Security Docu-
ments;
(ii) if the Mortgagor shall fail to make any other
payment required by this Mortgage within ten (10) days after
written notice thereof to the Mortgagor by the Mortgagee;
(iii) if any representation or warranty contained
herein shall be false or incorrect in any material respect when
made; or
(iv) if the Mortgagor fails to keep, observe and/or
perform any of the other covenants, conditions, Obligations or
agreements contained in this Mortgage, and such default continues
for a period of thirty (30) days after written notice to the
Mortgagor by the Mortgagee; provided, however, that it shall not be
an Event of Default hereunder if the default is such that cannot
reasonably be cured within 30 days and the Mortgagor commences to
cure the default within such thirty-day period, diligently pursues
a cure, and cures such default within 120 days from the date of the
initial written notice of default thereof to the Mortgagor by the
Mortgagee.
Section 3.2 Remedies. Upon the occurrence and during the continu-
ance of any Event of Default, the Mortgagee may:
(i) in addition to any rights or remedies available
to it hereunder, take such action as it deems advisable to protect
and enforce its rights against the Mortgagor and in and to the
Mortgaged Property, including, without limitation, the following
actions, each of which may be pursued concurrently or otherwise, at
such time and in such order as the Mortgagee may determine, in its
sole discretion, without impairing or otherwise affecting any of
the other rights and remedies of the Mortgagee: (1) declare the
entire unpaid Indebtedness to be immediately due and payable; or
(2) after accelerating the Indebtedness, to the extent permitted by
law, immediately enter into or upon the Mortgaged Property, either
personally or by its agents, nominees or attorneys and dispossess
the Mortgagor and its agents and servants there-from, and at once
take possession of the Mortgaged Property, and thereupon the Mort-
gagee may (a) use, operate, manage, control, insure, maintain, re-
pair, restore and otherwise deal with all and every part of the
Mortgaged Property and conduct the business thereat; (b) complete
any construction on the Mortgaged Property in such manner and form
as the Mortgagee deems advisable; (c) make such alterations, addi-
tions, renewals, replacements and improvements to or on the Im-
provements and the balance of the Mortgaged Property necessary or
advisable as determined by the Mortgagee to continue to operate the
business; (d) exercise all rights and powers of the Mortgagor with
respect to the Mortgaged Property, whether in the name of the Mort-
gagor or otherwise, including, without limitation, the right to
make, cancel, enforce or modify leases, obtain and evict tenants,
and sue for, collect and receive all earnings, revenues, rents,
issues, profits and other income of the Mortgaged Property and
every part thereof; and (e) apply the receipts from the Mortgaged
Property to the payment of the Indebtedness, after deducting there-
from all expenses (including reasonable attorneys' fees and
disbursements) incurred in connection with the aforesaid operations
and all amounts necessary to pay the taxes, assessments, insurance
and other charges in connection with the Mortgaged Property, as
well as just and reasonable compensation for the services of the
Mortgagee, its counsel, agents and employees; or (3) institute
proceedings for the complete foreclosure of this Mortgage in which
case the Mortgaged Property may be sold for cash or credit in one
or more parcels; or (4) with or without entry and, to the extent
permitted, and pursuant to the procedures provided by applicable
law, institute proceedings for the foreclosure of this Mortgage for
the portion of the Indebtedness then due and payable, subject to
the Lien of this Mortgage continuing unimpaired and without loss of
priority so as to secure the balance of the Indebtedness not then
due; or (5) institute an action, suit or proceeding in equity for
the specific performance of any covenants, condition or agreement
contained herein; or (6) recover judgment on the Notes or any
guaranty either before, during or after or in lieu of any
proceedings for the enforcement of this Mortgage; or (7) apply for
the appointment of a trustee, receiver, liquidator or conservator
of the Mortgaged Property, without regard for the adequacy of the
security for the Indebtedness and without regard for the solvency
of the Mortgagor, any guarantor or of any person, firm or other
entity liable for the payment of the Indebtedness or performance of
the Obligations to which appointment the Mortgagor does hereby con-
sent; or (8) to the extent permitted by applicable law, to proceed
under the POWER OF SALE granted herein and sell the Mortgaged
Property or any part thereof to the extent permitted and pursuant
to the procedures provided by the laws of the State in which the
Mortgaged Property is located, and all estate, right, title and
interest, claim and demand therein, and right of redemption there-
of, at one or more sales, as an entirety or in parcels, and at such
time and place, upon such terms and after such notice thereof as
may be required by applicable law or (9) pursue such other remedies
as the Mortgagee may have under applicable law.
(ii) In addition to any other remedies available to
the Mortgagee hereunder or at law or in equity, the Mortgagor
hereby confers unto the Mortgagee a power of sale for the Mortgaged
Property exercisable upon an Event of Default under this Mortgage
and agrees that the Mortgagee, at its option, may proceed under
this power of sale pursuant to the applicable procedures provided
therefor by the laws of the State in which the Mortgaged Property
is located or foreclose this Mortgage as provided by such laws.
The Mortgagor represents and warrants that the Mortgaged Property
is not the Mortgagor's homestead and that the Indebtedness is not
an extension of credit made primarily for agricultural purposes.
Notwithstanding anything contained in this Mortgage to the
contrary, any notices of sale given in accordance with the applicable
requirements provided therefor by the laws of the State in which the
Mortgaged Property is located shall constitute sufficient notice of sale.
The conduct of a sale pursuant to a power of sale shall be sufficient
hereunder if conducted in accordance with such requirements in effect at the
time of such sale, notwithstanding any other provision contained in this
Mortgage to the contrary. The proceeds of any sale of the Mortgaged Property
pursuant to the power of sale herein granted shall be applied in accordance
with such requirements in effect at the time of such sale.
(iii) The proceeds of any sale made under or by
virtue of this Article III, together with any other sums which then
may be held by the Mortgagee under this Mortgage, whether under the
provisions of this Article III or otherwise, shall be applied:
First: To the payment of the costs and expenses of any
such sale, or the costs and expenses of entering upon, taking
possession of, removing from, holding, operating and/or managing
the Mortgaged Property or any part thereof, as the case may be, and
of all expenses, liabilities and advances made or incurred by the
Mortgagee under this Mortgage, together with interest at the De-
fault Rate as provided herein on all advances made by the Mortgagee
and all taxes or assessments, except any taxes, assessments or
other charges subject to which the Mortgaged Property shall have
been sold.
Second: In accordance with the provisions of Section
6.10 of the Indenture.
The Mortgagee and any receiver of the Mortgaged Property or any part thereof
shall be liable to account for only those rents, issues and profits actually
received by it.
(iv) The Mortgagee may adjourn from time to time
any sale by it to be made under or by virtue of this Mortgage by
announcement at the time and place appointed for such sale or for
such adjourned sale or sales; and except as otherwise provided by
any applicable provision of law, the Mortgagee, without further
notice or publication, may make such sale at the time and place to
which the same shall be so adjourned.
(v) Upon the completion of any sale or sales made
by the Mortgagee under or by virtue of this Article III, the
Mortgagee, or an officer of any court empowered to do so, shall
execute and deliver to the accepted purchaser or purchasers a good
and sufficient instrument, or good and sufficient instruments,
granting, conveying, assigning and transferring all estate, right,
title and interest in and to the property and rights sold. The
Mortgagee is hereby irrevocably appointed the true and lawful
attorney-in-fact of the Mortgagor (coupled with an interest), in
its name and stead, to make all necessary conveyances, assignments,
transfers and deliveries of the Mortgaged Property and rights so
sold and for that purpose the Mortgagee may execute all necessary
instruments of conveyance, assignment, transfer and delivery, and
may substitute one or more persons with like power, the Mortgagor
hereby ratifying and confirming all that said attorney-in-fact or
such substitute or substitutes shall lawfully do by virtue hereof.
Nevertheless, the Mortgagor, if so requested by the Mortgagee,
shall ratify and confirm any such sale or sales by executing and
delivering to the Mortgagee or to such purchaser or purchasers all
such instruments as may be advisable, in the judgment of the
Mortgagee, for the purpose, and as may be designated in such
request. Any such sale or sales made under or by virtue of this
Article III, whether made under the POWER OF SALE herein granted or
under or by virtue of judicial proceedings or of a judgment or
decree of foreclosure and sale, shall operate to divest all of the
estate, right, title, interest, claim and demand whatsoever,
whether at law or in equity, of the Mortgagor in and to the proper-
ties and rights so sold, and shall be a perpetual bar both at law
and in equity against the Mortgagor and against any and all persons
claiming or who may claim the same or any part thereof from,
through or under the Mortgagor.
(vi) In the event of any sale made under or by
virtue of this Article III (whether made under the POWER OF SALE
provided for herein or under or by virtue of judicial proceedings
or of a judgment or decree of foreclosure and sale), the entire In-
debtedness, if not previously due and payable, immediately there-
upon shall, anything in any Note, the Indenture, any of the
Security Documents or in this Mortgage to the contrary notwith-
standing, become due and payable.
(vii) Upon any sale made under or by virtue of this
Article III (whether made under the POWER OF SALE provided for
herein or under or by virtue of judicial proceedings or of a judg-
ment or decree of foreclosure and sale), the Mortgagee may bid for
and acquire the Mortgaged Property or any part thereof or interest
therein and in lieu of paying cash therefor may make settlement for
the purchase price by crediting upon the Indebtedness of the Mort-
gagor secured by this Mortgage the net sales price after deducting
therefrom the expenses of the sale and the costs of the action
(including attorneys' fees and expenses) and any other sums which
the Mortgagee is authorized to deduct under this Mortgage.
(viii) No recovery of any judgment by the Mortgagee
and no levy of an execution under any judgment upon the Mortgaged
Property or any part thereof or upon any other property of the
Mortgagor shall effect in any manner or to any extent, the lien of
this Mortgage upon the Mortgaged Property or any part thereof, or
any liens, rights, powers or remedies of the Mortgagee hereunder,
but such Liens, rights, powers and remedies of the Mortgagee shall
continue unimpaired as before.
Section 3.3 Payment of Indebtedness After Default. Upon the
occurrence of any Event of Default and the acceleration of the maturity of
the Indebtedness as provided herein, if, at any time prior to foreclosure
sale, the Mortgagor or any other person tenders payment of the amount neces-
sary to satisfy the Indebtedness, the same shall constitute an evasion of the
payment terms hereof and/or the Indenture or the Security Documents or the
Notes and shall be deemed to be a voluntary prepayment hereunder, in which
case such payment must include the premium and/or fee required under the
prepayment provision, if any, contained herein or in the Notes, the Security
Documents and/or the Indenture. This provision shall be of no force or
effect if at the time that such tender of payment is made, the Mortgagor has
the right under this Mortgage, the Security Documents, the Indenture or the
Notes to prepay the Indebtedness without penalty or premium.
Section 3.4 Intentionally Omitted.
Section 3.5 Mortgagor's Actions After Default. Effective after
the happening of any Event of Default and immediately upon the commencement
of any action, suit or other legal proceedings by the Mortgagee to obtain
judgment for the Indebtedness, or of any other nature in aid of the
enforcement of the Notes, the Indenture, the Guaranty, the Security Documents
or this Mortgage, the Mortgagor hereby (i) waives the issuance and service of
process in any such action, suit or proceeding, provided, however, that
notice of such process is given to Mortgagor in accordance with Section 4.3
hereof, (ii) waives the right to trial by jury and (iii) if required by the
Mortgagee, consents to the appointment of a receiver or receivers with
respect to the Mortgaged Property and of all the earnings, revenues, rents,
issues, profits and income thereof.
Section 3.6 Control by Mortgagee After Default. Upon and
following the appointment of any receiver, liquidator or trustee of the
Mortgagor, or of any of its property, or of the Mortgaged Property or any
part thereof, the Mortgagee shall be entitled to possession and control of
all property now and hereafter covered by this Mortgage, and shall not be
deemed to be a mortgagee-in-possession as a result thereof.
ARTICLE IV
Miscellaneous
Section 4.1 Credits Waived. The Mortgagor will not claim or
demand or be entitled to any credit or credits against the Indebtedness for
so much of the taxes assessed against the Mortgaged Property or any part
thereof, as is equal to the tax rate applied to the amount due on this
Mortgage or any part thereof, and no deductions shall otherwise be made or
claimed from the taxable value of the Mortgaged Property or any part thereof
by reason of this Mortgage or the payment of the Indebtedness and the perfor-
mance of the Obligations secured hereby.
Section 4.2 No Releases. The Mortgagor agrees, that in the event
the Mortgaged Property or any part thereof or interest therein is sold
pursuant to the prior written consent of the Mortgagee as provided herein,
and the Mortgagee enters into any agreement with the then owner of the Mort-
gaged Property extending the time of payment of the Indebtedness or perfor-
mance of the Obligations, or otherwise modifying the terms hereof, the
Mortgagor shall continue to be liable to pay the Indebtedness and perform the
Obligations according to the tenor of any such agreement unless expressly
released and discharged in writing by the Mortgagee.
Section 4.3 Notices. All notices, requests, demands and other
communications required or permitted to be given to or made upon any party
hereto shall be in writing and shall be personally delivered or sent by
registered or certified mail, postage prepaid, return receipt requested, or
by prepaid telex or telegram (with messenger delivery specified in the case
of a telegram), or by telecopier, or overnight air courier guaranteeing next
day delivery and shall be deemed to be delivered for purposes of this Mort-
gage when delivered in person, upon acknowledged receipt if delivered by
telecopy or telex, or five (5) business days after depositing it in the
United States mail, registered or certified, with postage prepaid and
properly addressed, and the next business day after timely delivery to the
courier, if sent by overnight air courier guaranteeing next day delivery.
Unless otherwise specified in a notice sent or delivered in accordance with
the foregoing provisions of this Section 4.3, notices, demands, instructions
and other communications in writing shall be given to or made upon the
respective parties at their respective addresses (or to their respective
telex or telecopier numbers) indicated below:
If to Mortgagor:
Koehring Cranes, Inc.
c/o Terex Corporation
500 Post Road East
Westport, Connecticut 06880
Attention: Marvin Rosenberg, Esq.
If to the Mortgagee:
United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Attn: Corporate Trust Department
Section 4.4 Binding Obligations. The provisions
and covenants of this Mortgage shall run with the land, shall
be binding upon the Mortgagor and shall inure to the benefit
of the Mortgagee, subsequent holders of this Mortgage, and the
respective successors and assigns of the foregoing. For the
purpose of this Mortgage, the term "Mortgagor" shall include
and refer to the Mortgagor named herein, any subsequent owners
of the Mortgaged Property (or any part thereof or interest
therein), and their respective heirs, executors, legal
representatives, successors and assigns. If there is more
than one Mortgagor, all of their undertakings hereunder shall
be deemed to be joint and several.
Section 4.5 Legal Construction. The creation of
this Mortgage, the perfection of the lien or security interest
thereof in the Mortgaged Property, and the rights and remedies
of the Mortgagee with respect to the Mortgaged Property, as
provided herein and by the laws of the state wherein the
Mortgaged Property is located, shall be governed by and con-
strued in accordance with the internal laws of the state
wherein the Mortgaged Property is located without regard to
principles of conflict of law. Otherwise, to the extent
permitted by applicable law, this Mortgage, the Notes, the
Security Documents, the Indenture and all other obligations of
the Mortgagor (including, without limitation, the liability of
the Mortgagor for any deficiency following a foreclosure of
all or any part of the Mortgaged Property) shall be governed
by and construed in accordance with the internal laws of the
State of New York without regard to principles of conflicts of
laws, such state being the state where such documents were
executed and delivered. Nothing in this Mortgage, the Notes,
the Indenture or in any other agreement between the Mortgagor
and the Mortgagee shall require the Mortgagor to pay, or the
Mortgagee to accept, interest in an amount which would subject
the Mortgagee to any penalty or forfeiture under applicable
law. All agreements between the Mortgagor and the Mortgagee,
whether now existing or hereafter arising and whether oral or
written, are hereby expressly limited so that in no
contingency or event whatsoever shall the amount paid or
agreed to be paid by the Mortgagor for the use, forbearance or
detention of the money to be loaned under the Indenture, the
Security Documents, the Notes or any related document, or for
the payment or performance of any covenant or obligation con-
tained herein, in the Indenture, the Security Documents or in
the Notes exceed the maximum amount permissible under
applicable Federal or state usury laws. If under any cir-
cumstances whatsoever fulfillment of any such provision, at
the time performance of such provision shall be due, shall
involve exceeding the limit of validity prescribed by law,
then the obligation to be fulfilled shall be reduced to the
limit of such validity. If under any circumstances the
Mortgagor shall have paid an amount deemed interest by
applicable law, which would exceed the highest lawful rate,
such amount shall be applied to the reduction of the principal
amount owing in respect of the Indebtedness and not to the
payment of interest, or if such excessive interest exceeds
such unpaid balance of principal and any other amounts due
hereunder or under the Notes, the Indenture or any of the
Security Documents, the excess shall be refunded to the Mort-
gagor. All sums paid or agreed to be paid for the use, for-
bearance or detention of the principal under any extension of
credit by the Mortgagee shall, to the extent permitted by
applicable law, and to the extent necessary to preclude
exceeding the limit of validity prescribed by law, be amor-
tized, prorated, allocated and spread from the date of this
Mortgage until payment in full of such sums so that the actual
rate of interest on account of such principal amounts is
uniform throughout the term hereof.
Section 4.6 Captions. The captions of the Sections
of this Mortgage are for the purpose of convenience only and
are not intended to be a part of this Mortgage and shall not
be deemed to modify, explain, enlarge or restrict any of the
provisions hereof.
Section 4.7 Further Assurances. The Mortgagor
shall do, execute, acknowledge and deliver, at the sole cost
and expense of the Mortgagor, such further acts, deeds,
documents, instruments, conveyances, mortgages, assignments,
estoppel certificates, financing statements, fixture filings,
continuation statements, notices of assignment, transfers and
assurances as the Mortgagee may reasonably require from time
to time in order to assure, convey, grant, assign, transfer
and confirm unto the Mortgagee the rights now or hereafter
intended to be granted to the Mortgagee under this Mortgage,
any other instrument executed in connection with this Mortgage
or any other instrument under which the Mortgagor may be or
may hereafter become bound to convey, mortgage or assign to
the Mortgagee for carrying out the intention of facilitating
the performance of the terms of this Mortgage. The Mortgagor
hereby appoints the Mortgagee its attorney-in-fact to execute,
acknowledge and deliver for and in the name of the Mortgagor
any and all of the instruments mentioned in this Section 4.7
and this power, being coupled with an interest, shall be irre-
vocable as long as any part of the Indebtedness remains unpaid
or any Obligations remain unperformed, provided, however, that
the Mortgagee shall not exercise its powers as attorney-in-
fact without giving Mortgagor five (5) days' prior written
notice of its intention to do so.
Section 4.8 Severability. Any provision of this
Mortgage which is prohibited or unenforceable in any juris-
diction or prohibited or unenforceable as to any person or
entity shall, as to such jurisdiction, person or entity or
circumstance be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provi-
sions hereof or affecting the validity or enforceability of
such provisions in any other jurisdiction or as to any other
person or entity or circumstance.
Section 4.9 General Conditions.
(i) All covenants hereof shall be
construed as affording to the Mortgagee rights
additional to and not exclusive of the rights
conferred under the provisions of any other appli-
cable law. To the extent any specific provision of
this Mortgage and the provisions of any applicable
law conveying any beneficial rights to either party
directly conflict, the terms of this Mortgage shall
control.
(ii) This Mortgage cannot be al-
tered, amended, modified or discharged orally and
no executory agreement shall be effective to modify
or discharge it in whole or in part, unless it is
in writing and signed by the party against whom en-
forcement of the modification, alteration,
amendment or discharge is sought.
(iii) No remedy herein conferred
upon or reserved to the Mortgagee is intended to be
exclusive of any other remedy or remedies, and each
and every such remedy shall be cumulative, and
shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in
equity or by statute. No delay or omission of the
Mortgagee in exercising any right or power accruing
upon any Event of Default shall impair any such
right or power, or shall be construed to be a
waiver of any such Event of Default, or any
acquiescence therein. Acceptance of any payment
(other than a monetary payment in cure of a
monetary default) after the occurrence of an Event
of Default shall not be deemed a waiver of or a
cure of such Event of Default and every power and
remedy given by this Mortgage to the Mortgagee may
be exercised from time to time as often as may be
deemed expedient by the Mortgagee. Nothing in this
Mortgage or in the Notes shall limit or diminish
the obligation of the Mortgagor to pay the Indebt-
edness in the manner and at the time and place
therein respectively expressed.
(iv) No waiver by the Mortgagee or
the Mortgagor shall be effective unless it is in
writing and then only to the extent specifically
stated. Without limiting the generality of the
foregoing, any payment made by the Mortgagee for
insurance premiums, taxes, assessments, water
rates, sewer rentals, levies, fees or any other
charges affecting the Mortgaged Property shall not
constitute a waiver of the Mortgagor's default in
making such payments and shall not obligate the
Mortgagee to make any further payments.
(v) The Mortgagee shall have the
right to appear in and defend any action or pro-
ceeding, in the name and on behalf of the Mortgagor
which the Mortgagee in its discretion determines
may adversely affect the Mortgaged Property or this
Mortgage, provided, however, that the Mortgagor
shall have the right to defend any such action with
counsel reasonably acceptable to the Mortgagee. In
the event that any such action or proceeding is one
covered by title insurance, defense thereof may be
made by counsel to the title company; if the pro-
ceeding is one covered by insurance, defense
thereof may be made by counsel to the insurance
company; notwithstanding the foregoing, if the
action is one not covered by insurance, the Mort-
gagor shall defend such action with counsel reason-
ably satisfactory to the Mortgagee. The Mortgagee
shall also have the right, upon reasonable prior
notice to Mortgagor (except in the case of an
emergency or other imminent danger to the Mortgaged
Property or Mortgagee's interest therein, in which
event no prior notice shall be required), to insti-
tute any action or proceeding which the Mortgagee
in its reasonable discretion determines should be
brought to protect its interest in the Mortgaged
Property or its rights hereunder. All costs and
expenses incurred by the Mortgagee in connection
with any such action or proceedings, including,
without limitation, attorneys' fees and expenses
shall be paid by the Mortgagor and shall be secured
by this Mortgage.
(vi) In the event of the passage
after the date of this Mortgage of any law of any
governmental authority having jurisdiction hereof
or of the Mortgaged Property, deducting from the
value of land for the purpose of taxation, affect-
ing any lien thereon or changing in any way the
laws for the taxation of mortgages or debts secured
by mortgages for federal, state or local purposes,
or the manner of the collection of any such taxes,
so as to affect this Mortgage, the Mortgagor shall
promptly pay to the Mortgagee, on demand, all
taxes, costs and charges for which the Mortgagee is
or may be liable as a result thereof; provided that
if said payment shall be prohibited by law, render
the Notes usurious or subject the Mortgagee to any
penalty or forfeiture, then and in such event the
Indebtedness shall, at the option of the Mortgagee,
be immediately due and payable.
(vii) The Mortgagor hereby appoints
the Mortgagee as its attorney-in-fact in connection
with the personal property and fixtures covered by
this Mortgage, where permitted by law, to file on
its behalf any financing statements or other state-
ments in connection therewith with the appropriate
public office signed by the Mortgagee, as secured
party. This power being coupled with an interest,
shall be irrevocable so long as any part of the
Indebtedness remains unpaid.
Section 4.10 Multistate Real Estate Transaction.
The Mortgagor acknowledges that this Mortgage is one of a
number of other mortgages, deeds of trust and assignments of
leases and rents and other security documents (hereinafter
collectively the "Other Security Documents") which secure the
payment of the Indebtedness and performance of the Obligations
in whole or in part. The Mortgagor agrees that the lien of
this Mortgage shall, subject to the terms hereof, be absolute
and unconditional and shall not in any manner be affected or
impaired by any acts or omissions whatsoever of the Mortgagee
and, without limiting the generality of the foregoing, the
lien hereof shall not be impaired by any acceptance by the
Mortgagee of any security for or guarantors upon any of the
Indebtedness or by any failure, neglect or omission on the
part of the Mortgagee to realize upon or protect any of the
Indebtedness or any collateral or security therefor. The lien
hereof shall not in any manner be impaired or affected by any
release (except as to the property released), sale, pledge,
surrender, compromise, settlement, renewal, extension,
indulgence, alteration, changing, modification or any dispo-
sition of any of the Indebtedness or of any of the collateral
or security therefor. The Mortgagee may exercise any of the
rights and remedies under the Other Security Documents without
first exercising or enforcing any of its rights and remedies
hereunder, or may foreclose, exercise any power of sale, or
exercise any other right available under this Mortgage without
first exercising or enforcing any of its rights and remedies
under any or all of the Other Security Documents. Such
exercise of the Mortgagee's rights and remedies under any or
all of the Other Security Documents shall not in any manner
impair the Indebtedness or lien of this Mortgage, and any
exercise of the rights or remedies of the Mortgagee hereunder
shall not impair the lien of any of the Other Security
Documents or any of the Mortgagee's rights and remedies
thereunder. The Mortgagor specifically consents and agrees
that the Mortgagee may exercise its rights and remedies
hereunder and under the Other Security Documents separately
or concurrently and in any order that the Mortgagee may deem
appropriate.
Section 4.11 Agreement Paramount. If and to the
extent that any of the provisions of this Mortgage conflict or
are otherwise inconsistent with any of the provisions of the
Indenture, the provisions of the Indenture shall prevail.
Notwithstanding the foregoing, the failure of the Indenture to
speak to or address a provision expressly set forth in this
Mortgage shall not be deemed to be such an inconsistency or
conflict.
IN WITNESS WHEREOF, this Mortgage has been duly
executed and delivered by the Mortgagor as of the date first
above written.
KOEHRING CRANES, INC.
By:____________________________
Name:
Title:
Attest:________________________
Name:
Title:
<PAGE>
STATE OF _________________, ___________________COUNTY, ss:
On this __________ day of _________________________, 19____,
before me, a _______________________________ (insert title of
acknowledging officer) in and for said county, personally appeared
___________________________, to me personally known, who being by
me duly (sworn or affirmed) did say that that person is
_______________________ (insert title of executing officer) of said
(corporation or association), that (no seal has been procured by)
(the seal affixed thereto is the seal of) the (corporation or
association) and that said instrument was signed and sealed on
behalf of the said (corporation or association) by authority of its
Board of (Directors and Trustees); and the said
_______________________ acknowledged the execution of said
instrument to be the voluntary act and deed of said (corporation or
association) by it voluntarily executed.
_____________________________________
Notary Public in and for said State
REAL ESTATE FEE MORTGAGE, ASSIGNMENT OF RENTS, SECURITY
AGREEMENT, FINANCING STATEMENT AND FIXTURE FILING
in the amount of
$250,000,000.00
FROM
KOEHRING CRANES, INC., a Delaware corporation
having an office at:
c/o Terex Corporation
500 Post Road East
Westport, Connecticut 06880
(the "Mortgagor")
TO
UNITED STATES TRUST COMPANY OF NEW YORK, as collateral agent,
having an office at:
114 West 47th Street
New York, New York 10036
New York County
(the "Mortgagee")
This instrument was prepared by and,
after recording, please return to:
Michael A. Woronoff, Esq.
Skadden, Arps, Slate, Meagher & Flom
300 South Grand Avenue
Los Angeles, California 90071
<PAGE>
REAL ESTATE FEE MORTGAGE, ASSIGNMENT OF RENTS,
SECURITY AGREEMENT, FINANCING STATEMENT AND FIXTURE FILING
IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS
AGREEMENT SHOULD BE READ CAREFULLY BECAUSE ONLY THOSE
TERMS IN WRITING ARE ENFORCEABLE. NO OTHER TERMS OR ORAL
PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT MAY BE
LEGALLY ENFORCED. YOU MAY CHANGE THE TERMS OF THIS
AGREEMENT ONLY BY ANOTHER WRITTEN AGREEMENT.
NOTICE: This Mortgage secures credit in the amount of $250,000,000. Loans
and advances up to this amount, together with interest, are senior to
indebtedness to other creditors under subsequently recorded or filed
mortgages and liens.
THIS REAL ESTATE FEE MORTGAGE, ASSIGNMENT OF RENTS, SECURITY
AGREEMENT, FINANCING STATEMENT AND FIXTURE FILING (hereafter, as amended,
modified, replaced, consolidated and extended, this "Mortgage") is made as of
the 9th day of May, 1995 from KOEHRING CRANES, INC., a Delaware corporation
(the "Mortgagor"), a subsidiary of TEREX CORPORATION, a Delaware corporation
("Terex"), with a mailing address of 500 Post Road East, Westport, Connecti-
cut 06880, to UNITED STATES TRUST COMPANY OF NEW YORK, a New York corpo-
ration (the "Mortgagee"), as collateral agent, with a mailing address of 114
West 47th Street, New York, New York 10036.
R E C I T A L S:
1. The Mortgagor is the owner of the fee simple interest in the
Real Property (as hereinafter defined).
2. Pursuant to a certain Indenture (the "Indenture") dated as of
even date herewith between Terex and the Mortgagee as trustee thereunder (in
such capacity, the "Indenture Trustee") for the benefit of the Holders of the
Notes (as defined below), Terex has obtained financing in the amount of
$250,000,000 (the "Loan") with a maturity date of May 15, 2002. All
capitalized terms used but not otherwise defined herein shall have the
meaning ascribed to them in the Indenture.
3. Mortgagor, as a subsidiary of Terex, will receive substantial
benefits from the Loan, and pursuant to Sections 10.7 and 10.8 of the
Indenture, has guaranteed the obligations of Terex under the Indenture and
the Notes.
4. To secure Mortgagor's obligations under the Guaranty and the
repayment of the Notes and performance of all terms and conditions of the
Indenture, the Mortgagor has agreed to create a first mortgage lien on the
Mortgaged Property herein described, in favor of the Mortgagee.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, and (A) in order to secure (i) payment of the
indebtedness under the Indenture, as the same may be amended, modified,
restated, substituted and extended by the terms hereof, aggregating
$250,000,000 in principal amount (the various promissory notes and securities
evidencing said indebtedness and all supplements, substitutions, extensions
and renewals thereof are hereinafter referred to collectively as the
"Notes"), (ii) payment of the interest on such indebtedness according to the
terms of the Indenture and the Notes, (iii) payment of all other sums payable
to the Mortgagee pursuant to the terms of this Mortgage, and (iv) payment of
all other sums owed by the Mortgagor or Terex to the Mortgagee, the Indenture
Trustee or the Holders in accordance with the terms of the Indenture or
pursuant to the Notes, the Security Documents or the Guaranty (the payment
obligations described in the foregoing clauses (i), (ii), (iii) and (iv) are
hereinafter referred to collectively as the "Indebtedness"); and (B) in order
to secure the performance of every obligation contained in the Indenture, the
Notes, this Mortgage, the Security Documents, the Guaranty and all other
instruments now or hereafter evidencing or securing any portion of the
Indebtedness (hereinafter referred to collectively as the "Obligations"), the
Mortgagor by these presents does hereby mortgage, warrant, grant a security
interest in, pledge, assign and transfer to the Mortgagee, and each of its
successors and assigns forever under and subject to the terms and conditions
hereof, all of the Mortgagor's estate, right, title and interest in and to
the following, whether now owned or held or hereafter acquired (hereinafter
collectively referred to as the "Mortgaged Property" or the "Collateral"):
A. That certain real property (the "Real Property") more particu-
larly described in Schedule A attached hereto and made a part hereof by this
reference; and
B. All of the buildings, structures and improvements (hereinafter,
collectively, together with all building equipment, the "Improvements") now
or hereafter located on the Real Property and all of its right, title and
interest, if any, in and to the streets and roads abutting the Real Property
to the center lines thereof, and strips and gores within or adjoining the
Real Property, the air space and right to use said air space above the Real
Property, all rights of ingress and egress by motor vehicles to parking
facilities on or within the Real Property, all easements now or hereafter
affecting the Real Property or the Improvements, all royalties and all rights
appertaining to the use and enjoyment of the Real Property or the Im-
provements, including, without limitation, alley, drainage, crop, timber,
agricultural, horticultural, mineral, water, oil and gas rights; and
C. All fixtures (the "Fixtures"), and all appurtenances and addi-
tions thereto and substitutions or replacements thereof, now or hereafter
attached to the Real Property and/or the Improvements. Without limiting the
foregoing, to the extent permitted under applicable law, this Mortgage shall
be deemed to be a "security agreement" under the Uniform Commercial Code of
the State wherein the Real Property and improvements are located (the "UCC"),
and the Mortgagor hereby grants to the Mortgagee a "security interest" (as
defined in the UCC) in all of its present and future Fixtures and the
Mortgagee shall have, in addition to all rights and remedies provided herein,
and in any other agreements, commitments and undertakings made by the Mort-
gagor to the Mortgagee, all of the rights and remedies of a "secured party"
under the UCC; and
D. To the extent the same does not constitute Fixtures, all
equipment (as such term is defined in Article 9 of the UCC) now owned or
hereafter acquired and owned by the Mortgagor, which is used at or in
connection with the Improvements or the Real Property and is located thereon
or therein (including, without limitation, all machinery, production equip-
ment, furnishings, electronic data-processing and other office equipment to
the extent located on or in the Mortgaged Property), together with all
attachments, components, parts, equipment and accessories installed thereon
or affixed thereto and any and all extensions, additions, improvements,
betterments, renewals, substitutions and replacements to, for or of any of
the foregoing (collectively, the "Equipment"); and
E. All leases, lettings and licenses of the Real Property, the
Improvements and any other property or rights encumbered or conveyed hereby,
or any part thereof, now or hereafter entered into (each a "Lease," and
collectively, the "Leases") and all right, title and interest of the
Mortgagor thereunder, including, without limitation, cash and securities
deposited thereunder, the right to receive and collect the rents, issues and
profits payable thereunder and the right to enforce, whether by action at law
or in equity or by other means, all provisions, covenants and agreements
thereof, including, without limitation, the right (i) to enter upon and take
possession of the Mortgaged Premises (as hereinafter defined) for the purpose
of collecting the said rents, issues and profits, (ii) to dispossess by the
usual summary proceedings (or any other proceedings of the Mortgagee's
selection) any tenant defaulting in the payment thereof to the Mortgagee,
(iii) to let the Mortgaged Premises, or any part thereof, and (iv) subject to
Mortgagor's license as hereinafter set forth, to apply said rents, issues and
profits, after payment of all necessary charges and expenses, on account of
the Indebtedness; and
F. Any and all permits, certificates, approvals and autho-
rizations, however characterized, related to the Real Property or the
Improvements, issued or in any way furnished, whether necessary or not for
the operation and use of the Real Property or the Improvements, including,
without limitation, operating licenses, franchise agreements, contracts,
contract rights, public utility deposits, building permits, certificates of
occupancy, environmental certificates, industrial permits and licenses and
certificates of operation; and
G. All unearned premiums, accrued, accruing or to accrue under
insurance policies related to the Real Property or the Improvements now or
hereafter obtained by the Mortgagor and all proceeds of the conversion,
voluntary or involuntary, of the Real Property, the Improvements and/or any
other property or rights encumbered or conveyed hereby, or any part thereof,
into cash or liquidated claims, including, without limitation, proceeds of
hazard and title insurance and all awards and compensation heretofore and
hereafter made to the present and all subsequent owners of the Real Property,
the Improvements and/or any other property or rights encumbered or conveyed
hereby by any governmental or other lawful authority for the taking by
eminent domain, condemnation or otherwise, of all or any part of the Real
Property, the Improvements and/or any other property or rights encumbered or
conveyed hereby or any easement therein, including, but not limited to,
awards for any change of grade of streets; and
H. All extensions, improvements, betterments, renewals, substitu-
tions and replacements of and all additions and appurtenances to the Real
Property, the Improvements and/or any other property or rights encumbered or
conveyed hereby, hereafter acquired by or released to the Mortgagor or con-
structed, assembled or placed by the Mortgagor on the Real Property, the
Improvements and any other property or rights encumbered or conveyed hereby,
and all conversions of the security constituted thereby which, immediately
upon such acquisition, release, construction, assembling, placement or con-
version, as the case may be, and in each such case without any further
mortgage, conveyance, assignment or other act by the Mortgagor, shall become
subject to the lien of this Mortgage as fully and completely, and with the
same effect, as though now owned by the Mortgagor and specifically described
herein; and
I. All proceeds (as defined in the UCC) of the conversion, volun-
tary or involuntary, of any of the foregoing into cash or liquidated claims,
including, without limitation, proceeds of insurance and condemnation or
other awards or payments with respect thereto, including interest thereon.
TO HAVE AND TO HOLD the Mortgaged Property, with all powers of sale
and right of entry and possession (to the extent permitted by applicable
law), with all privileges and appurtenances to the same belonging, with the
right of possession thereof, unto the Mortgagee and its successors and
assigns, forever, and the Mortgagor hereby binds itself and its successors
and assigns to warrant and forever (but only until such time as the
Indebtedness has been paid in full and the Obligations have been fully
satisfied) defend title to the Mortgaged Property unto the Mortgagee and its
successors and assigns against the claim or claims of all parties claiming or
to claim the same, or any part thereof;
FOR THE PURPOSE OF SECURING THE OBLIGATIONS.
PROVIDED, HOWEVER, that if the Mortgagor shall pay or cause to be
paid indefeasibly in full all of the Indebtedness and if the Mortgagor shall
have kept, performed, observed and satisfied all of the Obligations, then the
Mortgagee shall deliver to the persons legally entitled thereto all such
documents, in recordable form, as shall be necessary to release the Mortgaged
Property from the lien of this Mortgage and to release to the Mortgagor all
deposits held by or on behalf of the Mortgagee, but otherwise this Mortgage
shall remain in full force and effect.
AND the Mortgagor represents, warrants, covenants and agrees as
follows:
ARTICLE I
Representations and Warranties of the Mortgagor
Section 1.1 Title to the Mortgaged Property.
(i) The right, title and interest of the Mortgagor constitutes a good,
marketable and insurable fee simple estate in the Mortgaged Property, subject
to no Liens, except for Liens permitted pursuant to Section 4.12 of the
Indenture (collectively, the "Permitted Liens"). (ii) This Mortgage creates
and constitutes a valid and enforceable lien on the Mortgaged Property, and,
to the extent any of the Mortgaged Property shall consist of personalty (when
taken together with any fixture filings and financing statements delivered in
connection herewith and filed in accordance with the UCC), a perfected
security interest in such Mortgaged Property, subject only to the Permitted
Liens. (iii) The Mortgagor has full power and lawful authority to encumber
the Mortgaged Property in the manner and form set forth hereunder. (iv) The
Mortgagor owns all Fixtures and Equipment now or hereafter comprising part of
the Mortgaged Property, subject only to the matters set forth in this Sec-
tion. (v) This Mortgage is and will remain a valid, enforceable and contin-
uing first priority Lien on the Mortgaged Property subject only to the
Permitted Liens. (vi) The Mortgagor will preserve such title as set forth
herein and in the Indenture, and will forever (but only until such time as
the Indebtedness has been paid in full and the Obligations have been fully
satisfied) warrant and defend the validity and priority of the lien hereof
against the claims of all persons and parties whatsoever.
Section 1.2 Mortgage Authorized. The execution and delivery of
this Mortgage, the Guaranty, the Indenture and each other document or
instrument executed or delivered by Mortgagor in connection with any of the
foregoing or the Notes have been duly authorized by all necessary corporate
action of the Mortgagor and there is no provision in the articles or certifi-
cate of incorporation or by-laws of the Mortgagor requiring further consent
for such action by any other entity or person. The Mortgagor is duly orga-
nized, validly existing and in good standing under the laws of the state of
its formation, and has (i) all necessary licenses, authorizations, registra-
tions, permits and/or approvals and (ii) full power and authority to own or
lease its properties and carry on its business as presently conducted, and
the execution and delivery by it of, and performance of the Obligations under
this Mortgage, the Guaranty, the Indenture and each other document or
instrument executed or delivered by Mortgagor in connection with any of the
foregoing or the Notes will not result in the Mortgagor being in default
under any provision of its articles or certificate of incorporation or by-
laws or of any mortgage, lease, credit or other agreement to which it is a
party or which affects it or the Mortgaged Property, or any part thereof.
Section 1.3 Operation of the Mortgaged Property. (i) The
Mortgagor has all certificates, licenses, authorizations, registrations,
permits and/or approvals and all required environmental permits necessary for
the operation of the Mortgaged Property or any part thereof, the lack of
which would have a Material Adverse Effect (as defined below), all of which
as of the date hereof are in full force and effect and are not, to the knowl-
edge of the Mortgagor, subject to any revocation, amendment, release,
suspension, forfeiture or the like. (ii) The Mortgaged Property is served by
all easements and utility lines and connections reasonably required or neces-
sary for the current use thereof. (iii) The Mortgaged Property has adequate
access to public roadways. As used in this Mortgage, "Material Adverse
Effect" shall mean a material adverse effect, singly or in the aggregate, on
(i) the properties, business, prospects, operations, earnings, assets,
liabilities or condition (financial or otherwise) of Mortgagor or Terex,
taken as a whole, (ii) the ability of Mortgagor to perform its obligations
under this Mortgage, the Guaranty or the Indenture, (iii) the perfection or
priority of the Lien of this Mortgage, or (iv) the value or utility of the
Mortgaged Property, taken as a whole.
ARTICLE II
Covenants of the Mortgagor
Section 2.1 Payment of Indebtedness and Performance of Covenants.
The Mortgagor shall (a) duly and punctually pay or cause to be paid each
payment of the principal of and interest on the Indebtedness and any
prepayments, late charges, premiums and fees provided for in the Indenture
and all other payment Obligations secured by this Mortgage at the time and in
the manner provided in this Mortgage, the Guaranty, the Indenture and each
other document or instrument executed or delivered by Mortgagor in connection
with any of the foregoing or the Notes, and (b) duly and punctually perform
and observe all of the terms, provisions, conditions, covenants and
agreements on the Mortgagor's part to be performed or observed as provided in
the Notes, this Mortgage, the Guaranty, the Indenture and each other document
or instrument executed or delivered by Mortgagor in connection with any of
the foregoing.
Section 2.2 Maintenance of the Mortgaged Property. (i) The
Mortgagor shall maintain the Mortgaged Property in a commercially reasonable
manner for the operation thereof and in accordance with the requirements of
the Indenture, and shall comply (and shall use commercially reasonable
efforts to cause any tenants to comply) with all federal, state and local
laws, statutes, regulations, ordinances, rules, codes, rulings, judgments,
decrees, orders, injunctions and other requirements of every government or
public agency having or claiming jurisdiction over the Mortgaged Property
(and all permits, certificates, consents, licenses, variances, orders, exemp-
tions, approvals and authorizations issued thereby) as the same relate to the
Mortgaged Property and the use and occupancy thereof and all covenants,
conditions, restrictions, declarations and easements that affect or are
binding upon the Mortgaged Property (each, a "Requirement"). The Mortgagor
shall permit the Mortgagee to enter upon the Mortgaged Property and inspect
the same at all reasonable hours and with reasonable prior notice. The
Mortgagor shall not, without the prior written consent of the Mortgagee,
threaten, commit, permit or suffer to occur any alterations or changes to the
Mortgaged Property or any part thereof other than alterations or changes that
do not materially adversely affect the value or utility of the Mortgaged
Property; provided, however, that Fixtures owned by the Mortgagor may be
removed from the Improvements if such Fixtures are obsolete or if the Mort-
gagor concurrently therewith replaces the same with items which do not reduce
the value or utility of the Mortgaged Property or the Improvements, free of
any lien, charge or claim superior to the lien and/or security interest
created thereby.
(ii) Nothing in this Section 2.2 shall require the
Mortgagor to comply with any Requirement so long as (a) the failure
so to do shall not otherwise apart from the provisions of this
Section 2.2 (i) be an Event of Default under this Mortgage, (b) the
failure so to do shall not result in the voiding, rescission or
invalidation of the certificate of occupancy or any other material
license, certificate, permit or registration in respect of the
Mortgaged Property essential to the conduct of the Mortgagor's
business at the Mortgaged Property, (c) the failure so to do shall
not prevent, hinder or materially interfere with the lawful use and
occupancy of the Mortgaged Property or any material portion thereof
for the use and occupancy which the Mortgagor reasonably determines
is most advantageous to its business, (d) the failure so to do
shall not void or invalidate or make unavailable any insurance
required by this Mortgage to be maintained by the Mortgagor in
respect of the Mortgaged Property and (e) the Mortgagor in good
faith and at its own expense shall contest the Requirement or the
validity thereof by appropriate legal proceedings, which
proceedings must operate to prevent (l) the occurrence of any of
the events described in the preceding clauses (a) through (d) of
this paragraph (ii) and (2) the collection or other realization of
any material sums due or payable as a consequence of the
Requirement, the sale of any lien arising in respect of the Re-
quirement, and/or the sale or forfeiture of the Mortgaged Property,
any part thereof or interest therein, or the sale of any lien con-
nected therewith; provided that during such contest the Mortgagor
shall, at the option of the Mortgagee, either establish adequate
reserves in accordance with generally accepted accounting
principles or provide security reasonably satisfactory to the
Mortgagee (in amount and form) assuring the discharge of the
Mortgagor's obligations hereunder and of any interest, charge,
fine, penalty, fee or expense arising from or incurred as a result
of such contest, and, for purposes herein, the Mortgagee agrees
that the deposit of cash or an irrevocable letter of credit drawn
on a bank reasonably acceptable to Mortgagee shall be a satis-
factory form of security; and provided, further, that if at any
time compliance with any obligation imposed upon the Mortgagor by
the Requirement shall become necessary to prevent (l) the
occurrence of any of the events described in clauses (a) through
(d) of this paragraph (ii) or (2) the delivery of a deed conveying
the Mortgaged Property or any portion thereof or interest therein
because of noncompliance, or the sale of a lien in connection
therewith, or (3) the imposition of any material penalty, fine,
charge, fee, cost or expense on the Mortgagee, then the Mortgagor
shall comply with the Requirement in sufficient time to prevent the
occurrence of any such events, the delivery of such deed or the
sale of such lien, or the imposition of such material penalty,
fine, charge, fee, cost or expense on the Mortgagee.
Section 2.3 Insurance; Coverage. (i) The Mortgagor shall keep the
Mortgaged Property insured against (a) loss and damage by fire, casualty and
such other hazards as may be reasonably specified by the Mortgagee, includ-
ing, without limitation, those hazards which are covered by the standard
extended coverage all-risk insurance policy, (b) damage by vandalism and/or
malicious mischief, (c) explosion insurance in respect of any boilers or
similar apparatus located on the Mortgaged Property and (d) such other
hazards as may be reasonably specified by the Mortgagee. Such insurance
shall be on forms and by companies reasonably satisfactory to the Mortgagee.
The amounts and coverage limits of each policy of insurance required pursuant
to this Section 2.3 shall be sufficient to prevent the Mortgagor or the
Mortgagee from becoming a co-insurer of any partial loss under the applicable
policies and otherwise satisfactory to the Mortgagee, but in no event less
than the actual replacement value of such Mortgaged Property as determined by
the Mortgagor in accordance with generally accepted insurance practice and
approved by the Mortgagee, or at the Mortgagee's option, which shall be exer-
cised not more frequently than annually, as determined at the Mortgagor's ex-
pense by the insurer or an expert appraiser approved by the Mortgagee.
Notwithstanding anything to the contrary contained herein, Mortgagor shall be
permitted to maintain self-insurance for all insurance required to be
maintained hereby, provided that such self-insurance is consistent with
Mortgagor's prior practice and has been heretofore adequately disclosed to
Mortgagee.
(ii) The Mortgagor shall maintain in full force
liability insurance against claims of bodily injury, death or
property damage occurring on, in or about the Mortgaged Property,
with policy limits and deductibles in such amounts as from time to
time would be maintained by a prudent operator of property similar
in use and configuration to the Mortgaged Property and located in
the locality where the Mortgaged Property is located (which policy
limits and deductibles shall be reasonably satisfactory to the
Mortgagee), which policies of insurance shall name the Mortgagee as
an additional insured. All insurance policies and endorsements
required pursuant to this Section 2.3 shall be fully paid for,
nonassessable and contain such provisions (including, without limi-
tation, inflation guard or replacement cost endorsements) and expi-
ration dates and shall be in such form and amounts and issued by
such insurance companies with a rating of "A VIII" or better as
established by Best's Rating Guide (or an equivalent rating with
such other publication of a similar nature as shall be in current
use and as approved by the Mortgagee), or such other companies, as
shall be approved by the Mortgagee.
(iii) The Mortgagor shall additionally keep the
Mortgaged Property insured against loss by flood if the Mortgaged
Property is located in an area identified by the Secretary of Hous-
ing and Urban Development as an area having special flood hazards
and which has been so identified under the Flood Insurance Act of
1968 and the Flood Disaster Protection Act of 1973, as the same may
have been or may hereafter be amended or modified (and any
successor acts thereto) in amounts reasonably acceptable to the
Mortgagee, but in no event more than what is available under such
laws.
(iv) In all events and without limitation on the
foregoing, the Mortgagor will deliver the policy or policies (or
true copies or certificates thereof) of all such insurance required
under this Mortgage to the Mortgagee, which policy or policies
shall be endorsed to name the Mortgagee as a mortgagee-loss payee
thereunder, with loss payable to the Mortgagee without contribution
or assessment under a New York Standard Mortgagee clause or similar
clause, and shall provide the Mortgagee with no less than thirty
(30) days' notice from the insurer prior to the expiration,
cancellation or termination (for any reason whatsoever) of any such
policy.
(v) Insurance required hereunder may be carried by
the Mortgagor pursuant to blanket policies, provided that all other
requirements herein set forth are satisfied and that the underlying
policy in respect of the Mortgaged Property is delivered to the
Mortgagee as herein required. In the event that the Mortgagor
fails to keep the Mortgaged Property insured as required hereunder,
the Mortgagee may, but shall not be obligated to, obtain insurance
and pay the premiums therefor and the Mortgagor shall, on demand,
reimburse the Mortgagee for all sums, advances and expenses
incurred in connection therewith and such sums, advances and
expenses shall be deemed a part of the Indebtedness secured hereby
and shall bear interest at the Default Rate (as defined in Section
2.13 of this Mortgage) until reimbursed.
Section 2.4 Insurance; Proceeds. The Mortgagor shall give the
Mortgagee prompt notice of any material loss covered by insurance and the
Mortgagee shall have the right to join the Mortgagor in adjusting any loss
during the continuance of an Event of Default. The proceeds of insurance
paid on account of any damage or destruction to the Mortgaged Property or any
part thereof shall be paid over to the Mortgagee to be applied as hereinafter
provided. Notwithstanding anything to the contrary contained herein or in
any provision of applicable law, the proceeds of insurance policies coming
into the possession of the Mortgagee shall not be deemed trust funds.
Section 2.5 Restoration of the Mortgaged Property. In the event
of any material damage or destruction of the Mortgaged Property, or any part
thereof, as a result of casualty, condemnation, taking or other cause, the
Mortgagor shall give prompt written notice thereof to the Mortgagee. In the
event that the Mortgagee, in accordance with Section 2.6 hereof, makes avail-
able to the Mortgagor the insurance proceeds received by it, if any (or in
the event of condemnation or taking, the award, if any, arising out of such
condemnation or taking), the Mortgagor shall with reasonable promptness
commence and diligently continue to perform the repair, restoration and re-
building of the Mortgaged Property (hereinafter, the "Work") so as to restore
the Mortgaged Property in full compliance with all legal requirements and so
that the Mortgaged Property shall, to the extent reasonably practicable, be
at least equal in value and general utility as it was immediately prior to
the damage or destruction. If the Work to be done is materially structural
(as reasonably determined by the Mortgagee) or if the cost of the Work, as
estimated by the Mortgagee, shall exceed $________________ (hereinafter,
collectively, "Major Work"), the Mortgagor shall, prior to the commencement
of the Major Work, furnish to the Mortgagee for its approval not to be
unreasonably withheld or delayed: (i) complete plans and specifications for
the Major Work, with reasonably satisfactory evidence of the approval thereof
(a) by all governmental authorities whose approval is required for any or all
of the Major Work, (b) by all parties to or having an interest in the leases,
if any, of any portion of the Mortgaged Property whose approval is required,
and (c) by an architect or reputable contractor or construction manager or
engineer satisfactory to the Mortgagee (hereinafter, the "Architect") and
which shall be accompanied by the Architect's signed estimate, bearing the
Architect's seal, of the Architect's good faith estimate of the entire cost
of completing the Major Work; (ii) certified or photostatic copies of all
permits and approvals required by law in connection with the commencement
and/or the conduct of the Work; and (iii) such other documents, instruments
and certificates as Mortgagee may reasonably request. The Mortgagor shall
not be entitled to receive any of the insurance proceeds until the Mortgagor
shall have complied with the applicable requirements referred to in this Sec-
tion 2.5. After commencing any Major Work the Mortgagor shall perform such
Major Work diligently and in good faith in accordance with the plans and
specifications referred to in this Section 2.5.
Section 2.6 Restoration; Advances. Insurance proceeds received by
the Mortgagee (or, in the case of condemnation or taking, the award therefor)
less the cost, if any, to the Mortgagee of recovery of the same and of paying
out such proceeds (including reasonable attorneys' fees and expenses and
administrative costs), shall be applied by the Mortgagee to reduce the
Indebtedness; provided, however, that so long as no Event of Default
hereunder has occurred and is continuing, the Mortgagor shall have the right
to cause Mortgagee to apply such net insurance proceeds to the payment of the
cost of the Work in accordance with the terms of this Section 2.6.
Notwithstanding anything to the contrary contained herein, and so long as no
Event of Default hereunder has occurred and is continuing, Mortgagor shall
have the right, upon written notice to Mortgagee, to not perform the Work, in
which event the net amount of any insurance proceeds received by Mortgagor or
Mortgagee (or, in the case of condemnation or taking, the award therefor)
shall be either (i) applied to repay the Indebtedness, or (ii) invested in
assets related to the business of the Mortgagor, Terex or any of its other
Restricted Subsidiaries. If Mortgagor elects (to the extent such an election
is permitted hereby) to perform or cause the Work to be performed, and the
Work is not Major Work, insurance proceeds will be paid in a lump sum to the
Mortgagor. If Mortgagor elects (to the extent such an election is permitted
hereby) to perform or cause the Work to be performed, and the Work is Major
Work, the proceeds shall be paid out from time to time, but not more often
than monthly, to the Mortgagor as said Major Work progresses, but subject to
the following conditions:
(i) an Architect shall be in charge of such Major
Work;
(ii) each request for payment shall be made on at
least seven (7) days' prior written notice to the Mortgagee and
shall be accompanied by (a) a certificate of the chief financial
officer or other authorized officer of the Mortgagor specifying the
party to whom (and for the account of which) such payment is to be
made, (b) copies of lien releases (in form and substance customary
and appropriate for the jurisdiction in which the Mortgaged
Property is located) from each party to whom payment is to be made,
and (c) a certificate of an Architect if an Architect is required
under Section 2.5 above, otherwise a certificate of the chief
financial officer or other authorized officer of the Mortgagor
stating (x) that all of the Work completed has been done substan-
tially in compliance with the approved plans and specifications, if
any, required under said Section 2.5, and in accordance with all
provisions of law; (y) the sum requested is justly required to
reimburse the Mortgagor for payments by the Mortgagor to, or is
justly due to, the contractor, subcontractors, materialmen, la-
borers, engineers, architects or other persons rendering services
or materials for the Work (giving a brief description of any such
services and materials), and that when added to all sums, if any,
previously paid out by the Mortgagee does not exceed the cost of
the Work done to the date of such certificate and (z) that the
amount of such proceeds remaining in the hands of the Mortgagee
will be sufficient on completion of the Work to pay for the same in
full (giving in such reasonable detail as the Mortgagee may require
an estimate of the cost of such completion) or that, if the pro-
ceeds are inadequate, that a sufficient reserve has been created in
accordance with generally accepted accounting principles to provide
for the payment of such deficiency;
(iii) each request for payment shall be accompanied
by sworn statements and partial or final waivers of liens, as may
be appropriate, or if unavailable, lien bonds, satisfactory to the
Mortgagee covering that part of the Work previously paid for, if
any, and by a search prepared by a title insurance company or a
licensed abstractor reasonably satisfactory to the Mortgagee or by
other evidence satisfactory to the Mortgagee, that there has not
been filed with respect to the Mortgaged Property any mechanic's
lien or other lien or instrument for the retention of title in re-
spect of any part of the Work not discharged of record and that
there exist no encumbrances on or affecting the Mortgaged Property
(or any part thereof) other than Permitted Liens;
(iv) no Event of Default shall have occurred and be
continuing; and
(v) the request for any payment after the Work has
been completed shall be accompanied by certified copies of all
certificates, permits, licenses, waivers and/or other documents
required by law which are customarily issued in the state and
municipality in which the Mortgaged Property is located (or
pursuant to any agreement binding upon the Mortgagor or affecting
the Mortgaged Property or any part thereof) to render occupancy or
use of the Mortgaged Property legal.
Upon completion of any Work and payment in full therefor, and
provided that no Event of Default has occurred and is continuing, the Mort-
gagee shall deliver any excess proceeds to the Mortgagor; provided, however,
that nothing herein contained shall prevent the Mortgagee from applying at
any time the whole or any part of such proceeds to the curing of any Event of
Default.
Section 2.7 Restoration by the Mortgagee. Without limitation on
the foregoing, in the event the Mortgagee, in accordance with the provisions
of Section 2.6 hereof, is making available to the Mortgagor insurance
proceeds (if any) recovered by the Mortgagee, and if there is an Event of
Default which is continuing, then in addition to all other rights herein set
forth and notwithstanding anything to the contrary contained herein, the
Mortgagee, or any lawfully appointed receiver of the Mortgaged Property, may
at its option after giving the Mortgagor ten (10) days' written notice of
such Event of Default, perform or cause to be performed such repair, restora-
tion and rebuilding, and may take such other steps as it deems reasonably
advisable to perform such repair, restoration and rebuilding, and upon
twenty-four (24) hours' prior written notice to the Mortgagor, the Mortgagee
may enter upon the Mortgaged Property to the extent reasonably necessary or
appropriate for any of the foregoing purposes, and the Mortgagor hereby
waives, for the Mortgagor and all others holding under the Mortgagor, any
claim against the Mortgagee and/or such receiver arising out of anything done
by the Mortgagee or such receiver pursuant hereto, and the Mortgagee may, at
its option, apply insurance proceeds, if any (without the need by the
Mortgagee to fulfill any other requirements of this Mortgage), to reimburse
the Mortgagee and/or such receiver for all amounts expended or incurred by
either of them in connection with the performance of such Work, and any
excess costs shall be paid by the Mortgagor to the Mortgagee upon demand, and
such payment of excess costs shall be deemed part of the Indebtedness secured
hereby and shall bear interest at the Default Rate until paid.
Section 2.8 Intentionally Deleted.
Section 2.9 Taxes and Other Charges.
(i) The Mortgagor shall pay and discharge by the
last day payable without penalty or premium all taxes of every kind
and nature, water rates, sewer rents and assessments, levies,
permits, inspection and license fees and all other charges imposed
upon or assessed against the Mortgaged Property or any part thereof
or upon the revenues, rents, issues, income and profits of the
Mortgaged Property or arising in respect of the occupancy, use or
possession thereof (excluding any taxes in the nature of income
taxes). To the extent any such items are payable in installments,
the Mortgagor may elect to pay any such item in installments, but
each payment shall be made before any penalty accrues. The
Mortgagor shall exhibit to the Mortgagee within a reasonable period
of time after request and after the same are required to be paid as
specified herein, validated receipts or other evidence reasonably
satisfactory to the Mortgagee showing the payment of such taxes,
assessments, water rates, sewer rents, levies, fees and/or other
charges. Should the Mortgagor default in the payment of any of the
foregoing taxes, assessments, water rates, sewer rents, levies,
fees or other charges, the Mortgagee may, but shall not be
obligated to, pay the same or any part thereof and the Mortgagor
shall reimburse the Mortgagee for all amounts so paid and such
amounts shall be deemed a part of the Indebtedness secured hereby
and shall bear interest at the Default Rate until reimbursed.
(ii) Nothing in this Section 2.9 shall require the
payment or discharge of any obligation imposed upon the Mortgagor
by subsection (i) of this Section 2.9 so long as the Mortgagor
shall in good faith and at its own expense contest the same or the
validity thereof by appropriate legal proceedings which proceedings
must operate to prevent the collection thereof or other realization
thereon, the sale of the lien thereof and the sale or forfeiture of
the Mortgaged Property or any part thereof, to satisfy the same;
provided that during such contest the Mortgagor shall, at the
option of the Mortgagee, establish reserves in accordance with
generally accepted accounting principles or deposit cash or an
irrevocable letter of credit drawn on a bank reasonably acceptable
to the Mortgagee, assuring the discharge of the Mortgagor's
obligation hereunder and of any additional interest charge, penalty
or expense arising from or incurred as a result of such contest;
and provided, further, that if at any time payment of any
obligation imposed upon the Mortgagor by subsection (i) of this
Section 2.9 shall become necessary to prevent the delivery of a tax
deed or similar instrument conveying the Mortgaged Property or any
portion thereof or the sale of the tax lien therefor because of
non-payment, or the imposition of any penalty, which is not
reserved or secured against, or cost on the Mortgagee not paid by
the Mortgagor, then the Mortgagor shall pay the same in sufficient
time to prevent the delivery of such tax deed or the sale of such
lien, or the imposition of such penalty or cost on the Mortgagee.
(iii) The Mortgagor shall pay when due all (a)
premiums for fire, hazard and other insurance required to be main-
tained by the Mortgagor on the Mortgaged Property pursuant to the
terms of Section 2.3 hereof, (b) title insurance premiums, if any,
relating to the insurance to be obtained on the Mortgaged Property
in connection with this Mortgage, and (c) any and all other costs,
expenses and charges expressly required to be paid hereunder.
Section 2.10 Mechanics' and Other Liens.
(i) To the extent that the following are not
Permitted Liens, within sixty (60) days from the date of the filing
of any such Lien, the Mortgagor shall pay, bond or discharge of
record, from time to time, forthwith, all Liens on the Mortgaged
Property or any part thereof, and, in general, the Mortgagor
forthwith shall do, at the cost of the Mortgagor and without
expense to the Mortgagee, everything necessary to fully preserve
the first priority Lien of this Mortgage. In the event that the
Mortgagor fails in a timely manner to make payment in full of, bond
or discharge, any such Liens, as required under the preceding
sentence, the Mortgagee may, but shall not be obligated to, make
payment, bond, or discharge such Liens, in order fully to preserve
the Lien of this Mortgage and the collateral value of the Mortgaged
Property, and the Mortgagor shall reimburse the Mortgagee for all
sums so expended and such sums shall be deemed a part of the In-
debtedness secured hereby and shall bear interest at the Default
Rate until reimbursed.
(ii) Nothing in this Section 2.10 shall require the
payment or discharge of any obligation imposed upon the Mortgagor
by subsection (i) of this Section 2.10 so long as the Mortgagor
shall bond or discharge any Lien on the Mortgaged Property arising
from such obligation or in good faith and at its own expense
contest the same or the validity thereof by appropriate legal pro-
ceedings which proceedings must operate to prevent the collection
thereof or other realization thereon, the sale of the Lien thereof
and the sale or forfeiture of the Mortgaged Property or any part
thereof, to satisfy the same; provided that during such contest the
Mortgagor shall, at the option of the Mortgagee, either (at the
option of the Mortgagor) establish an adequate reserve in
accordance with generally acceptable accounting principles or pro-
vide security satisfactory to the Mortgagee, assuring the discharge
of the Mortgagor's obligation hereunder and of any additional
interest charge, penalty or expense arising from or incurred as a
result of such contest, which security can take the form of cash or
an irrevocable letter of credit drawn on a bank reasonably
acceptable to the Mortgagee; and provided, further, that if at any
time payment of any obligation imposed upon the Mortgagor by
subsection (i) of this Section 2.10 shall become necessary (a) to
prevent the sale or forfeiture of the Mortgaged Property or any
portion thereof because of non-payment, or (b) to protect the Lien
of this Mortgage, then the Mortgagor shall pay the same in
sufficient time to prevent the sale or forfeiture of the Mortgaged
Property or to protect the Lien of this Mortgage, as the case may
be.
Section 2.11 Condemnation Awards. The Mortgagor, immediately upon
obtaining knowledge in any manner of the institution of any proceedings for
the condemnation of the Mortgaged Property or any portion thereof which could
have a Material Adverse Effect, will notify the Mortgagee of such
proceedings. The Mortgagee may participate in any such proceedings, and the
Mortgagor from time to time will deliver to the Mortgagee all instruments re-
quested by it to permit such participation. The Mortgagor and the Mortgagee
shall both act reasonably and expeditiously in connection with such pro-
ceedings. All awards and compensation payable to the Mortgagor as a result
of any condemnation or other taking or purchase in lieu thereof of the Mort-
gaged Property or any part thereof are hereby assigned to and shall be paid
to the Mortgagee, and shall be treated in accordance with the provisions of
Sections 2.5 and 2.6 hereof. The Mortgagor hereby authorizes the Mortgagee
to collect and receive such awards and compensation, to give proper receipts
and acceptances therefor and to apply the same in accordance with the provi-
sions of Sections 2.5 and 2.6 of this Mortgage. The Mortgagor, upon request
by the Mortgagee, shall make, execute and deliver any and all instruments
requested for the purpose of confirming the assignment of the aforesaid
awards and compensation to the Mortgagee free and clear of any Liens, charges
or encumbrances of any kind or nature whatsoever.
Notwithstanding anything to the contrary in this Section 2.11, the
Mortgagor shall continue to pay the Indebtedness and perform the Obligations
at the time and in the manner provided for in the Notes, the Security Docu-
ments and the Indenture. If the Mortgaged Property or any portion thereof is
sold, through foreclosure or otherwise, prior to the receipt by the Mortgagee
of such payment, the Mortgagee shall have the right, whether or not a
deficiency judgment shall have been sought, recovered or denied, to receive
said payment, or a portion thereof sufficient to pay the Indebtedness,
whichever is less. The Mortgagor shall file and prosecute its claim or
claims for any such payment in good faith and with due diligence and cause
the same to be collected and paid over to the Mortgagee, in the name of the
Mortgagor or otherwise, to collect and give receipt for any such payment and
to file and prosecute such claim or claims, and although it is hereby
expressly agreed that the same shall not be necessary in any event, the
Mortgagor shall, upon demand of the Mortgagee, make, execute and deliver any
and all assignments and other instruments sufficient for the purpose of
assigning any such payment to the Mortgagee, free and clear of any
encumbrances of any kind or nature whatsoever.
Section 2.12 Costs of Defending and Upholding the Lien. If any
action or proceeding is commenced to which action or proceeding the Mortgagee
is made a party or in which it becomes necessary to defend or uphold the
first priority Lien of this Mortgage, the Mortgagor shall reimburse the
Mortgagee for all reasonable expenses (including, without limitation,
reasonable attorneys' fees and expenses) incurred by the Mortgagee in any
such action or proceeding and such expenses shall be deemed a part of the
Indebtedness secured hereby and shall bear interest at the Default Rate until
reimbursed. To the extent the subject of the action is covered by title
insurance, the Mortgagee may be defended by the title insurance counsel
reasonably satisfactory to it; if otherwise covered by insurance, the Mort-
gagee may be defended by counsel for the insurance company reasonably
satisfactory to the Mortgagee. Notwithstanding the foregoing, in an action
not covered by insurance, the Mortgagor may defend with counsel reasonably
satisfactory to the Mortgagee.
Section 2.13 Additional Advances and Disbursements. The Mortgagor
shall pay by the last day payable without premium or penalty all payments and
charges on all liens, encumbrances, ground and other leases and security
interests which affect or may affect or attach or may attach to the Mortgaged
Property, or any part thereof, and in default thereof, the Mortgagee shall
have the right, but shall not be obligated, to pay upon notice to the
Mortgagor, if practicable in order fully to preserve the first priority Lien
of this Mortgage and the collateral value of the Mortgaged Property, such
payments and charges and the Mortgagor shall reimburse the Mortgagee for any
amounts so paid. In addition, upon the occurrence of any material default of
the Mortgagor in the performance of any other terms, covenants, conditions or
obligations by it to be performed hereunder or under any such Lien,
encumbrance, lease or security interest and after the expiration of all
applicable notice and cure periods, if any, the Mortgagee shall have the
right, but shall not be obligated, to cure such default in the name and on
behalf of the Mortgagor. All sums advanced and reasonable expenses incurred
at any time by the Mortgagee pursuant to this Section 2.13 or as otherwise
provided under the terms and provisions of this Mortgage or under applicable
law shall bear interest from the date that such sum is advanced or expenses
incurred, to and including the date of reimbursement, computed at an interest
rate per annum (the "Default Rate") at all times equal to the highest default
rate provided in the Indenture, but in no event to exceed the maximum rate
allowed by law. All interest payable hereunder shall be computed on the
basis of a 360-day year over the actual number of days elapsed. Any such
amounts advanced or incurred by the Mortgagee, together with the interest
thereon, shall be payable on demand, shall, until paid, be secured by this
Mortgage as a Lien on the Mortgaged Property and shall be deemed a part of
the Indebtedness.
Section 2.14 Costs of Enforcement. The Mortgagor agrees to bear
and pay all expenses (including, without limitation, reasonable attorneys'
fees and expenses) of or incidental to (i) the enforcement of any provision
hereof, (ii) the enforcement of this Mortgage, the Notes, the Security Docu-
ments, the Indenture and for the curing thereof, (iii) subject to Section
2.12 hereof, defending the rights and claims of the Mortgagee in respect of
this Mortgage, the Notes, the Indenture and/or the Security Documents, by
litigation or otherwise, and (iv) the appointment of a receiver or receivers
as hereinafter contemplated. All rights and remedies of the Mortgagee shall
be cumulative and may be exercised singly or concurrently. Notwithstanding
anything herein contained to the contrary, the Mortgagor: (i) HEREBY WAIVES
TRIAL BY JURY; and, to the fullest extent allowed by law, (ii) shall not (a)
at any time insist upon, or plead, or in any manner whatever claim or take
any benefit or advantage of any stay or extension or moratorium law, any
exemption from execution or sale of the Mortgaged Property or any part
thereof, wherever enacted, now or at any time hereafter in force, which may
affect the covenants and terms of performance of this Mortgage, nor (b) after
any such sale or sales, claim or exercise any right under any statute
heretofore or hereafter enacted to redeem the property so sold or any part
thereof; (iii) hereby expressly waives all benefit or advantage of any such
law or laws; and (iv) covenants not to hinder, delay or impede the execution
of any power herein granted or delegated to the Mortgagee, but to suffer and
permit the execution of every power as though no such law or laws had been
made or enacted. The Mortgagor, for itself and all who may claim under it,
waives, to the extent that it lawfully may, all right to have the Mortgaged
Property or any part thereof marshalled upon any foreclosure hereof. The ap-
praisement of the Mortgaged Property is hereby expressly waived or not waived
at the option of the Mortgagee, its successors or assigns, such option to be
exercised prior to or at the time judgment is rendered in any foreclosure
hereof.
Section 2.15 Filing Charges, Recording Fees, Taxes, etc. The
Mortgagor shall pay any and all taxes, charges, filing, registration and
recording fees, excises and levies imposed upon the Mortgagee by reason of
its interest in the Mortgaged Property and this Mortgage or any mortgage
supplemental hereto, any security instrument with respect to any interest of
the Mortgagor in and to any fixture or personal property at the Mortgaged
Property or any instrument of further assurance, other than income,
franchise, succession, inheritance, business and similar taxes, and shall pay
all other taxes, if any, required to be paid on the debt evidenced by the
Notes. In the event the Mortgagor fails to make such payment within ten (10)
days after written notice thereof to the Mortgagor, then the Mortgagee shall
have the right, in its sole discretion, to elect either to (i) declare the
entire Indebtedness immediately due and payable or (ii) to pay the amount
due, and the Mortgagor shall reimburse the Mortgagee for said amount,
together with interest thereon computed at the Default Rate.
Section 2.16 Restrictive Covenants and Leasing Requirements.
Promptly following the execution hereof, Mortgagor shall deliver a notice, in
form and substance reasonably satisfactory to Mortgagee, to all existing
tenants or other occupants of the Mortgaged Property, which notice shall
indicate that this Mortgage has been executed and, subject to the terms
hereof, all Leases have been assigned to Mortgagee. Mortgagor shall not
hereafter execute or permit to be executed any lease or other occupancy
agreement, whether singly or in a series of transactions, for all or substan-
tially all of the Mortgaged Property, without first delivering to Mortgagee
a subordination and attornment agreement to and for the benefit of Mortgagee
in form and substance reasonably satisfactory to Mortgagee. Notwithstanding
the foregoing, the Mortgagor shall be permitted, without the delivery of a
separate subordination and attornment agreement, to lease up to one-half of
the Mortgaged Property, provided (i) such lease is to a bona fide third-party
tenant on commercially reasonable terms, (ii) Mortgagor gives notice to the
Mortgagee of such lease, or any such amendment, modification or extension
thereof with a copy thereof, and (iii) Mortgagor gives prior written notice
of this Mortgage to the tenant or other occupant under any such lease, amend-
ment, modification or extension.
Section 2.17 Assignment of Rents. The Mortgagor hereby
absolutely, presently and unconditionally assigns to the Mortgagee, as fur-
ther security for the payment of the Indebtedness and performance of the
Obligations, all of its interest in the rents, issues and profits of the
Mortgaged Property, together with its interest in all Leases of all or any
portion thereof and other documents evidencing such rents, issues and profits
now or hereafter in effect and its interest in any and all deposits held as
security under any such Leases, and shall deliver to the Mortgagee a true and
correct copy of an executed counterpart of each such Lease or other material
documents to which it is a party and which affects the Mortgaged Property.
Nothing contained in the foregoing sentence shall be construed to bind the
Mortgagee to the performance of any of the covenants, conditions or
provisions contained in any such Lease or other document or otherwise to
impose any obligation on the Mortgagee, including, without limitation, any
liability under the covenants contained in any such Lease. To the fullest
extent permitted by applicable laws, the Mortgagor hereby grants to the
Mortgagee the present right (i) to collect and receive any and all rents,
issues and profits and to enter upon and take possession of the Mortgaged
Property for the purpose of collecting the said rents, issues and profits,
(ii) to dispossess by the usual summary proceedings (or any other proceedings
of the Mortgagee's selection) any tenant defaulting in the payment thereof to
the Mortgagee, (iii) to let the Mortgaged Property, or any part thereof, and
(iv) to apply said rents, issues and profits, after payment of all necessary
charges and expenses (including, without limitation, costs of required
maintenance and operation of the Mortgaged Property, costs of collection,
default associated charges, past due interest and late charges and similar
charges and expenses) , on account of the Indebtedness. This Mortgage
constitutes and evidences the irrevocable consent of the Mortgagor to the
entry upon and taking possession of the Mortgaged Property by the Mortgagee
pursuant to such grant, whether foreclosure has been instituted or not and
without applying for a receiver; provided, however, that so long as no Event
of Default shall have occurred and be continuing, the Mortgagor shall have a
revocable license to collect and receive said rents, issues and profits and
to otherwise manage the Mortgaged Property, including, without limitation, a
revocable license to exercise the rights granted to Mortgagee pursuant to
subsections (i), (ii), (iii) and (iv) above. If an Event of Default shall
have occurred and be continuing, any rental or other income from the Mort-
gaged Property received by the Mortgagor shall be deemed to be received by
the Mortgagor in trust for the Mortgagee and shall be paid over to the Mort-
gagee immediately upon receipt by the Mortgagor. This license of the
Mortgagor to collect and receive said rents, issues and profits shall be
automatically revoked without the requirement of any action by the Mortgagee
upon the occurrence and during the continuance of an Event of Default. Upon
the occurrence and during the continuance of an Event of Default, the Mort-
gagor hereby appoints the Mortgagee as its attorney-in-fact, coupled with an
interest, to receive and collect all rent, additional rent and other sums due
under the terms of each Lease to which the Mortgagor is a party and to direct
any such tenant, by written notice or by mail or in person to the Mortgagee.
If an Event of Default shall have occurred and be continuing, Mortgagee may,
without thereby becoming or being deemed a mortgagee in possession or incur-
ring any liability under any Lease, notify any lessee, tenant, conces-
sionaire, licensee or other occupant of all or any part of the Mortgaged
Property to pay all rental or other income payable by it, him or her to the
Mortgagee and all such rental and other income shall thereafter be paid di-
rectly to the Mortgagee until the Mortgagee agrees otherwise. If an Event of
Default has occurred and is continuing, to facilitate the Mortgagee's
collection of rental and other income, the Mortgagor hereby irrevocably
authorizes and empowers the Mortgagee to endorse on behalf of the Mortgagor
and in the Mortgagor's name all checks and other instruments received by the
Mortgagee as payment of rental or other income. The Mortgagee shall apply to
the Indebtedness the net amount (after deducting all costs and expenses,
including attorneys' fees and expenses, incident to the collection thereof,
and after deducting all costs and expenses of operation, maintenance and
repairs of the Mortgaged Property) of any such rental or other income
received by it.
Section HEN\ Transfer Restrictions. Except as either permitted or
not prohibited by the provisions of Section 4.10 of the Indenture, the Mort-
gagor may not, without the prior written consent of the Mortgagee, further
mortgage, encumber, hypothecate, sell, transfer, convey, assign or sublet all
or any part of the Mortgaged Property or the leases and rents affecting the
Mortgaged Property or any other interest in the Mortgaged Property or such
leases and rents or suffer any of the foregoing to occur involuntarily or by
operation of law or otherwise. In the event of a sale, transfer or other
conveyance of any of the Mortgaged Property permitted by this section,
Mortgagee shall, subject to the terms of Section 10.3 of the Indenture, at
the sole cost and expense of Mortgagor, execute such documents as Mortgagor
shall reasonably request to evidence the release of the Lien of this Mortgage
with respect to such Mortgaged Property.
Section 2.19 Indemnity. The Mortgagor agrees that it shall
indemnify, defend and hold harmless the Mortgagee from and against all loss,
liability, obligation, claim, damage, penalty, cause of action, cost and
expense, including, without limitation, any assessments, levies, impositions,
judgments, reasonable attorneys' fees and disbursements, cost of appeal bonds
and printing costs, imposed upon or incurred by or asserted against the
Mortgagee by reason of (a) ownership of this Mortgage (other than taxes, if
any, in the nature of income taxes imposed on the Mortgagee as the result of
its ownership of this Mortgage); (b) any accident, injury to or death of
persons or loss of or damage to property occurring on or about the Mortgaged
Property (except to the extent the same shall be caused by the Mortgagee's
own gross negligence or willful misconduct); (c) any use, non-use or
condition of the Mortgaged Property (except to the extent the same shall be
caused by the Mortgagee's own gross negligence or willful misconduct); (d)
performance of any labor or services or the furnishing of any materials or
other property in respect of the Mortgaged Property or any part thereof for
maintenance or otherwise; (e) the imposition of any mortgage, real estate or
governmental tax incurred as a result of this Mortgage or the Notes, other
than income, franchise, succession, inheritance, business and similar taxes
payable by the Mortgagee, or (f) any violation or alleged violation by the
Mortgagor of any law. Any amounts payable under this Section 2.19 shall be
immediately due and payable without demand, shall be deemed a part of the
Indebtedness secured hereby, and until paid shall bear interest at the
Default Rate. If any action is brought against the Mortgagee by reason of
any of the foregoing occurrences, the Mortgagor will have the right to defend
and resist such action, suit or proceeding, at the Mortgagor's sole cost and
expense by counsel reasonably approved by the Mortgagee. The Mortgagor's
obligations under this Section 2.19 shall survive any change in law, the
payment in full of the Indebtedness, any discharge, release or satisfaction
of this Mortgage and/or the delivery of one or more deeds in lieu of
foreclosure with respect to this Mortgage.
Section 2.20 Security Interest in Fixtures.
(i) As provided in the granting clauses herein-
above, this Mortgage shall constitute a security agreement and
shall create and evidence a security interest in all Fixtures in
which a security interest or lien may be granted or a common law
pledge created pursuant to the UCC as in effect in the state in
which the Mortgaged Property is located or under common law in such
state, which security interest is hereby granted to Mortgagee as
"secured party" (as such term is defined in the UCC), securing the
Indebtedness and the Obligations of the Mortgagor hereunder and
upon recordation in the real property records of the County in
which the Mortgaged Property is located, shall constitute a
"fixture filing" within the meaning of Article 9 of the UCC cre-
ating a perfected security interest in all fixtures now or
hereafter located upon the Mortgaged Property. The Mortgagor,
immediately upon the execution and delivery of this Mortgage, and
thereafter from time to time, shall cause this Mortgage, any secu-
rity instrument evidencing or perfecting the Lien hereof in the
Fixtures, and each instrument of further assurance, including,
without limitation, UCC financing statements and continuation
statements, to be filed, registered or recorded in such manner and
in such places as may be required by any present or future law in
order to publish notice of and fully to perfect, preserve and pro-
tect the lien hereof upon the Mortgaged Property. The Mortgagor
hereby appoints and authorizes the Mortgagee to act on behalf of
the Mortgagor upon the Mortgagor's failure to comply with the
provisions of this Section 2.20.
(ii) To the extent the mortgage foreclosure laws of
the state in which the Mortgaged Property is located do not provide
for foreclosure against some or all of the Fixtures, upon the
occurrence of any Event of Default, in addition to the remedies set
forth in Article III hereof, the Mortgagee shall have the power to
foreclose the Mortgagor's right of redemption in the Fixtures by
sale of the Fixtures in accordance with the UCC as enacted in the
state in which the Mortgaged Property is located or under other ap-
plicable law in such state. It shall not be necessary that any
Fixtures offered be physically present at any such sale or
constructively be in the possession of the Mortgagee or the person
conducting the sale. Upon the occurrence and during the continu-
ance of any Event of Default, the Mortgagee may sell the Fixtures
or any portion thereof at public or private sale with notice to the
Mortgagor as hereinafter provided. The proceeds of any such sale,
after deducting all expenses of the Mortgagee in taking, storing,
repairing and selling the Fixtures or any part thereof (including,
without limitation, attorneys' fees and expenses) shall be applied
in the manner set forth in Section 3.2 hereof. At any sale, public
or private, of the Fixtures or any part thereof, the Mortgagee may
purchase any or all of the Fixtures offered at such sale.
(iii) The Mortgagee shall give Mortgagor notice of
any sale of the Fixtures or any portion thereof pursuant to the
provisions of this Section 2.20. Any such notice shall conclusive-
ly be deemed to be effective if such notice is mailed at least ten
(10) business days prior to any sale, by first class or certified
mail, postage prepaid, to the Mortgagor at its address determined
in accordance with the provisions of Section 4.3 hereof.
Section 2.21 Compliance with Agreements. The Mortgagor shall
timely comply and perform all of the obligations imposed upon it by the
Notes, the Indenture and the Security Documents.
Section 2.22 Environmental. Except as could not, singly or in the
aggregate, have a Material Adverse Effect:
(i) Mortgagor (a) has obtained all Permits that are
required with respect to the operation of the Mortgaged Property
under the Environmental Laws (as defined below) and is in com-
pliance with all terms and conditions of such required Permits, and
(b) is in compliance with all Environmental Laws (including,
without limitation, compliance with standards, schedules and time-
tables therein);
(ii) no portion of or interest in the Mortgaged
Property is listed or proposed for listing on the National Priori-
ties List or the Comprehensive Environmental Response, Compen-
sation, 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
Mortgagor has not received any notification of potential or actual
liability or request for information under CERCLA or any comparable
state or local law;
(iii) no underground storage tank or other under-
ground storage receptacle, or related piping, is located on the
Mortgaged Property;
(iv) there have been no releases (including,
without limitation, any past or present releasing, spilling,
leaking, pumping, pouring, emitting, emptying, discharging, inject-
ing, escaping, leaching, disposing or dumping, on-site or, to the
best of Mortgagor's knowledge after due inquiry, off-site) of Haz-
ardous Materials (as defined below) by Mortgagor or, to the best of
Mortgagor's knowledge after due inquiry, any predecessor in inter-
est, or any person or entity whose liability for any release of
Hazardous Materials, Mortgagor or any of its affiliates has re-
tained or assumed either contractually or by operation of law at,
on, under, from or into any portion of the Mortgaged Property;
(v) neither Mortgagor nor any person or entity
whose liability Mortgagor or any of its affiliates has retained or
assumed either contractually or by operation of law has any lia-
bility, 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, proceed-
ing, notice or demand letter pending or, to the best of their
knowledge after due inquiry, threatened against any of them under
any Environmental Law;
(vi) there are no events, activities, practices,
incidents or actions or, to the best of Mortgagor's knowledge after
due inquiry, conditions, circumstances or plans that may interfere
with or prevent compliance by Mortgagor with any Environmental Law,
or that may give rise to any liability under any Environmental
Laws; and
(vii) in the ordinary course of its businesses,
Mortgagor conducts a periodic review of the effect of Environmental
Laws on the business, operations and properties of Mortgagor in the
course of which it identifies and evaluates associated costs and
liabilities (including, without limitation, any capital or operat-
ing 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 re-
view, Mortgagor has reasonably concluded that such associated costs
and liabilities could not reasonably be expected to, singly or in
the aggregate, have a Material Adverse Effect on Mortgagor, 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 environ-
ment, 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.
ARTICLE III
Default and Remedies
Section 3.1 Events of Default. The following shall each
constitute an "Event of Default" under this Mortgage:
(i) the occurrence of any Event of Default under
the Notes, the Indenture, the Guaranty or any of the Security Docu-
ments;
(ii) if the Mortgagor shall fail to make any other
payment required by this Mortgage within ten (10) days after
written notice thereof to the Mortgagor by the Mortgagee;
(iii) if any representation or warranty contained
herein shall be false or incorrect in any material respect when
made; or
(iv) if the Mortgagor fails to keep, observe and/or
perform any of the other covenants, conditions, Obligations or
agreements contained in this Mortgage, and such default continues
for a period of thirty (30) days after written notice to the
Mortgagor by the Mortgagee; provided, however, that it shall not be
an Event of Default hereunder if the default is such that cannot
reasonably be cured within 30 days and the Mortgagor commences to
cure the default within such thirty-day period, diligently pursues
a cure, and cures such default within 120 days from the date of the
initial written notice of default thereof to the Mortgagor by the
Mortgagee.
Section 3.2 Remedies. Upon the occurrence and during the continu-
ance of any Event of Default, the Mortgagee may:
(i) in addition to any rights or remedies available
to it hereunder, take such action as it deems advisable to protect
and enforce its rights against the Mortgagor and in and to the
Mortgaged Property, including, without limitation, the following
actions, each of which may be pursued concurrently or otherwise, at
such time and in such order as the Mortgagee may determine, in its
sole discretion, without impairing or otherwise affecting any of
the other rights and remedies of the Mortgagee: (1) declare the
entire unpaid Indebtedness to be immediately due and payable; or
(2) after accelerating the Indebtedness, to the extent permitted by
law, immediately enter into or upon the Mortgaged Property, either
personally or by its agents, nominees or attorneys and dispossess
the Mortgagor and its agents and servants there-from, and at once
take possession of the Mortgaged Property, and thereupon the Mort-
gagee may (a) use, operate, manage, control, insure, maintain, re-
pair, restore and otherwise deal with all and every part of the
Mortgaged Property and conduct the business thereat; (b) complete
any construction on the Mortgaged Property in such manner and form
as the Mortgagee deems advisable; (c) make such alterations, addi-
tions, renewals, replacements and improvements to or on the Im-
provements and the balance of the Mortgaged Property necessary or
advisable as determined by the Mortgagee to continue to operate the
business; (d) exercise all rights and powers of the Mortgagor with
respect to the Mortgaged Property, whether in the name of the Mort-
gagor or otherwise, including, without limitation, the right to
make, cancel, enforce or modify leases, obtain and evict tenants,
and sue for, collect and receive all earnings, revenues, rents,
issues, profits and other income of the Mortgaged Property and
every part thereof; and (e) apply the receipts from the Mortgaged
Property to the payment of the Indebtedness, after deducting there-
from all expenses (including reasonable attorneys' fees and
disbursements) incurred in connection with the aforesaid operations
and all amounts necessary to pay the taxes, assessments, insurance
and other charges in connection with the Mortgaged Property, as
well as just and reasonable compensation for the services of the
Mortgagee, its counsel, agents and employees; or (3) institute
proceedings for the complete foreclosure of this Mortgage in which
case the Mortgaged Property may be sold for cash or credit in one
or more parcels; or (4) with or without entry and, to the extent
permitted, and pursuant to the procedures provided by applicable
law, institute proceedings for the foreclosure of this Mortgage for
the portion of the Indebtedness then due and payable, subject to
the Lien of this Mortgage continuing unimpaired and without loss of
priority so as to secure the balance of the Indebtedness not then
due; or (5) institute an action, suit or proceeding in equity for
the specific performance of any covenants, condition or agreement
contained herein; or (6) recover judgment on the Notes or any
guaranty either before, during or after or in lieu of any
proceedings for the enforcement of this Mortgage; or (7) apply for
the appointment of a trustee, receiver, liquidator or conservator
of the Mortgaged Property, without regard for the adequacy of the
security for the Indebtedness and without regard for the solvency
of the Mortgagor, any guarantor or of any person, firm or other
entity liable for the payment of the Indebtedness or performance of
the Obligations to which appointment the Mortgagor does hereby con-
sent; or (8) to the extent permitted by applicable law, to proceed
under the POWER OF SALE granted herein and sell the Mortgaged
Property or any part thereof to the extent permitted and pursuant
to the procedures provided by the laws of the State in which the
Mortgaged Property is located, and all estate, right, title and
interest, claim and demand therein, and right of redemption there-
of, at one or more sales, as an entirety or in parcels, and at such
time and place, upon such terms and after such notice thereof as
may be required by applicable law or (9) pursue such other remedies
as the Mortgagee may have under applicable law.
(ii) In addition to any other remedies available to
the Mortgagee hereunder or at law or in equity, the Mortgagor
hereby confers unto the Mortgagee a power of sale for the Mortgaged
Property exercisable upon an Event of Default under this Mortgage
and agrees that the Mortgagee, at its option, may proceed under
this power of sale pursuant to the applicable procedures provided
therefor by the laws of the State in which the Mortgaged Property
is located or foreclose this Mortgage as provided by such laws.
The Mortgagor represents and warrants that the Mortgaged Property
is not the Mortgagor's homestead and that the Indebtedness is not
an extension of credit made primarily for agricultural purposes.
Notwithstanding anything contained in this Mortgage to the
contrary, any notices of sale given in accordance with the applicable
requirements provided therefor by the laws of the State in which the
Mortgaged Property is located shall constitute sufficient notice of sale.
The conduct of a sale pursuant to a power of sale shall be sufficient
hereunder if conducted in accordance with such requirements in effect at the
time of such sale, notwithstanding any other provision contained in this
Mortgage to the contrary. The proceeds of any sale of the Mortgaged Property
pursuant to the power of sale herein granted shall be applied in accordance
with such requirements in effect at the time of such sale.
(iii) The proceeds of any sale made under or by
virtue of this Article III, together with any other sums which then
may be held by the Mortgagee under this Mortgage, whether under the
provisions of this Article III or otherwise, shall be applied:
First: To the payment of the costs and expenses of any
such sale, or the costs and expenses of entering upon, taking
possession of, removing from, holding, operating and/or managing
the Mortgaged Property or any part thereof, as the case may be, and
of all expenses, liabilities and advances made or incurred by the
Mortgagee under this Mortgage, together with interest at the De-
fault Rate as provided herein on all advances made by the Mortgagee
and all taxes or assessments, except any taxes, assessments or
other charges subject to which the Mortgaged Property shall have
been sold.
Second: In accordance with the provisions of Section
6.10 of the Indenture.
The Mortgagee and any receiver of the Mortgaged Property or any part thereof
shall be liable to account for only those rents, issues and profits actually
received by it.
(iv) The Mortgagee may adjourn from time to time
any sale by it to be made under or by virtue of this Mortgage by
announcement at the time and place appointed for such sale or for
such adjourned sale or sales; and except as otherwise provided by
any applicable provision of law, the Mortgagee, without further
notice or publication, may make such sale at the time and place to
which the same shall be so adjourned.
(v) Upon the completion of any sale or sales made
by the Mortgagee under or by virtue of this Article III, the
Mortgagee, or an officer of any court empowered to do so, shall
execute and deliver to the accepted purchaser or purchasers a good
and sufficient instrument, or good and sufficient instruments,
granting, conveying, assigning and transferring all estate, right,
title and interest in and to the property and rights sold. The
Mortgagee is hereby irrevocably appointed the true and lawful
attorney-in-fact of the Mortgagor (coupled with an interest), in
its name and stead, to make all necessary conveyances, assignments,
transfers and deliveries of the Mortgaged Property and rights so
sold and for that purpose the Mortgagee may execute all necessary
instruments of conveyance, assignment, transfer and delivery, and
may substitute one or more persons with like power, the Mortgagor
hereby ratifying and confirming all that said attorney-in-fact or
such substitute or substitutes shall lawfully do by virtue hereof.
Nevertheless, the Mortgagor, if so requested by the Mortgagee,
shall ratify and confirm any such sale or sales by executing and
delivering to the Mortgagee or to such purchaser or purchasers all
such instruments as may be advisable, in the judgment of the
Mortgagee, for the purpose, and as may be designated in such
request. Any such sale or sales made under or by virtue of this
Article III, whether made under the POWER OF SALE herein granted or
under or by virtue of judicial proceedings or of a judgment or
decree of foreclosure and sale, shall operate to divest all of the
estate, right, title, interest, claim and demand whatsoever,
whether at law or in equity, of the Mortgagor in and to the proper-
ties and rights so sold, and shall be a perpetual bar both at law
and in equity against the Mortgagor and against any and all persons
claiming or who may claim the same or any part thereof from,
through or under the Mortgagor.
(vi) In the event of any sale made under or by
virtue of this Article III (whether made under the POWER OF SALE
provided for herein or under or by virtue of judicial proceedings
or of a judgment or decree of foreclosure and sale), the entire In-
debtedness, if not previously due and payable, immediately there-
upon shall, anything in any Note, the Indenture, any of the
Security Documents or in this Mortgage to the contrary notwith-
standing, become due and payable.
(vii) Upon any sale made under or by virtue of this
Article III (whether made under the POWER OF SALE provided for
herein or under or by virtue of judicial proceedings or of a judg-
ment or decree of foreclosure and sale), the Mortgagee may bid for
and acquire the Mortgaged Property or any part thereof or interest
therein and in lieu of paying cash therefor may make settlement for
the purchase price by crediting upon the Indebtedness of the Mort-
gagor secured by this Mortgage the net sales price after deducting
therefrom the expenses of the sale and the costs of the action
(including attorneys' fees and expenses) and any other sums which
the Mortgagee is authorized to deduct under this Mortgage.
(viii) No recovery of any judgment by the Mortgagee
and no levy of an execution under any judgment upon the Mortgaged
Property or any part thereof or upon any other property of the
Mortgagor shall effect in any manner or to any extent, the lien of
this Mortgage upon the Mortgaged Property or any part thereof, or
any liens, rights, powers or remedies of the Mortgagee hereunder,
but such Liens, rights, powers and remedies of the Mortgagee shall
continue unimpaired as before.
Section 3.3 Payment of Indebtedness After Default. Upon the
occurrence of any Event of Default and the acceleration of the maturity of
the Indebtedness as provided herein, if, at any time prior to foreclosure
sale, the Mortgagor or any other person tenders payment of the amount neces-
sary to satisfy the Indebtedness, the same shall constitute an evasion of the
payment terms hereof and/or the Indenture or the Security Documents or the
Notes and shall be deemed to be a voluntary prepayment hereunder, in which
case such payment must include the premium and/or fee required under the
prepayment provision, if any, contained herein or in the Notes, the Security
Documents and/or the Indenture. This provision shall be of no force or
effect if at the time that such tender of payment is made, the Mortgagor has
the right under this Mortgage, the Security Documents, the Indenture or the
Notes to prepay the Indebtedness without penalty or premium.
Section 3.4 Intentionally Omitted.
Section 3.5 Mortgagor's Actions After Default. Effective after
the happening of any Event of Default and immediately upon the commencement
of any action, suit or other legal proceedings by the Mortgagee to obtain
judgment for the Indebtedness, or of any other nature in aid of the
enforcement of the Notes, the Indenture, the Guaranty, the Security Documents
or this Mortgage, the Mortgagor hereby (i) waives the issuance and service of
process in any such action, suit or proceeding, provided, however, that
notice of such process is given to Mortgagor in accordance with Section 4.3
hereof, (ii) waives the right to trial by jury and (iii) if required by the
Mortgagee, consents to the appointment of a receiver or receivers with
respect to the Mortgaged Property and of all the earnings, revenues, rents,
issues, profits and income thereof.
Section 3.6 Control by Mortgagee After Default. Upon and
following the appointment of any receiver, liquidator or trustee of the
Mortgagor, or of any of its property, or of the Mortgaged Property or any
part thereof, the Mortgagee shall be entitled to possession and control of
all property now and hereafter covered by this Mortgage, and shall not be
deemed to be a mortgagee-in-possession as a result thereof.
ARTICLE IV
Miscellaneous
Section 4.1 Credits Waived. The Mortgagor will not claim or
demand or be entitled to any credit or credits against the Indebtedness for
so much of the taxes assessed against the Mortgaged Property or any part
thereof, as is equal to the tax rate applied to the amount due on this
Mortgage or any part thereof, and no deductions shall otherwise be made or
claimed from the taxable value of the Mortgaged Property or any part thereof
by reason of this Mortgage or the payment of the Indebtedness and the perfor-
mance of the Obligations secured hereby.
Section 4.2 No Releases. The Mortgagor agrees, that in the event
the Mortgaged Property or any part thereof or interest therein is sold
pursuant to the prior written consent of the Mortgagee as provided herein,
and the Mortgagee enters into any agreement with the then owner of the Mort-
gaged Property extending the time of payment of the Indebtedness or perfor-
mance of the Obligations, or otherwise modifying the terms hereof, the
Mortgagor shall continue to be liable to pay the Indebtedness and perform the
Obligations according to the tenor of any such agreement unless expressly
released and discharged in writing by the Mortgagee.
Section 4.3 Notices. All notices, requests, demands and other
communications required or permitted to be given to or made upon any party
hereto shall be in writing and shall be personally delivered or sent by
registered or certified mail, postage prepaid, return receipt requested, or
by prepaid telex or telegram (with messenger delivery specified in the case
of a telegram), or by telecopier, or overnight air courier guaranteeing next
day delivery and shall be deemed to be delivered for purposes of this Mort-
gage when delivered in person, upon acknowledged receipt if delivered by
telecopy or telex, or five (5) business days after depositing it in the
United States mail, registered or certified, with postage prepaid and
properly addressed, and the next business day after timely delivery to the
courier, if sent by overnight air courier guaranteeing next day delivery.
Unless otherwise specified in a notice sent or delivered in accordance with
the foregoing provisions of this Section 4.3, notices, demands, instructions
and other communications in writing shall be given to or made upon the
respective parties at their respective addresses (or to their respective
telex or telecopier numbers) indicated below:
If to Mortgagor:
Koehring Cranes, Inc.
c/o Terex Corporation
500 Post Road East
Westport, Connecticut 06880
Attention: Marvin Rosenberg, Esq.
If to the Mortgagee:
United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Attn: Corporate Trust Department
Section 4.4 Binding Obligations. The provisions
and covenants of this Mortgage shall run with the land, shall
be binding upon the Mortgagor and shall inure to the benefit
of the Mortgagee, subsequent holders of this Mortgage, and the
respective successors and assigns of the foregoing. For the
purpose of this Mortgage, the term "Mortgagor" shall include
and refer to the Mortgagor named herein, any subsequent owners
of the Mortgaged Property (or any part thereof or interest
therein), and their respective heirs, executors, legal
representatives, successors and assigns. If there is more
than one Mortgagor, all of their undertakings hereunder shall
be deemed to be joint and several.
Section 4.5 Legal Construction. The creation of
this Mortgage, the perfection of the lien or security interest
thereof in the Mortgaged Property, and the rights and remedies
of the Mortgagee with respect to the Mortgaged Property, as
provided herein and by the laws of the state wherein the
Mortgaged Property is located, shall be governed by and con-
strued in accordance with the internal laws of the state
wherein the Mortgaged Property is located without regard to
principles of conflict of law. Otherwise, to the extent
permitted by applicable law, this Mortgage, the Notes, the
Security Documents, the Indenture and all other obligations of
the Mortgagor (including, without limitation, the liability of
the Mortgagor for any deficiency following a foreclosure of
all or any part of the Mortgaged Property) shall be governed
by and construed in accordance with the internal laws of the
State of New York without regard to principles of conflicts of
laws, such state being the state where such documents were
executed and delivered. Nothing in this Mortgage, the Notes,
the Indenture or in any other agreement between the Mortgagor
and the Mortgagee shall require the Mortgagor to pay, or the
Mortgagee to accept, interest in an amount which would subject
the Mortgagee to any penalty or forfeiture under applicable
law. All agreements between the Mortgagor and the Mortgagee,
whether now existing or hereafter arising and whether oral or
written, are hereby expressly limited so that in no
contingency or event whatsoever shall the amount paid or
agreed to be paid by the Mortgagor for the use, forbearance or
detention of the money to be loaned under the Indenture, the
Security Documents, the Notes or any related document, or for
the payment or performance of any covenant or obligation con-
tained herein, in the Indenture, the Security Documents or in
the Notes exceed the maximum amount permissible under
applicable Federal or state usury laws. If under any cir-
cumstances whatsoever fulfillment of any such provision, at
the time performance of such provision shall be due, shall
involve exceeding the limit of validity prescribed by law,
then the obligation to be fulfilled shall be reduced to the
limit of such validity. If under any circumstances the
Mortgagor shall have paid an amount deemed interest by
applicable law, which would exceed the highest lawful rate,
such amount shall be applied to the reduction of the principal
amount owing in respect of the Indebtedness and not to the
payment of interest, or if such excessive interest exceeds
such unpaid balance of principal and any other amounts due
hereunder or under the Notes, the Indenture or any of the
Security Documents, the excess shall be refunded to the Mort-
gagor. All sums paid or agreed to be paid for the use, for-
bearance or detention of the principal under any extension of
credit by the Mortgagee shall, to the extent permitted by
applicable law, and to the extent necessary to preclude
exceeding the limit of validity prescribed by law, be amor-
tized, prorated, allocated and spread from the date of this
Mortgage until payment in full of such sums so that the actual
rate of interest on account of such principal amounts is
uniform throughout the term hereof.
Section 4.6 Captions. The captions of the Sections
of this Mortgage are for the purpose of convenience only and
are not intended to be a part of this Mortgage and shall not
be deemed to modify, explain, enlarge or restrict any of the
provisions hereof.
Section 4.7 Further Assurances. The Mortgagor
shall do, execute, acknowledge and deliver, at the sole cost
and expense of the Mortgagor, such further acts, deeds,
documents, instruments, conveyances, mortgages, assignments,
estoppel certificates, financing statements, fixture filings,
continuation statements, notices of assignment, transfers and
assurances as the Mortgagee may reasonably require from time
to time in order to assure, convey, grant, assign, transfer
and confirm unto the Mortgagee the rights now or hereafter
intended to be granted to the Mortgagee under this Mortgage,
any other instrument executed in connection with this Mortgage
or any other instrument under which the Mortgagor may be or
may hereafter become bound to convey, mortgage or assign to
the Mortgagee for carrying out the intention of facilitating
the performance of the terms of this Mortgage. The Mortgagor
hereby appoints the Mortgagee its attorney-in-fact to execute,
acknowledge and deliver for and in the name of the Mortgagor
any and all of the instruments mentioned in this Section 4.7
and this power, being coupled with an interest, shall be irre-
vocable as long as any part of the Indebtedness remains unpaid
or any Obligations remain unperformed, provided, however, that
the Mortgagee shall not exercise its powers as attorney-in-
fact without giving Mortgagor five (5) days' prior written
notice of its intention to do so.
Section 4.8 Severability. Any provision of this
Mortgage which is prohibited or unenforceable in any juris-
diction or prohibited or unenforceable as to any person or
entity shall, as to such jurisdiction, person or entity or
circumstance be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provi-
sions hereof or affecting the validity or enforceability of
such provisions in any other jurisdiction or as to any other
person or entity or circumstance.
Section 4.9 General Conditions.
(i) All covenants hereof shall be
construed as affording to the Mortgagee rights
additional to and not exclusive of the rights
conferred under the provisions of any other appli-
cable law. To the extent any specific provision of
this Mortgage and the provisions of any applicable
law conveying any beneficial rights to either party
directly conflict, the terms of this Mortgage shall
control.
(ii) This Mortgage cannot be al-
tered, amended, modified or discharged orally and
no executory agreement shall be effective to modify
or discharge it in whole or in part, unless it is
in writing and signed by the party against whom en-
forcement of the modification, alteration,
amendment or discharge is sought.
(iii) No remedy herein conferred
upon or reserved to the Mortgagee is intended to be
exclusive of any other remedy or remedies, and each
and every such remedy shall be cumulative, and
shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in
equity or by statute. No delay or omission of the
Mortgagee in exercising any right or power accruing
upon any Event of Default shall impair any such
right or power, or shall be construed to be a
waiver of any such Event of Default, or any
acquiescence therein. Acceptance of any payment
(other than a monetary payment in cure of a
monetary default) after the occurrence of an Event
of Default shall not be deemed a waiver of or a
cure of such Event of Default and every power and
remedy given by this Mortgage to the Mortgagee may
be exercised from time to time as often as may be
deemed expedient by the Mortgagee. Nothing in this
Mortgage or in the Notes shall limit or diminish
the obligation of the Mortgagor to pay the Indebt-
edness in the manner and at the time and place
therein respectively expressed.
(iv) No waiver by the Mortgagee or
the Mortgagor shall be effective unless it is in
writing and then only to the extent specifically
stated. Without limiting the generality of the
foregoing, any payment made by the Mortgagee for
insurance premiums, taxes, assessments, water
rates, sewer rentals, levies, fees or any other
charges affecting the Mortgaged Property shall not
constitute a waiver of the Mortgagor's default in
making such payments and shall not obligate the
Mortgagee to make any further payments.
(v) The Mortgagee shall have the
right to appear in and defend any action or pro-
ceeding, in the name and on behalf of the Mortgagor
which the Mortgagee in its discretion determines
may adversely affect the Mortgaged Property or this
Mortgage, provided, however, that the Mortgagor
shall have the right to defend any such action with
counsel reasonably acceptable to the Mortgagee. In
the event that any such action or proceeding is one
covered by title insurance, defense thereof may be
made by counsel to the title company; if the pro-
ceeding is one covered by insurance, defense
thereof may be made by counsel to the insurance
company; notwithstanding the foregoing, if the
action is one not covered by insurance, the Mort-
gagor shall defend such action with counsel reason-
ably satisfactory to the Mortgagee. The Mortgagee
shall also have the right, upon reasonable prior
notice to Mortgagor (except in the case of an
emergency or other imminent danger to the Mortgaged
Property or Mortgagee's interest therein, in which
event no prior notice shall be required), to insti-
tute any action or proceeding which the Mortgagee
in its reasonable discretion determines should be
brought to protect its interest in the Mortgaged
Property or its rights hereunder. All costs and
expenses incurred by the Mortgagee in connection
with any such action or proceedings, including,
without limitation, attorneys' fees and expenses
shall be paid by the Mortgagor and shall be secured
by this Mortgage.
(vi) In the event of the passage
after the date of this Mortgage of any law of any
governmental authority having jurisdiction hereof
or of the Mortgaged Property, deducting from the
value of land for the purpose of taxation, affect-
ing any lien thereon or changing in any way the
laws for the taxation of mortgages or debts secured
by mortgages for federal, state or local purposes,
or the manner of the collection of any such taxes,
so as to affect this Mortgage, the Mortgagor shall
promptly pay to the Mortgagee, on demand, all
taxes, costs and charges for which the Mortgagee is
or may be liable as a result thereof; provided that
if said payment shall be prohibited by law, render
the Notes usurious or subject the Mortgagee to any
penalty or forfeiture, then and in such event the
Indebtedness shall, at the option of the Mortgagee,
be immediately due and payable.
(vii) The Mortgagor hereby appoints
the Mortgagee as its attorney-in-fact in connection
with the personal property and fixtures covered by
this Mortgage, where permitted by law, to file on
its behalf any financing statements or other state-
ments in connection therewith with the appropriate
public office signed by the Mortgagee, as secured
party. This power being coupled with an interest,
shall be irrevocable so long as any part of the
Indebtedness remains unpaid.
Section 4.10 Multistate Real Estate Transaction.
The Mortgagor acknowledges that this Mortgage is one of a
number of other mortgages, deeds of trust and assignments of
leases and rents and other security documents (hereinafter
collectively the "Other Security Documents") which secure the
payment of the Indebtedness and performance of the Obligations
in whole or in part. The Mortgagor agrees that the lien of
this Mortgage shall, subject to the terms hereof, be absolute
and unconditional and shall not in any manner be affected or
impaired by any acts or omissions whatsoever of the Mortgagee
and, without limiting the generality of the foregoing, the
lien hereof shall not be impaired by any acceptance by the
Mortgagee of any security for or guarantors upon any of the
Indebtedness or by any failure, neglect or omission on the
part of the Mortgagee to realize upon or protect any of the
Indebtedness or any collateral or security therefor. The lien
hereof shall not in any manner be impaired or affected by any
release (except as to the property released), sale, pledge,
surrender, compromise, settlement, renewal, extension,
indulgence, alteration, changing, modification or any dispo-
sition of any of the Indebtedness or of any of the collateral
or security therefor. The Mortgagee may exercise any of the
rights and remedies under the Other Security Documents without
first exercising or enforcing any of its rights and remedies
hereunder, or may foreclose, exercise any power of sale, or
exercise any other right available under this Mortgage without
first exercising or enforcing any of its rights and remedies
under any or all of the Other Security Documents. Such
exercise of the Mortgagee's rights and remedies under any or
all of the Other Security Documents shall not in any manner
impair the Indebtedness or lien of this Mortgage, and any
exercise of the rights or remedies of the Mortgagee hereunder
shall not impair the lien of any of the Other Security
Documents or any of the Mortgagee's rights and remedies
thereunder. The Mortgagor specifically consents and agrees
that the Mortgagee may exercise its rights and remedies
hereunder and under the Other Security Documents separately
or concurrently and in any order that the Mortgagee may deem
appropriate.
Section 4.11 Agreement Paramount. If and to the
extent that any of the provisions of this Mortgage conflict or
are otherwise inconsistent with any of the provisions of the
Indenture, the provisions of the Indenture shall prevail.
Notwithstanding the foregoing, the failure of the Indenture to
speak to or address a provision expressly set forth in this
Mortgage shall not be deemed to be such an inconsistency or
conflict.
IN WITNESS WHEREOF, this Mortgage has been duly
executed and delivered by the Mortgagor as of the date first
above written.
KOEHRING CRANES, INC.
By:____________________________
Name:
Title:
Attest:________________________
Name:
Title:
<PAGE>
STATE OF _________________, ___________________COUNTY, ss:
On this __________ day of _________________________, 19____,
before me, a _______________________________ (insert title of
acknowledging officer) in and for said county, personally appeared
___________________________, to me personally known, who being by
me duly (sworn or affirmed) did say that that person is
_______________________ (insert title of executing officer) of said
(corporation or association), that (no seal has been procured by)
(the seal affixed thereto is the seal of) the (corporation or
association) and that said instrument was signed and sealed on
behalf of the said (corporation or association) by authority of its
Board of (Directors and Trustees); and the said
_______________________ acknowledged the execution of said
instrument to be the voluntary act and deed of said (corporation or
association) by it voluntarily executed.
_____________________________________
Notary Public in and for said State
[Oklahoma]
REAL ESTATE FEE MORTGAGE, ASSIGNMENT OF RENTS, SECURITY AGREEMENT,
FINANCING STATEMENT AND FIXTURE FILING
in the amount of
$250,000,000.00
FROM
TEREX CORPORATION, a Delaware corporation,
having an office at:
500 Post Road East
Westport, Connecticut 06880
(the "Mortgagor")
TO
UNITED STATES TRUST COMPANY OF NEW YORK, as collateral agent,
having an office at:
114 West 47th Street
New York, New York 10036
(the "Mortgagee")
This instrument was prepared by and,
after recording, please return to:
Michael A. Woronoff, Esq.
Skadden, Arps, Slate, Meagher & Flom
300 South Grand Avenue
Los Angeles, California 90071
<PAGE>
REAL ESTATE FEE MORTGAGE, ASSIGNMENT OF RENTS,
SECURITY AGREEMENT, FINANCING STATEMENT AND FIXTURE FILING
A POWER OF SALE HAS BEEN GRANTED IN THIS MORTGAGE.
A POWER OF SALE MAY ALLOW THE MORTGAGEE TO
TAKE THE MORTGAGED PROPERTY AND SELL IT
WITHOUT GOING TO COURT IN A
FORECLOSURE ACTION UPON DEFAULT BY THE
MORTGAGOR UNDER THIS MORTGAGE
THIS REAL ESTATE FEE MORTGAGE, ASSIGNMENT OF RENTS, SECURITY
AGREEMENT, FINANCING STATEMENT AND FIXTURE FILING (hereafter, as amended,
modified, replaced, consolidated and extended, this "Mortgage") is made as
of the 9th day of May, 1995 from TEREX CORPORATION, a Delaware corporation
(the "Mortgagor" or "Terex"), with a mailing address of 500 Post Road East,
Westport, Connecticut 06880, to UNITED STATES TRUST COMPANY OF NEW YORK, a
New York corporation (the "Mortgagee"), as collateral agent, with a mailing
address of 114 West 47th Street, New York, New York 10036.
R E C I T A L S:
1. The Mortgagor is the owner of the fee simple interest in the
Real Property (as hereinafter defined).
2. Pursuant to a certain Indenture (the "Indenture") dated as of
even date herewith between Terex and the Mortgagee as trustee thereunder
(in such capacity, the "Indenture Trustee") for the benefit of the Holders
of the Notes (as defined below), Terex has obtained financing in the amount
of $250,000,000 (the "Loan") with a maturity date of May 15, 2002. All
capitalized terms used but not otherwise defined herein shall have the
meaning ascribed to them in the Indenture.
3. To secure Mortgagor's obligations under the Notes and perfor-
mance of all terms and conditions of the Indenture, the Mortgagor has
agreed to create a first mortgage lien on the Mortgaged Property herein
described, in favor of the Mortgagee.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants herein contained, and (A) in order to secure (i) payment
of the indebtedness under the Indenture, as the same may be amended,
modified, restated, substituted and extended by the terms hereof,
aggregating $250,000,000 in principal amount (the various promissory notes
and securities evidencing said indebtedness and all supplements,
substitutions, extensions and renewals thereof are hereinafter referred to
collectively as the "Notes"), (ii) payment of the interest on such
indebtedness according to the terms of the Indenture and the Notes, (iii)
payment of all other sums payable to the Mortgagee pursuant to the terms of
this Mortgage, and (iv) payment of all other sums owed by the Mortgagor to
the Mortgagee, the Indenture Trustee or the Holders in accordance with the
terms of the Indenture or pursuant to the Notes or the Security Documents
(the payment obligations described in the foregoing clauses (i), (ii),
(iii) and (iv) are hereinafter referred to collectively as the "Indebted-
ness"); and (B) in order to secure the performance of every obligation
contained in the Indenture, the Notes, this Mortgage, the Security
Documents and all other instruments now or hereafter evidencing or securing
any portion of the Indebtedness (hereinafter referred to collectively as
the "Obligations"), the Mortgagor by these presents does hereby mortgage,
warrant, grant a security interest in, pledge, assign and transfer to the
Mortgagee, and each of its successors and assigns forever under and subject
to the terms and conditions hereof, all of the Mortgagor's estate, right,
title and interest in and to the following, whether now owned or held or
hereafter acquired (hereinafter collectively referred to as the "Mortgaged
Property" or the "Collateral"):
A. That certain real property (the "Real Property") more
particularly described in Schedule A attached hereto and made a part hereof
by this reference; and
B. All of the buildings, structures and improvements (here-
inafter, collectively, together with all building equipment, the "Improve-
ments") now or hereafter located on the Real Property and all of its right,
title and interest, if any, in and to the streets and roads abutting the
Real Property to the center lines thereof, and strips and gores within or
adjoining the Real Property, the air space and right to use said air space
above the Real Property, all rights of ingress and egress by motor vehicles
to parking facilities on or within the Real Property, all easements now or
hereafter affecting the Real Property or the Improvements, all royalties
and all rights appertaining to the use and enjoyment of the Real Property
or the Improvements, including, without limitation, alley, drainage, crop,
timber, agricultural, horticultural, mineral, water, oil and gas rights;
and
C. All fixtures (the "Fixtures"), and all appurtenances and
additions thereto and substitutions or replacements thereof, now or
hereafter attached to the Real Property and/or the Improvements. Without
limiting the foregoing, to the extent permitted under applicable law, this
Mortgage shall be deemed to be a "security agreement" under the Uniform
Commercial Code of the State wherein the Real Property and improvements are
located (the "UCC"), and the Mortgagor hereby grants to the Mortgagee a
"security interest" (as defined in the UCC) in all of its present and
future Fixtures and the Mortgagee shall have, in addition to all rights and
remedies provided herein, and in any other agreements, commitments and
undertakings made by the Mortgagor to the Mortgagee, all of the rights and
remedies of a "secured party" under the UCC; and
D. To the extent the same does not constitute Fixtures, all
equipment (as such term is defined in Article 9 of the UCC) now owned or
hereafter acquired and owned by the Mortgagor, which is used at or in
connection with the Improvements or the Real Property and is located
thereon or therein (including, without limitation, all machinery, produc-
tion equipment, furnishings, electronic data-processing and other office
equipment to the extent located on or in the Mortgaged Property), together
with all attachments, components, parts, equipment and accessories
installed thereon or affixed thereto and any and all extensions, additions,
improvements, betterments, renewals, substitutions and replacements to, for
or of any of the foregoing (collectively, the "Equipment"); and
E. All leases, lettings and licenses of the Real Property, the
Improvements and any other property or rights encumbered or conveyed
hereby, or any part thereof, now or hereafter entered into (each a "Lease,"
and collectively, the "Leases") and all right, title and interest of the
Mortgagor thereunder, including, without limitation, cash and securities
deposited thereunder, the right to receive and collect the rents, issues
and profits payable thereunder and the right to enforce, whether by action
at law or in equity or by other means, all provisions, covenants and
agreements thereof, including, without limitation, the right (i) to enter
upon and take possession of the Mortgaged Premises (as hereinafter defined)
for the purpose of collecting the said rents, issues and profits, (ii) to
dispossess by the usual summary proceedings (or any other proceedings of
the Mortgagee's selection) any tenant defaulting in the payment thereof to
the Mortgagee, (iii) to let the Mortgaged Premises, or any part thereof,
and (iv) subject to Mortgagor's license as hereinafter set forth, to apply
said rents, issues and profits, after payment of all necessary charges and
expenses, on account of the Indebtedness; and
F. Any and all permits, certificates, approvals and autho-
rizations, however characterized, related to the Real Property or the
Improvements, issued or in any way furnished, whether necessary or not for
the operation and use of the Real Property or the Improvements, including,
without limitation, operating licenses, franchise agreements, contracts,
contract rights, public utility deposits, building permits, certificates of
occupancy, environmental certificates, industrial permits and licenses and
certificates of operation; and
G. All unearned premiums, accrued, accruing or to accrue under
insurance policies related to the Real Property or the Improvements now or
hereafter obtained by the Mortgagor and all proceeds of the conversion,
voluntary or involuntary, of the Real Property, the Improvements and/or any
other property or rights encumbered or conveyed hereby, or any part
thereof, into cash or liquidated claims, including, without limitation,
proceeds of hazard and title insurance and all awards and compensation
heretofore and hereafter made to the present and all subsequent owners of
the Real Property, the Improvements and/or any other property or rights
encumbered or conveyed hereby by any governmental or other lawful authority
for the taking by eminent domain, condemnation or otherwise, of all or any
part of the Real Property, the Improvements and/or any other property or
rights encumbered or conveyed hereby or any easement therein, including,
but not limited to, awards for any change of grade of streets; and
H. All extensions, improvements, betterments, renewals, substi-
tutions and replacements of and all additions and appurtenances to the Real
Property, the Improvements and/or any other property or rights encumbered
or conveyed hereby, hereafter acquired by or released to the Mortgagor or
constructed, assembled or placed by the Mortgagor on the Real Property, the
Improvements and any other property or rights encumbered or conveyed
hereby, and all conversions of the security constituted thereby which,
immediately upon such acquisition, release, construction, assembling,
placement or conversion, as the case may be, and in each such case without
any further mortgage, conveyance, assignment or other act by the Mortgagor,
shall become subject to the lien of this Mortgage as fully and completely,
and with the same effect, as though now owned by the Mortgagor and
specifically described herein; and
I. All proceeds (as defined in the UCC) of the conversion,
voluntary or involuntary, of any of the foregoing into cash or liquidated
claims, including, without limitation, proceeds of insurance and condemna-
tion or other awards or payments with respect thereto, including interest
thereon.
TO HAVE AND TO HOLD the Mortgaged Property, with all powers of
sale and right of entry and possession (to the extent permitted by
applicable law), with all privileges and appurtenances to the same
belonging, with the right of possession thereof, unto the Mortgagee and its
successors and assigns, forever, and the Mortgagor hereby binds itself and
its successors and assigns to warrant and forever (but only until such time
as the Indebtedness has been paid in full and the Obligations have been
fully satisfied) defend title to the Mortgaged Property unto the Mortgagee
and its successors and assigns against the claim or claims of all parties
claiming or to claim the same, or any part thereof;
FOR THE PURPOSE OF SECURING THE OBLIGATIONS.
PROVIDED, HOWEVER, that if the Mortgagor shall pay or cause to be
paid indefeasibly in full all of the Indebtedness and if the Mortgagor
shall have kept, performed, observed and satisfied all of the Obligations,
then the Mortgagee shall deliver to the persons legally entitled thereto
all such documents, in recordable form, as shall be necessary to release
the Mortgaged Property from the lien of this Mortgage and to release to the
Mortgagor all deposits held by or on behalf of the Mortgagee, but otherwise
this Mortgage shall remain in full force and effect.
AND the Mortgagor represents, warrants, covenants and agrees as
follows:
ARTICLE I
Representations and Warranties of the Mortgagor
Section 1.1 Title to the Mortgaged Property.
(i) The right, title and interest of the Mortgagor constitutes a good,
marketable and insurable fee simple estate in the Mortgaged Property,
subject to no Liens, except for Liens permitted pursuant to Section 4.12 of
the Indenture (collectively, the "Permitted Liens"). (ii) This Mortgage
creates and constitutes a valid and enforceable lien on the Mortgaged
Property, and, to the extent any of the Mortgaged Property shall consist of
personalty (when taken together with any fixture filings and financing
statements delivered in connection herewith and filed in accordance with
the UCC), a perfected security interest in such Mortgaged Property, subject
only to the Permitted Liens. (iii) The Mortgagor has full power and lawful
authority to encumber the Mortgaged Property in the manner and form set
forth hereunder. (iv) The Mortgagor owns all Fixtures and Equipment now or
hereafter comprising part of the Mortgaged Property, subject only to the
matters set forth in this Section. (v) This Mortgage is and will remain a
valid, enforceable and continuing first priority Lien on the Mortgaged
Property subject only to the Permitted Liens. (vi) The Mortgagor will pre-
serve such title as set forth herein and in the Indenture, and will forever
(but only until such time as the Indebtedness has been paid in full and the
Obligations have been fully satisfied) warrant and defend the validity and
priority of the lien hereof against the claims of all persons and parties
whatsoever.
Section 1.2 Mortgage Authorized. The execution and delivery of
this Mortgage, the Indenture and each other document or instrument executed
or delivered by Mortgagor in connection with any of the foregoing or the
Notes have been duly authorized by all necessary corporate action of the
Mortgagor and there is no provision in the articles or certificate of
incorporation or by-laws of the Mortgagor requiring further consent for
such action by any other entity or person. The Mortgagor is duly orga-
nized, validly existing and in good standing under the laws of the state of
its formation, and has (i) all necessary licenses, authorizations,
registrations, permits and/or approvals and (ii) full power and authority
to own or lease its properties and carry on its business as presently con-
ducted, and the execution and delivery by it of, and performance of the
Obligations under this Mortgage, the Indenture and each other document or
instrument executed or delivered by Mortgagor in connection with any of the
foregoing or the Notes will not result in the Mortgagor being in default
under any provision of its articles or certificate of incorporation or by-
laws or of any mortgage, lease, credit or other agreement to which it is a
party or which affects it or the Mortgaged Property, or any part thereof.
Section 1.3 Operation of the Mortgaged Property. (i) The
Mortgagor has all certificates, licenses, authorizations, registrations,
permits and/or approvals and all required environmental permits necessary
for the operation of the Mortgaged Property or any part thereof, the lack
of which would have a Material Adverse Effect (as defined below), all of
which as of the date hereof are in full force and effect and are not, to
the knowledge of the Mortgagor, subject to any revocation, amendment,
release, suspension, forfeiture or the like. (ii) The Mortgaged Property
is served by all easements and utility lines and connections reasonably
required or necessary for the current use thereof. (iii) The Mortgaged
Property has adequate access to public roadways. As used in this Mortgage,
"Material Adverse Effect" shall mean a material adverse effect, singly or
in the aggregate, on (i) the properties, business, prospects, operations,
earnings, assets, liabilities or condition (financial or otherwise) of
Mortgagor, taken as a whole, (ii) the ability of Mortgagor to perform its
obligations under this Mortgage or the Indenture, (iii) the perfection or
priority of the Lien of this Mortgage, or (iv) the value or utility of the
Mortgaged Property, taken as a whole.
ARTICLE II
Covenants of the Mortgagor
Section 2.1 Payment of Indebtedness and Performance of
Covenants. The Mortgagor shall (a) duly and punctually pay or cause to be
paid each payment of the principal of and interest on the Indebtedness and
any prepayments, late charges, premiums and fees provided for in the Inden-
ture and all other payment Obligations secured by this Mortgage at the time
and in the manner provided in this Mortgage, the Security Documents, the
Indenture and each other document or instrument executed or delivered by
Mortgagor in connection with any of the foregoing or the Notes, and (b)
duly and punctually perform and observe all of the terms, provisions,
conditions, covenants and agreements on the Mortgagor's part to be
performed or observed as provided in the Notes, this Mortgage, the
Indenture and each other document or instrument executed or delivered by
Mortgagor in connection with any of the foregoing.
Section 2.2 Maintenance of the Mortgaged Property. (i) The
Mortgagor shall maintain the Mortgaged Property in a commercially
reasonable manner for the operation thereof and in accordance with the
requirements of the Indenture, and shall comply (and shall use commercially
reasonable efforts to cause any tenants to comply) with all federal, state
and local laws, statutes, regulations, ordinances, rules, codes, rulings,
judgments, decrees, orders, injunctions and other requirements of every
government or public agency having or claiming jurisdiction over the Mort-
gaged Property (and all permits, certificates, consents, licenses,
variances, orders, exemptions, approvals and authorizations issued thereby)
as the same relate to the Mortgaged Property and the use and occupancy
thereof and all covenants, conditions, restrictions, declarations and ease-
ments that affect or are binding upon the Mortgaged Property (each, a
"Requirement"). The Mortgagor shall permit the Mortgagee to enter upon the
Mortgaged Property and inspect the same at all reasonable hours and with
reasonable prior notice. The Mortgagor shall not, without the prior
written consent of the Mortgagee, threaten, commit, permit or suffer to
occur any alterations or changes to the Mortgaged Property or any part
thereof other than alterations or changes that do not materially adversely
affect the value or utility of the Mortgaged Property; provided, however,
that Fixtures owned by the Mortgagor may be removed from the Improvements
if such Fixtures are obsolete or if the Mortgagor concurrently therewith
replaces the same with items which do not reduce the value or utility of
the Mortgaged Property or the Improvements, free of any lien, charge or
claim superior to the lien and/or security interest created thereby.
(ii) Nothing in this Section 2.2 shall require
the Mortgagor to comply with any Requirement so long as (a) the
failure so to do shall not otherwise apart from the provisions of
this Section 2.2 (i) be an Event of Default under this Mortgage,
(b) the failure so to do shall not result in the voiding,
rescission or invalidation of the certificate of occupancy or any
other material license, certificate, permit or registration in
respect of the Mortgaged Property essential to the conduct of the
Mortgagor's business at the Mortgaged Property, (c) the failure
so to do shall not prevent, hinder or materially interfere with
the lawful use and occupancy of the Mortgaged Property or any
material portion thereof for the use and occupancy which the
Mortgagor reasonably determines is most advantageous to its busi-
ness, (d) the failure so to do shall not void or invalidate or
make unavailable any insurance required by this Mortgage to be
maintained by the Mortgagor in respect of the Mortgaged Property
and (e) the Mortgagor in good faith and at its own expense shall
contest the Requirement or the validity thereof by appropriate
legal proceedings, which proceedings must operate to prevent (l)
the occurrence of any of the events described in the preceding
clauses (a) through (d) of this paragraph (ii) and (2) the
collection or other realization of any material sums due or
payable as a consequence of the Requirement, the sale of any lien
arising in respect of the Requirement, and/or the sale or
forfeiture of the Mortgaged Property, any part thereof or
interest therein, or the sale of any lien connected therewith;
provided that during such contest the Mortgagor shall, at the
option of the Mortgagee, either establish adequate reserves in
accordance with generally accepted accounting principles or
provide security reasonably satisfactory to the Mortgagee (in
amount and form) assuring the discharge of the Mortgagor's
obligations hereunder and of any interest, charge, fine, penalty,
fee or expense arising from or incurred as a result of such con-
test, and, for purposes herein, the Mortgagee agrees that the
deposit of cash or an irrevocable letter of credit drawn on a
bank reasonably acceptable to Mortgagee shall be a satisfactory
form of security; and provided, further, that if at any time
compliance with any obligation imposed upon the Mortgagor by the
Requirement shall become necessary to prevent (l) the occurrence
of any of the events described in clauses (a) through (d) of this
paragraph (ii) or (2) the delivery of a deed conveying the
Mortgaged Property or any portion thereof or interest therein
because of noncompliance, or the sale of a lien in connection
therewith, or (3) the imposition of any material penalty, fine,
charge, fee, cost or expense on the Mortgagee, then the Mortgagor
shall comply with the Requirement in sufficient time to prevent
the occurrence of any such events, the delivery of such deed or
the sale of such lien, or the imposition of such material
penalty, fine, charge, fee, cost or expense on the Mortgagee.
Section 2.3 Insurance; Coverage. (i) The Mortgagor shall keep
the Mortgaged Property insured against (a) loss and damage by fire,
casualty and such other hazards as may be reasonably specified by the Mort-
gagee, including, without limitation, those hazards which are covered by
the standard extended coverage all-risk insurance policy, (b) damage by
vandalism and/or malicious mischief, (c) explosion insurance in respect of
any boilers or similar apparatus located on the Mortgaged Property and (d)
such other hazards as may be reasonably specified by the Mortgagee. Such
insurance shall be on forms and by companies reasonably satisfactory to the
Mortgagee. The amounts and coverage limits of each policy of insurance
required pursuant to this Section 2.3 shall be sufficient to prevent the
Mortgagor or the Mortgagee from becoming a co-insurer of any partial loss
under the applicable policies and otherwise satisfactory to the Mortgagee,
but in no event less than the actual replacement value of such Mortgaged
Property as determined by the Mortgagor in accordance with generally
accepted insurance practice and approved by the Mortgagee, or at the
Mortgagee's option, which shall be exercised not more frequently than
annually, as determined at the Mortgagor's expense by the insurer or an
expert appraiser approved by the Mortgagee. Notwithstanding anything to
the contrary contained herein, Mortgagor shall be permitted to maintain
self-insurance for all insurance required to be maintained hereby, provided
that such self-insurance is consistent with Mortgagor's prior practice and
has been heretofore adequately disclosed to Mortgagee.
(ii) The Mortgagor shall maintain in full force
liability insurance against claims of bodily injury, death or
property damage occurring on, in or about the Mortgaged Property,
with policy limits and deductibles in such amounts as from time
to time would be maintained by a prudent operator of property
similar in use and configuration to the Mortgaged Property and
located in the locality where the Mortgaged Property is located
(which policy limits and deductibles shall be reasonably satis-
factory to the Mortgagee), which policies of insurance shall name
the Mortgagee as an additional insured. All insurance policies
and endorsements required pursuant to this Section 2.3 shall be
fully paid for, nonassessable and contain such provisions (in-
cluding, without limitation, inflation guard or replacement cost
endorsements) and expiration dates and shall be in such form and
amounts and issued by such insurance companies with a rating of
"A VIII" or better as established by Best's Rating Guide (or an
equivalent rating with such other publication of a similar nature
as shall be in current use and as approved by the Mortgagee), or
such other companies, as shall be approved by the Mortgagee.
(iii) The Mortgagor shall additionally keep the
Mortgaged Property insured against loss by flood if the Mortgaged
Property is located in an area identified by the Secretary of
Housing and Urban Development as an area having special flood
hazards and which has been so identified under the Flood Insur-
ance Act of 1968 and the Flood Disaster Protection Act of 1973,
as the same may have been or may hereafter be amended or modified
(and any successor acts thereto) in amounts reasonably acceptable
to the Mortgagee, but in no event more than what is available
under such laws.
(iv) In all events and without limitation on the
foregoing, the Mortgagor will deliver the policy or policies (or
true copies or certificates thereof) of all such insurance re-
quired under this Mortgage to the Mortgagee, which policy or
policies shall be endorsed to name the Mortgagee as a mortgagee-
loss payee thereunder, with loss payable to the Mortgagee without
contribution or assessment under a New York Standard Mortgagee
clause or similar clause, and shall provide the Mortgagee with no
less than thirty (30) days' notice from the insurer prior to the
expiration, cancellation or termination (for any reason whatsoev-
er) of any such policy.
(v) Insurance required hereunder may be carried
by the Mortgagor pursuant to blanket policies, provided that all
other requirements herein set forth are satisfied and that the
underlying policy in respect of the Mortgaged Property is deliv-
ered to the Mortgagee as herein required. In the event that the
Mortgagor fails to keep the Mortgaged Property insured as
required hereunder, the Mortgagee may, but shall not be obligated
to, obtain insurance and pay the premiums therefor and the Mort-
gagor shall, on demand, reimburse the Mortgagee for all sums,
advances and expenses incurred in connection therewith and such
sums, advances and expenses shall be deemed a part of the
Indebtedness secured hereby and shall bear interest at the
Default Rate (as defined in Section 2.13 of this Mortgage) until
reimbursed.
Section 2.4 Insurance; Proceeds. The Mortgagor shall give the
Mortgagee prompt notice of any material loss covered by insurance and the
Mortgagee shall have the right to join the Mortgagor in adjusting any loss
during the continuance of an Event of Default. The proceeds of insurance
paid on account of any damage or destruction to the Mortgaged Property or
any part thereof shall be paid over to the Mortgagee to be applied as
hereinafter provided. Notwithstanding anything to the contrary contained
herein or in any provision of applicable law, the proceeds of insurance
policies coming into the possession of the Mortgagee shall not be deemed
trust funds.
Section 2.5 Restoration of the Mortgaged Property. In the event
of any material damage or destruction of the Mortgaged Property, or any
part thereof, as a result of casualty, condemnation, taking or other cause,
the Mortgagor shall give prompt written notice thereof to the Mortgagee.
In the event that the Mortgagee, in accordance with Section 2.6 hereof,
makes available to the Mortgagor the insurance proceeds received by it, if
any (or in the event of condemnation or taking, the award, if any, arising
out of such condemnation or taking), the Mortgagor shall with reasonable
promptness commence and diligently continue to perform the repair,
restoration and rebuilding of the Mortgaged Property (hereinafter, the
"Work") so as to restore the Mortgaged Property in full compliance with all
legal requirements and so that the Mortgaged Property shall, to the extent
reasonably practicable, be at least equal in value and general utility as
it was immediately prior to the damage or destruction. If the Work to be
done is materially structural (as reasonably determined by the Mortgagee)
or if the cost of the Work, as estimated by the Mortgagee, shall exceed
$________________ (hereinafter, collectively, "Major Work"), the Mortgagor
shall, prior to the commencement of the Major Work, furnish to the Mort-
gagee for its approval not to be unreasonably withheld or delayed: (i)
complete plans and specifications for the Major Work, with reasonably
satisfactory evidence of the approval thereof (a) by all governmental
authorities whose approval is required for any or all of the Major Work,
(b) by all parties to or having an interest in the leases, if any, of any
portion of the Mortgaged Property whose approval is required, and (c) by an
architect or reputable contractor or construction manager or engineer
satisfactory to the Mortgagee (hereinafter, the "Architect") and which
shall be accompanied by the Architect's signed estimate, bearing the
Architect's seal, of the Architect's good faith estimate of the entire cost
of completing the Major Work; (ii) certified or photostatic copies of all
permits and approvals required by law in connection with the commencement
and/or the conduct of the Work; and (iii) such other documents, instruments
and certificates as Mortgagee may reasonably request. The Mortgagor shall
not be entitled to receive any of the insurance proceeds until the
Mortgagor shall have complied with the applicable requirements referred to
in this Section 2.5. After commencing any Major Work the Mortgagor shall
perform such Major Work diligently and in good faith in accordance with the
plans and specifications referred to in this Section 2.5.
Section 2.6 Restoration; Advances. Insurance proceeds received
by the Mortgagee (or, in the case of condemnation or taking, the award
therefor) less the cost, if any, to the Mortgagee of recovery of the same
and of paying out such proceeds (including reasonable attorneys' fees and
expenses and administrative costs), shall be applied by the Mortgagee to
reduce the Indebtedness; provided, however, that so long as no Event of
Default hereunder has occurred and is continuing, the Mortgagor shall have
the right to cause Mortgagee to apply such net insurance proceeds to the
payment of the cost of the Work in accordance with the terms of this
Section 2.6. Notwithstanding anything to the contrary contained herein,
and so long as no Event of Default hereunder has occurred and is
continuing, Mortgagor shall have the right, upon written notice to
Mortgagee, to not perform the Work, in which event the net amount of any
insurance proceeds received by Mortgagor or Mortgagee (or, in the case of
condemnation or taking, the award therefor) shall be either (i) applied to
repay the Indebtedness, or (ii) invested in assets related to the business
of the Mortgagor or any of its other Restricted Subsidiaries. If Mortgagor
elects (to the extent such an election is permitted hereby) to perform or
cause the Work to be performed, and the Work is not Major Work, insurance
proceeds will be paid in a lump sum to the Mortgagor. If Mortgagor elects
(to the extent such an election is permitted hereby) to perform or cause
the Work to be performed, and the Work is Major Work, the proceeds shall be
paid out from time to time, but not more often than monthly, to the
Mortgagor as said Major Work progresses, but subject to the following
conditions:
(i) an Architect shall be in charge of such Major
Work;
(ii) each request for payment shall be made on at
least seven (7) days' prior written notice to the Mortgagee and
shall be accompanied by (a) a certificate of the chief financial
officer or other authorized officer of the Mortgagor specifying
the party to whom (and for the account of which) such payment is
to be made, (b) copies of lien releases (in form and substance
customary and appropriate for the jurisdiction in which the
Mortgaged Property is located) from each party to whom payment is
to be made, and (c) a certificate of an Architect if an Architect
is required under Section 2.5 above, otherwise a certificate of
the chief financial officer or other authorized officer of the
Mortgagor stating (x) that all of the Work completed has been
done substantially in compliance with the approved plans and
specifications, if any, required under said Section 2.5, and in
accordance with all provisions of law; (y) the sum requested is
justly required to reimburse the Mortgagor for payments by the
Mortgagor to, or is justly due to, the contractor, subcon-
tractors, materialmen, laborers, engineers, architects or other
persons rendering services or materials for the Work (giving a
brief description of any such services and materials), and that
when added to all sums, if any, previously paid out by the Mort-
gagee does not exceed the cost of the Work done to the date of
such certificate and (z) that the amount of such proceeds re-
maining in the hands of the Mortgagee will be sufficient on
completion of the Work to pay for the same in full (giving in
such reasonable detail as the Mortgagee may require an estimate
of the cost of such completion) or that, if the proceeds are
inadequate, that a sufficient reserve has been created in
accordance with generally accepted accounting principles to
provide for the payment of such deficiency;
(iii) each request for payment shall be accom-
panied by sworn statements and partial or final waivers of liens,
as may be appropriate, or if unavailable, lien bonds, satisfacto-
ry to the Mortgagee covering that part of the Work previously
paid for, if any, and by a search prepared by a title insurance
company or a licensed abstractor reasonably satisfactory to the
Mortgagee or by other evidence satisfactory to the Mortgagee,
that there has not been filed with respect to the Mortgaged
Property any mechanic's lien or other lien or instrument for the
retention of title in respect of any part of the Work not dis-
charged of record and that there exist no encumbrances on or
affecting the Mortgaged Property (or any part thereof) other than
Permitted Liens;
(iv) no Event of Default shall have occurred and
be continuing; and
(v) the request for any payment after the Work
has been completed shall be accompanied by certified copies of
all certificates, permits, licenses, waivers and/or other docu-
ments required by law which are customarily issued in the state
and municipality in which the Mortgaged Property is located (or
pursuant to any agreement binding upon the Mortgagor or affecting
the Mortgaged Property or any part thereof) to render occupancy
or use of the Mortgaged Property legal.
Upon completion of any Work and payment in full therefor, and
provided that no Event of Default has occurred and is continuing, the Mort-
gagee shall deliver any excess proceeds to the Mortgagor; provided,
however, that nothing herein contained shall prevent the Mortgagee from
applying at any time the whole or any part of such proceeds to the curing
of any Event of Default.
Section 2.7 Restoration by the Mortgagee. Without limitation on
the foregoing, in the event the Mortgagee, in accordance with the
provisions of Section 2.6 hereof, is making available to the Mortgagor
insurance proceeds (if any) recovered by the Mortgagee, and if there is an
Event of Default which is continuing, then in addition to all other rights
herein set forth and notwithstanding anything to the contrary contained
herein, the Mortgagee, or any lawfully appointed receiver of the Mortgaged
Property, may at its option after giving the Mortgagor ten (10) days'
written notice of such Event of Default, perform or cause to be performed
such repair, restoration and rebuilding, and may take such other steps as
it deems reasonably advisable to perform such repair, restoration and
rebuilding, and upon twenty-four (24) hours' prior written notice to the
Mortgagor, the Mortgagee may enter upon the Mortgaged Property to the
extent reasonably necessary or appropriate for any of the foregoing
purposes, and the Mortgagor hereby waives, for the Mortgagor and all others
holding under the Mortgagor, any claim against the Mortgagee and/or such
receiver arising out of anything done by the Mortgagee or such receiver
pursuant hereto, and the Mortgagee may, at its option, apply insurance
proceeds, if any (without the need by the Mortgagee to fulfill any other
requirements of this Mortgage), to reimburse the Mortgagee and/or such
receiver for all amounts expended or incurred by either of them in connec-
tion with the performance of such Work, and any excess costs shall be paid
by the Mortgagor to the Mortgagee upon demand, and such payment of excess
costs shall be deemed part of the Indebtedness secured hereby and shall
bear interest at the Default Rate until paid.
Section 2.8 Intentionally Deleted.
Section 2.9 Taxes and Other Charges.
(i) The Mortgagor shall pay and discharge by the
last day payable without penalty or premium all taxes of every
kind and nature, water rates, sewer rents and assessments,
levies, permits, inspection and license fees and all other
charges imposed upon or assessed against the Mortgaged Property
or any part thereof or upon the revenues, rents, issues, income
and profits of the Mortgaged Property or arising in respect of
the occupancy, use or possession thereof (excluding any taxes in
the nature of income taxes). To the extent any such items are
payable in installments, the Mortgagor may elect to pay any such
item in installments, but each payment shall be made before any
penalty accrues. The Mortgagor shall exhibit to the Mortgagee
within a reasonable period of time after request and after the
same are required to be paid as specified herein, validated
receipts or other evidence reasonably satisfactory to the Mort-
gagee showing the payment of such taxes, assessments, water
rates, sewer rents, levies, fees and/or other charges. Should
the Mortgagor default in the payment of any of the foregoing
taxes, assessments, water rates, sewer rents, levies, fees or
other charges, the Mortgagee may, but shall not be obligated to,
pay the same or any part thereof and the Mortgagor shall reim-
burse the Mortgagee for all amounts so paid and such amounts
shall be deemed a part of the Indebtedness secured hereby and
shall bear interest at the Default Rate until reimbursed.
(ii) Nothing in this Section 2.9 shall require
the payment or discharge of any obligation imposed upon the
Mortgagor by subsection (i) of this Section 2.9 so long as the
Mortgagor shall in good faith and at its own expense contest the
same or the validity thereof by appropriate legal proceedings
which proceedings must operate to prevent the collection thereof
or other realization thereon, the sale of the lien thereof and
the sale or forfeiture of the Mortgaged Property or any part
thereof, to satisfy the same; provided that during such contest
the Mortgagor shall, at the option of the Mortgagee, establish
reserves in accordance with generally accepted accounting
principles or deposit cash or an irrevocable letter of credit
drawn on a bank reasonably acceptable to the Mortgagee, assuring
the discharge of the Mortgagor's obligation hereunder and of any
additional interest charge, penalty or expense arising from or
incurred as a result of such contest; and provided, further, that
if at any time payment of any obligation imposed upon the
Mortgagor by subsection (i) of this Section 2.9 shall become
necessary to prevent the delivery of a tax deed or similar
instrument conveying the Mortgaged Property or any portion
thereof or the sale of the tax lien therefor because of non-pay-
ment, or the imposition of any penalty, which is not reserved or
secured against, or cost on the Mortgagee not paid by the
Mortgagor, then the Mortgagor shall pay the same in sufficient
time to prevent the delivery of such tax deed or the sale of such
lien, or the imposition of such penalty or cost on the Mortgagee.
(iii) The Mortgagor shall pay when due all (a)
premiums for fire, hazard and other insurance required to be
maintained by the Mortgagor on the Mortgaged Property pursuant to
the terms of Section 2.3 hereof, (b) title insurance premiums, if
any, relating to the insurance to be obtained on the Mortgaged
Property in connection with this Mortgage, and (c) any and all
other costs, expenses and charges expressly required to be paid
hereunder.
Section 2.10 Mechanics' and Other Liens.
(i) To the extent that the following are not
Permitted Liens, within sixty (60) days from the date of the
filing of any such Lien, the Mortgagor shall pay, bond or dis-
charge of record, from time to time, forthwith, all Liens on the
Mortgaged Property or any part thereof, and, in general, the
Mortgagor forthwith shall do, at the cost of the Mortgagor and
without expense to the Mortgagee, everything necessary to fully
preserve the first priority Lien of this Mortgage. In the event
that the Mortgagor fails in a timely manner to make payment in
full of, bond or discharge, any such Liens, as required under the
preceding sentence, the Mortgagee may, but shall not be obligated
to, make payment, bond, or discharge such Liens, in order fully
to preserve the Lien of this Mortgage and the collateral value of
the Mortgaged Property, and the Mortgagor shall reimburse the
Mortgagee for all sums so expended and such sums shall be deemed
a part of the Indebtedness secured hereby and shall bear interest
at the Default Rate until reimbursed.
(ii) Nothing in this Section 2.10 shall require
the payment or discharge of any obligation imposed upon the
Mortgagor by subsection (i) of this Section 2.10 so long as the
Mortgagor shall bond or discharge any Lien on the Mortgaged
Property arising from such obligation or in good faith and at its
own expense contest the same or the validity thereof by appro-
priate legal proceedings which proceedings must operate to
prevent the collection thereof or other realization thereon, the
sale of the Lien thereof and the sale or forfeiture of the Mort-
gaged Property or any part thereof, to satisfy the same; provided
that during such contest the Mortgagor shall, at the option of
the Mortgagee, either (at the option of the Mortgagor) establish
an adequate reserve in accordance with generally acceptable
accounting principles or provide security satisfactory to the
Mortgagee, assuring the discharge of the Mortgagor's obligation
hereunder and of any additional interest charge, penalty or
expense arising from or incurred as a result of such contest,
which security can take the form of cash or an irrevocable letter
of credit drawn on a bank reasonably acceptable to the Mortgagee;
and provided, further, that if at any time payment of any obli-
gation imposed upon the Mortgagor by subsection (i) of this
Section 2.10 shall become necessary (a) to prevent the sale or
forfeiture of the Mortgaged Property or any portion thereof
because of non-payment, or (b) to protect the Lien of this Mort-
gage, then the Mortgagor shall pay the same in sufficient time to
prevent the sale or forfeiture of the Mortgaged Property or to
protect the Lien of this Mortgage, as the case may be.
Section 2.11 Condemnation Awards. The Mortgagor, immediately
upon obtaining knowledge in any manner of the institution of any
proceedings for the condemnation of the Mortgaged Property or any portion
thereof which could have a Material Adverse Effect, will notify the
Mortgagee of such proceedings. The Mortgagee may participate in any such
proceedings, and the Mortgagor from time to time will deliver to the
Mortgagee all instruments requested by it to permit such participation.
The Mortgagor and the Mortgagee shall both act reasonably and expeditiously
in connection with such proceedings. All awards and compensation payable
to the Mortgagor as a result of any condemnation or other taking or
purchase in lieu thereof of the Mortgaged Property or any part thereof are
hereby assigned to and shall be paid to the Mortgagee, and shall be treated
in accordance with the provisions of Sections 2.5 and 2.6 hereof. The
Mortgagor hereby authorizes the Mortgagee to collect and receive such
awards and compensation, to give proper receipts and acceptances therefor
and to apply the same in accordance with the provisions of Sections 2.5 and
2.6 of this Mortgage. The Mortgagor, upon request by the Mortgagee, shall
make, execute and deliver any and all instruments requested for the purpose
of confirming the assignment of the aforesaid awards and compensation to
the Mortgagee free and clear of any Liens, charges or encumbrances of any
kind or nature whatsoever.
Notwithstanding anything to the contrary in this Section 2.11,
the Mortgagor shall continue to pay the Indebtedness and perform the
Obligations at the time and in the manner provided for in the Notes, the
Security Documents and the Indenture. If the Mortgaged Property or any
portion thereof is sold, through foreclosure or otherwise, prior to the re-
ceipt by the Mortgagee of such payment, the Mortgagee shall have the right,
whether or not a deficiency judgment shall have been sought, recovered or
denied, to receive said payment, or a portion thereof sufficient to pay the
Indebtedness, whichever is less. The Mortgagor shall file and prosecute
its claim or claims for any such payment in good faith and with due
diligence and cause the same to be collected and paid over to the
Mortgagee, in the name of the Mortgagor or otherwise, to collect and give
receipt for any such payment and to file and prosecute such claim or
claims, and although it is hereby expressly agreed that the same shall not
be necessary in any event, the Mortgagor shall, upon demand of the Mort-
gagee, make, execute and deliver any and all assignments and other instru-
ments sufficient for the purpose of assigning any such payment to the
Mortgagee, free and clear of any encumbrances of any kind or nature whatso-
ever.
Section 2.12 Costs of Defending and Upholding the Lien. If any
action or proceeding is commenced to which action or proceeding the
Mortgagee is made a party or in which it becomes necessary to defend or
uphold the first priority Lien of this Mortgage, the Mortgagor shall reim-
burse the Mortgagee for all reasonable expenses (including, without limita-
tion, reasonable attorneys' fees and expenses) incurred by the Mortgagee in
any such action or proceeding and such expenses shall be deemed a part of
the Indebtedness secured hereby and shall bear interest at the Default Rate
until reimbursed. To the extent the subject of the action is covered by
title insurance, the Mortgagee may be defended by the title insurance
counsel reasonably satisfactory to it; if otherwise covered by insurance,
the Mortgagee may be defended by counsel for the insurance company reason-
ably satisfactory to the Mortgagee. Notwithstanding the foregoing, in an
action not covered by insurance, the Mortgagor may defend with counsel
reasonably satisfactory to the Mortgagee.
Section 2.13 Additional Advances and Disbursements. The
Mortgagor shall pay by the last day payable without premium or penalty all
payments and charges on all liens, encumbrances, ground and other leases
and security interests which affect or may affect or attach or may attach
to the Mortgaged Property, or any part thereof, and in default thereof, the
Mortgagee shall have the right, but shall not be obligated, to pay upon
notice to the Mortgagor, if practicable in order fully to preserve the
first priority Lien of this Mortgage and the collateral value of the Mort-
gaged Property, such payments and charges and the Mortgagor shall reimburse
the Mortgagee for any amounts so paid. In addition, upon the occurrence of
any material default of the Mortgagor in the performance of any other
terms, covenants, conditions or obligations by it to be performed hereunder
or under any such Lien, encumbrance, lease or security interest and after
the expiration of all applicable notice and cure periods, if any, the
Mortgagee shall have the right, but shall not be obligated, to cure such
default in the name and on behalf of the Mortgagor. All sums advanced and
reasonable expenses incurred at any time by the Mortgagee pursuant to this
Section 2.13 or as otherwise provided under the terms and provisions of
this Mortgage or under applicable law shall bear interest from the date
that such sum is advanced or expenses incurred, to and including the date
of reimbursement, computed at an interest rate per annum (the "Default
Rate") at all times equal to the highest default rate provided in the
Indenture, but in no event to exceed the maximum rate allowed by law. All
interest payable hereunder shall be computed on the basis of a 360-day year
over the actual number of days elapsed. Any such amounts advanced or in-
curred by the Mortgagee, together with the interest thereon, shall be
payable on demand, shall, until paid, be secured by this Mortgage as a Lien
on the Mortgaged Property and shall be deemed a part of the Indebtedness.
Section 2.14 Costs of Enforcement. The Mortgagor agrees to bear
and pay all expenses (including, without limitation, reasonable attorneys'
fees and expenses) of or incidental to (i) the enforcement of any provision
hereof, (ii) the enforcement of this Mortgage, the Notes, the Security
Documents, the Indenture and for the curing thereof, (iii) subject to
Section 2.12 hereof, defending the rights and claims of the Mortgagee in
respect of this Mortgage, the Notes, the Indenture and/or the Security
Documents, by litigation or otherwise, and (iv) the appointment of a
receiver or receivers as hereinafter contemplated. All rights and remedies
of the Mortgagee shall be cumulative and may be exercised singly or concur-
rently. Notwithstanding anything herein contained to the contrary, the
Mortgagor: (i) HEREBY WAIVES TRIAL BY JURY; and, to the fullest extent
allowed by law, (ii) shall not (a) at any time insist upon, or plead, or in
any manner whatever claim or take any benefit or advantage of any stay or
extension or moratorium law, any exemption from execution or sale of the
Mortgaged Property or any part thereof, wherever enacted, now or at any
time hereafter in force, which may affect the covenants and terms of
performance of this Mortgage, nor (b) after any such sale or sales, claim
or exercise any right under any statute heretofore or hereafter enacted to
redeem the property so sold or any part thereof; (iii) hereby expressly
waives all benefit or advantage of any such law or laws; and (iv) covenants
not to hinder, delay or impede the execution of any power herein granted or
delegated to the Mortgagee, but to suffer and permit the execution of every
power as though no such law or laws had been made or enacted. The Mort-
gagor, for itself and all who may claim under it, waives, to the extent
that it lawfully may, all right to have the Mortgaged Property or any part
thereof marshalled upon any foreclosure hereof. The appraisement of the
Mortgaged Property is hereby expressly waived or not waived at the option
of the Mortgagee, its successors or assigns, such option to be exercised
prior to or at the time judgment is rendered in any foreclosure hereof.
Section 2.15 Filing Charges, Recording Fees, Taxes, etc. The
Mortgagor shall pay any and all taxes, charges, filing, registration and
recording fees, excises and levies imposed upon the Mortgagee by reason of
its interest in the Mortgaged Property and this Mortgage or any mortgage
supplemental hereto, any security instrument with respect to any interest
of the Mortgagor in and to any fixture or personal property at the
Mortgaged Property or any instrument of further assurance, other than
income, franchise, succession, inheritance, business and similar taxes,
and shall pay all other taxes, if any, required to be paid on the debt
evidenced by the Notes. In the event the Mortgagor fails to make such
payment within ten (10) days after written notice thereof to the Mortgagor,
then the Mortgagee shall have the right, in its sole discretion, to elect
either to (i) declare the entire Indebtedness immediately due and payable
or (ii) to pay the amount due, and the Mortgagor shall reimburse the
Mortgagee for said amount, together with interest thereon computed at the
Default Rate. Nothing herein contained shall be construed to require the
Mortgagor to pay the Mortgage Registration Tax imposed by the laws of the
State of Oklahoma, which registration tax shall be paid by the Mortgagee.
Section 2.16 Restrictive Covenants and Leasing Requirements.
Promptly following the execution hereof, Mortgagor shall deliver a notice,
in form and substance reasonably satisfactory to Mortgagee, to all existing
tenants or other occupants of the Mortgaged Property, which notice shall
indicate that this Mortgage has been executed and, subject to the terms
hereof, all Leases have been assigned to Mortgagee. Mortgagor shall not
hereafter execute or permit to be executed any lease or other occupancy
agreement, whether singly or in a series of transactions, for all or
substantially all of the Mortgaged Property, without first delivering to
Mortgagee a subordination and attornment agreement to and for the benefit
of Mortgagee in form and substance reasonably satisfactory to Mortgagee.
Notwithstanding the foregoing, the Mortgagor shall be permitted, without
the delivery of a separate subordination and attornment agreement, to lease
up to one-half of the Mortgaged Property, provided (i) such lease is to a
bona fide third-party tenant on commercially reasonable terms, (ii) Mort-
gagor gives notice to the Mortgagee of such lease, or any such amendment,
modification or extension thereof with a copy thereof, and (iii) Mortgagor
gives prior written notice of this Mortgage to the tenant or other occupant
under any such lease, amendment, modification or extension.
Section 2.17 Assignment of Rents. The Mortgagor hereby
absolutely, presently and unconditionally assigns to the Mortgagee, as fur-
ther security for the payment of the Indebtedness and performance of the
Obligations, all of its interest in the rents, issues and profits of the
Mortgaged Property, together with its interest in all Leases of all or any
portion thereof and other documents evidencing such rents, issues and
profits now or hereafter in effect and its interest in any and all deposits
held as security under any such Leases, and shall deliver to the Mortgagee
a true and correct copy of an executed counterpart of each such Lease or
other material documents to which it is a party and which affects the Mort-
gaged Property. Nothing contained in the foregoing sentence shall be
construed to bind the Mortgagee to the performance of any of the covenants,
conditions or provisions contained in any such Lease or other document or
otherwise to impose any obligation on the Mortgagee, including, without
limitation, any liability under the covenants contained in any such Lease.
To the fullest extent permitted by applicable laws, the Mortgagor hereby
grants to the Mortgagee the present right (i) to collect and receive any
and all rents, issues and profits and to enter upon and take possession of
the Mortgaged Property for the purpose of collecting the said rents, issues
and profits, (ii) to dispossess by the usual summary proceedings (or any
other proceedings of the Mortgagee's selection) any tenant defaulting in
the payment thereof to the Mortgagee, (iii) to let the Mortgaged Property,
or any part thereof, and (iv) to apply said rents, issues and profits,
after payment of all necessary charges and expenses (including, without
limitation, costs of required maintenance and operation of the Mortgaged
Property, costs of collection, default associated charges, past due
interest and late charges and similar charges and expenses) , on account of
the Indebtedness. This Mortgage constitutes and evidences the irrevocable
consent of the Mortgagor to the entry upon and taking possession of the
Mortgaged Property by the Mortgagee pursuant to such grant, whether
foreclosure has been instituted or not and without applying for a receiver;
provided, however, that so long as no Event of Default shall have occurred
and be continuing, the Mortgagor shall have a revocable license to collect
and receive said rents, issues and profits and to otherwise manage the
Mortgaged Property, including, without limitation, a revocable license to
exercise the rights granted to Mortgagee pursuant to subsections (i), (ii),
(iii) and (iv) above. If an Event of Default shall have occurred and be
continuing, any rental or other income from the Mortgaged Property received
by the Mortgagor shall be deemed to be received by the Mortgagor in trust
for the Mortgagee and shall be paid over to the Mortgagee immediately upon
receipt by the Mortgagor. This license of the Mortgagor to collect and re-
ceive said rents, issues and profits shall be automatically revoked without
the requirement of any action by the Mortgagee upon the occurrence and
during the continuance of an Event of Default. Upon the occurrence and
during the continuance of an Event of Default, the Mortgagor hereby ap-
points the Mortgagee as its attorney-in-fact, coupled with an interest, to
receive and collect all rent, additional rent and other sums due under the
terms of each Lease to which the Mortgagor is a party and to direct any
such tenant, by written notice or by mail or in person to the Mortgagee.
If an Event of Default shall have occurred and be continuing, Mortgagee
may, without thereby becoming or being deemed a mortgagee in possession or
incurring any liability under any Lease, notify any lessee, tenant, conces-
sionaire, licensee or other occupant of all or any part of the Mortgaged
Property to pay all rental or other income payable by it, him or her to the
Mortgagee and all such rental and other income shall thereafter be paid di-
rectly to the Mortgagee until the Mortgagee agrees otherwise. If an Event
of Default has occurred and is continuing, to facilitate the Mortgagee's
collection of rental and other income, the Mortgagor hereby irrevocably
authorizes and empowers the Mortgagee to endorse on behalf of the Mortgagor
and in the Mortgagor's name all checks and other instruments received by
the Mortgagee as payment of rental or other income. The Mortgagee shall
apply to the Indebtedness the net amount (after deducting all costs and
expenses, including attorneys' fees and expenses, incident to the collec-
tion thereof, and after deducting all costs and expenses of operation,
maintenance and repairs of the Mortgaged Property) of any such rental or
other income received by it.
Section OHEN Transfer Restrictions. Except as either permitted
or not prohibited by the provisions of Section 4.10 of the Indenture, the
Mortgagor may not, without the prior written consent of the Mortgagee,
further mortgage, encumber, hypothecate, sell, transfer, convey, assign or
sublet all or any part of the Mortgaged Property or the leases and rents
affecting the Mortgaged Property or any other interest in the Mortgaged
Property or such leases and rents or suffer any of the foregoing to occur
involuntarily or by operation of law or otherwise. In the event of a sale,
transfer or other conveyance of any of the Mortgaged Property permitted by
this section, Mortgagee shall, subject to the terms of Section 10.3 of the
Indenture, at the sole cost and expense of Mortgagor, execute such
documents as Mortgagor shall reasonably request to evidence the release of
the Lien of this Mortgage with respect to such Mortgaged Property.
Section 2.19 Indemnity. The Mortgagor agrees that it shall
indemnify, defend and hold harmless the Mortgagee from and against all
loss, liability, obligation, claim, damage, penalty, cause of action, cost
and expense, including, without limitation, any assessments, levies, impo-
sitions, judgments, reasonable attorneys' fees and disbursements, cost of
appeal bonds and printing costs, imposed upon or incurred by or asserted
against the Mortgagee by reason of (a) ownership of this Mortgage (other
than taxes, if any, in the nature of income taxes imposed on the Mortgagee
as the result of its ownership of this Mortgage); (b) any accident, injury
to or death of persons or loss of or damage to property occurring on or
about the Mortgaged Property (except to the extent the same shall be caused
by the Mortgagee's own gross negligence or willful misconduct); (c) any
use, non-use or condition of the Mortgaged Property (except to the extent
the same shall be caused by the Mortgagee's own gross negligence or willful
misconduct); (d) performance of any labor or services or the furnishing of
any materials or other property in respect of the Mortgaged Property or any
part thereof for maintenance or otherwise; (e) the imposition of any
mortgage, real estate or governmental tax incurred as a result of this
Mortgage or the Notes, other than income, franchise, succession, inheri-
tance, business and similar taxes payable by the Mortgagee, or (f) any
violation or alleged violation by the Mortgagor of any law. Any amounts
payable under this Section 2.19 shall be immediately due and payable
without demand, shall be deemed a part of the Indebtedness secured hereby,
and until paid shall bear interest at the Default Rate. If any action is
brought against the Mortgagee by reason of any of the foregoing occur-
rences, the Mortgagor will have the right to defend and resist such action,
suit or proceeding, at the Mortgagor's sole cost and expense by counsel
reasonably approved by the Mortgagee. The Mortgagor's obligations under
this Section 2.19 shall survive any change in law, the payment in full of
the Indebtedness, any discharge, release or satisfaction of this Mortgage
and/or the delivery of one or more deeds in lieu of foreclosure with
respect to this Mortgage. Nothing herein contained shall be construed to
require the Mortgagor to pay the Mortgage Registration Tax imposed by the
laws of the State of Oklahoma, which registration tax shall be paid by the
Mortgagee.
Section 2.20 Security Interest in Fixtures.
(i) As provided in the granting clauses herein-
above, this Mortgage shall constitute a security agreement and
shall create and evidence a security interest in all Fixtures in
which a security interest or lien may be granted or a common law
pledge created pursuant to the UCC as in effect in the state in
which the Mortgaged Property is located or under common law in
such state, which security interest is hereby granted to
Mortgagee as "secured party" (as such term is defined in the
UCC), securing the Indebtedness and the Obligations of the
Mortgagor hereunder and upon recordation in the real property
records of the County in which the Mortgaged Property is located,
shall constitute a "fixture filing" within the meaning of Article
9 of the UCC creating a perfected security interest in all fix-
tures now or hereafter located upon the Mortgaged Property. The
Mortgagor, immediately upon the execution and delivery of this
Mortgage, and thereafter from time to time, shall cause this
Mortgage, any security instrument evidencing or perfecting the
Lien hereof in the Fixtures, and each instrument of further
assurance, including, without limitation, UCC financing state-
ments and continuation statements, to be filed, registered or
recorded in such manner and in such places as may be required by
any present or future law in order to publish notice of and fully
to perfect, preserve and protect the lien hereof upon the Mort-
gaged Property. The Mortgagor hereby appoints and authorizes the
Mortgagee to act on behalf of the Mortgagor upon the Mortgagor's
failure to comply with the provisions of this Section 2.20.
(ii) To the extent the mortgage foreclosure laws
of the state in which the Mortgaged Property is located do not
provide for foreclosure against some or all of the Fixtures, upon
the occurrence of any Event of Default, in addition to the
remedies set forth in Article III hereof, the Mortgagee shall
have the power to foreclose the Mortgagor's right of redemption
in the Fixtures by sale of the Fixtures in accordance with the
UCC as enacted in the state in which the Mortgaged Property is
located or under other applicable law in such state. It shall
not be necessary that any Fixtures offered be physically present
at any such sale or constructively be in the possession of the
Mortgagee or the person conducting the sale. Upon the occurrence
and during the continuance of any Event of Default, the Mortgagee
may sell the Fixtures or any portion thereof at public or private
sale with notice to the Mortgagor as hereinafter provided. The
proceeds of any such sale, after deducting all expenses of the
Mortgagee in taking, storing, repairing and selling the Fixtures
or any part thereof (including, without limitation, attorneys'
fees and expenses) shall be applied in the manner set forth in
Section 3.2 hereof. At any sale, public or private, of the
Fixtures or any part thereof, the Mortgagee may purchase any or
all of the Fixtures offered at such sale.
(iii) The Mortgagee shall give Mortgagor notice
of any sale of the Fixtures or any portion thereof pursuant to
the provisions of this Section 2.20. Any such notice shall
conclusively be deemed to be effective if such notice is mailed
at least ten (10) business days prior to any sale, by first class
or certified mail, postage prepaid, to the Mortgagor at its
address determined in accordance with the provisions of Section
4.3 hereof.
Section 2.21 Compliance with Agreements. The Mortgagor shall
timely comply and perform all of the obligations imposed upon it by the
Notes, the Indenture and the Security Documents.
Section 2.22 Environmental. Except as could not, singly or in
the aggregate, have a Material Adverse Effect:
(i) Mortgagor (a) has obtained all Permits that
are required with respect to the operation of the Mortgaged
Property under the Environmental Laws (as defined below) and is
in compliance with all terms and conditions of such required
Permits, and (b) is in compliance with all Environmental Laws
(including, without limitation, compliance with standards,
schedules and timetables therein);
(ii) no portion of or interest in the Mortgaged
Property 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 Mortgagor has not received any notification of potential
or actual liability or request for information under CERCLA or
any comparable state or local law;
(iii) no underground storage tank or other under-
ground storage receptacle, or related piping, is located on the
Mortgaged Property;
(iv) there have been no releases (including,
without limitation, any past or present releasing, spilling,
leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, disposing or dumping, on-site or,
to the best of Mortgagor's knowledge after due inquiry, off-site)
of Hazardous Materials (as defined below) by Mortgagor or, to the
best of Mortgagor's knowledge after due inquiry, any predecessor
in interest, or any person or entity whose liability for any
release of Hazardous Materials, Mortgagor or any of its affili-
ates has retained or assumed either contractually or by operation
of law at, on, under, from or into any portion of the Mortgaged
Property;
(v) neither Mortgagor nor any person or entity
whose liability Mortgagor or any of its affiliates has retained
or assumed either contractually or 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, investi-
gation, 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;
(vi) there are no events, activities, practices,
incidents or actions or, to the best of Mortgagor's knowledge
after due inquiry, conditions, circumstances or plans that may
interfere with or prevent compliance by Mortgagor with any Envi-
ronmental Law, or that may give rise to any liability under any
Environmental Laws; and
(vii) in the ordinary course of its businesses,
Mortgagor conducts a periodic review of the effect of Environ-
mental Laws on the business, operations and properties of
Mortgagor in the course of which it identifies and evaluates
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 par-
ties). On the basis of such review, Mortgagor has reasonably
concluded that such associated costs and liabilities could not
reasonably be expected to, singly or in the aggregate, have a
Material Adverse Effect on Mortgagor, 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 envi-
ronment, 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 (collec-
tively referred to as "Hazardous Materials"), into the environment (in-
cluding, without limitation, ambient air, surface water, ground water, land
surface or subsurface strata), (2) the manufacture, processing, distribu-
tion, 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 there-
from.
ARTICLE III
Default and Remedies
Section 3.1 Events of Default. The following shall each
constitute an "Event of Default" under this Mortgage:
(i) the occurrence of any Event of Default under
the Notes, the Indenture or any of the Security Documents;
\COR if the Mortgagor shall fail to make any
other payment required by this Mortgage within ten (10) days
after written notice thereof to the Mortgagor by the Mortgagee;
(iii) if any representation or warranty contained
herein shall be false or incorrect in any material respect when
made; or
(iv) if the Mortgagor fails to keep, observe
and/or perform any of the other covenants, conditions,
Obligations or agreements contained in this Mortgage, and such
default continues for a period of thirty (30) days after written
notice to the Mortgagor by the Mortgagee; provided, however, that
it shall not be an Event of Default hereunder if the default is
such that cannot reasonably be cured within 30 days and the
Mortgagor commences to cure the default within such thirty-day
period, diligently pursues a cure, and cures such default within
120 days from the date of the initial written notice of default
thereof to the Mortgagor by the Mortgagee.
Section 3.2 Remedies. Upon the occurrence and during the
continuance of any Event of Default, the Mortgagee may:
(i) in addition to any rights or remedies avail-
able to it hereunder, take such action as it deems advisable to
protect and enforce its rights against the Mortgagor and in and
to the Mortgaged Property, including, without limitation, the
following actions, each of which may be pursued concurrently or
otherwise, at such time and in such order as the Mortgagee may
determine, in its sole discretion, without impairing or otherwise
affecting any of the other rights and remedies of the Mortgagee:
(1) declare the entire unpaid Indebtedness to be immediately due
and payable; or (2) after accelerating the Indebtedness, to the
extent permitted by law, immediately enter into or upon the
Mortgaged Property, either personally or by its agents, nominees
or attorneys and dispossess the Mortgagor and its agents and ser-
vants there-from, and at once take possession of the Mortgaged
Property, and thereupon the Mortgagee may (a) use, operate,
manage, control, insure, maintain, repair, restore and otherwise
deal with all and every part of the Mortgaged Property and
conduct the business thereat; (b) complete any construction on
the Mortgaged Property in such manner and form as the Mortgagee
deems advisable; (c) make such alterations, additions, renewals,
replacements and improvements to or on the Improvements and the
balance of the Mortgaged Property necessary or advisable as
determined by the Mortgagee to continue to operate the business;
(d) exercise all rights and powers of the Mortgagor with respect
to the Mortgaged Property, whether in the name of the Mortgagor
or otherwise, including, without limitation, the right to make,
cancel, enforce or modify leases, obtain and evict tenants, and
sue for, collect and receive all earnings, revenues, rents,
issues, profits and other income of the Mortgaged Property and
every part thereof; and (e) apply the receipts from the Mortgaged
Property to the payment of the Indebtedness, after deducting
therefrom all expenses (including reasonable attorneys' fees and
disbursements) incurred in connection with the aforesaid
operations and all amounts necessary to pay the taxes, as-
sessments, insurance and other charges in connection with the
Mortgaged Property, as well as just and reasonable compensation
for the services of the Mortgagee, its counsel, agents and
employees; or (3) institute proceedings for the complete
foreclosure of this Mortgage in which case the Mortgaged Property
may be sold for cash or credit in one or more parcels; or (4)
with or without entry and, to the extent permitted, and pursuant
to the procedures provided by applicable law, institute
proceedings for the foreclosure of this Mortgage for the portion
of the Indebtedness then due and payable, subject to the Lien of
this Mortgage continuing unimpaired and without loss of priority
so as to secure the balance of the Indebtedness not then due; or
(5) institute an action, suit or proceeding in equity for the
specific performance of any covenants, condition or agreement
contained herein; or (6) recover judgment on the Notes or any
guaranty either before, during or after or in lieu of any
proceedings for the enforcement of this Mortgage; or (7) apply
for the appointment of a trustee, receiver, liquidator or
conservator of the Mortgaged Property, without regard for the
adequacy of the security for the Indebtedness and without regard
for the solvency of the Mortgagor, any guarantor or of any
person, firm or other entity liable for the payment of the
Indebtedness or performance of the Obligations to which
appointment the Mortgagor does hereby consent; or (8) to the
extent permitted by applicable law, to proceed under the POWER OF
SALE granted herein and sell the Mortgaged Property or any part
thereof to the extent permitted and pursuant to the procedures
provided by the laws of the State in which the Mortgaged Property
is located, and all estate, right, title and interest, claim and
demand therein, and right of redemption thereof, at one or more
sales, as an entirety or in parcels, and at such time and place,
upon such terms and after such notice thereof as may be required
by applicable law or (9) pursue such other remedies as the
Mortgagee may have under applicable law.
(ii) In addition to any other remedies available
to the Mortgagee hereunder or at law or in equity, the Mortgagor
hereby confers unto the Mortgagee a power of sale for the Mort-
gaged Property exercisable upon an Event of Default under this
Mortgage and agrees that the Mortgagee, at its option, may
proceed under this power of sale pursuant to the applicable
procedures provided therefor by the laws of the State in which
the Mortgaged Property is located or foreclose this Mortgage as
provided by such laws. The Mortgagor represents and warrants
that the Mortgaged Property is not the Mortgagor's homestead and
that the Indebtedness is not an extension of credit made pri-
marily for agricultural purposes.
Notwithstanding anything contained in this Mortgage to the
contrary, any notices of sale given in accordance with the applicable
requirements provided therefor by the laws of the State in which the
Mortgaged Property is located shall constitute sufficient notice of sale.
The conduct of a sale pursuant to a power of sale shall be sufficient
hereunder if conducted in accordance with such requirements in effect at
the time of such sale, notwithstanding any other provision contained in
this Mortgage to the contrary. The proceeds of any sale of the Mortgaged
Property pursuant to the power of sale herein granted shall be applied in
accordance with such requirements in effect at the time of such sale.
(iii) The proceeds of any sale made under or by
virtue of this Article III, together with any other sums which
then may be held by the Mortgagee under this Mortgage, whether
under the provisions of this Article III or otherwise, shall be
applied:
First: To the payment of the costs and expenses of any
such sale, or the costs and expenses of entering upon, taking
possession of, removing from, holding, operating and/or managing
the Mortgaged Property or any part thereof, as the case may be,
and of all expenses, liabilities and advances made or incurred by
the Mortgagee under this Mortgage, together with interest at the
Default Rate as provided herein on all advances made by the
Mortgagee and all taxes or assessments, except any taxes,
assessments or other charges subject to which the Mortgaged
Property shall have been sold.
Second: In accordance with the provisions of Section
6.10 of the Indenture.
The Mortgagee and any receiver of the Mortgaged Property or any part
thereof shall be liable to account for only those rents, issues and profits
actually received by it.
(iv) The Mortgagee may adjourn from time to time
any sale by it to be made under or by virtue of this Mortgage by
announcement at the time and place appointed for such sale or for
such adjourned sale or sales; and except as otherwise provided by
any applicable provision of law, the Mortgagee, without further
notice or publication, may make such sale at the time and place
to which the same shall be so adjourned.
(v) Upon the completion of any sale or sales made
by the Mortgagee under or by virtue of this Article III, the
Mortgagee, or an officer of any court empowered to do so, shall
execute and deliver to the accepted purchaser or purchasers a
good and sufficient instrument, or good and sufficient instru-
ments, granting, conveying, assigning and transferring all
estate, right, title and interest in and to the property and
rights sold. The Mortgagee is hereby irrevocably appointed the
true and lawful attorney-in-fact of the Mortgagor (coupled with
an interest), in its name and stead, to make all necessary
conveyances, assignments, transfers and deliveries of the Mort-
gaged Property and rights so sold and for that purpose the Mort-
gagee may execute all necessary instruments of conveyance,
assignment, transfer and delivery, and may substitute one or more
persons with like power, the Mortgagor hereby ratifying and
confirming all that said attorney-in-fact or such substitute or
substitutes shall lawfully do by virtue hereof. Nevertheless,
the Mortgagor, if so requested by the Mortgagee, shall ratify and
confirm any such sale or sales by executing and delivering to the
Mortgagee or to such purchaser or purchasers all such instruments
as may be advisable, in the judgment of the Mortgagee, for the
purpose, and as may be designated in such request. Any such sale
or sales made under or by virtue of this Article III, whether
made under the POWER OF SALE herein granted or under or by virtue
of judicial proceedings or of a judgment or decree of foreclosure
and sale, shall operate to divest all of the estate, right,
title, interest, claim and demand whatsoever, whether at law or
in equity, of the Mortgagor in and to the properties and rights
so sold, and shall be a perpetual bar both at law and in equity
against the Mortgagor and against any and all persons claiming or
who may claim the same or any part thereof from, through or under
the Mortgagor.
(vi) In the event of any sale made under or by
virtue of this Article III (whether made under the POWER OF SALE
provided for herein or under or by virtue of judicial proceedings
or of a judgment or decree of foreclosure and sale), the entire
Indebtedness, if not previously due and payable, immediately
thereupon shall, anything in any Note, the Indenture, any of the
Security Documents or in this Mortgage to the contrary notwith-
standing, become due and payable.
(vii) Upon any sale made under or by virtue of
this Article III (whether made under the POWER OF SALE provided
for herein or under or by virtue of judicial proceedings or of a
judgment or decree of foreclosure and sale), the Mortgagee may
bid for and acquire the Mortgaged Property or any part thereof or
interest therein and in lieu of paying cash therefor may make
settlement for the purchase price by crediting upon the Indebted-
ness of the Mortgagor secured by this Mortgage the net sales
price after deducting therefrom the expenses of the sale and the
costs of the action (including attorneys' fees and expenses) and
any other sums which the Mortgagee is authorized to deduct under
this Mortgage.
(viii) No recovery of any judgment by the Mort-
gagee and no levy of an execution under any judgment upon the
Mortgaged Property or any part thereof or upon any other property
of the Mortgagor shall effect in any manner or to any extent, the
lien of this Mortgage upon the Mortgaged Property or any part
thereof, or any liens, rights, powers or remedies of the
Mortgagee hereunder, but such Liens, rights, powers and remedies
of the Mortgagee shall continue unimpaired as before.
Section 3.3 Payment of Indebtedness After Default. Upon the
occurrence of any Event of Default and the acceleration of the maturity of
the Indebtedness as provided herein, if, at any time prior to foreclosure
sale, the Mortgagor or any other person tenders payment of the amount
necessary to satisfy the Indebtedness, the same shall constitute an evasion
of the payment terms hereof and/or the Indenture or the Security Documents
or the Notes and shall be deemed to be a voluntary prepayment hereunder, in
which case such payment must include the premium and/or fee required under
the prepayment provision, if any, contained herein or in the Notes, the
Security Documents and/or the Indenture. This provision shall be of no
force or effect if at the time that such tender of payment is made, the
Mortgagor has the right under this Mortgage, the Security Documents, the
Indenture or the Notes to prepay the Indebtedness without penalty or
premium.
Section 3.4 Intentionally Omitted.
Section 3.5 Mortgagor's Actions After Default. Effective after
the happening of any Event of Default and immediately upon the commencement
of any action, suit or other legal proceedings by the Mortgagee to obtain
judgment for the Indebtedness, or of any other nature in aid of the
enforcement of the Notes, the Indenture, the Security Documents or this
Mortgage, the Mortgagor hereby (i) waives the issuance and service of
process in any such action, suit or proceeding, provided, however, that
notice of such process is given to Mortgagor in accordance with Section 4.3
hereof, (ii) waives the right to trial by jury and (iii) if required by the
Mortgagee, consents to the appointment of a receiver or receivers with
respect to the Mortgaged Property and of all the earnings, revenues, rents,
issues, profits and income thereof.
Section 3.6 Control by Mortgagee After Default. Upon and
following the appointment of any receiver, liquidator or trustee of the
Mortgagor, or of any of its property, or of the Mortgaged Property or any
part thereof, the Mortgagee shall be entitled to possession and control of
all property now and hereafter covered by this Mortgage, and shall not be
deemed to be a mortgagee-in-possession as a result thereof.
ARTICLE IV
Miscellaneous
Section 4.1 Credits Waived. The Mortgagor will not claim or
demand or be entitled to any credit or credits against the Indebtedness for
so much of the taxes assessed against the Mortgaged Property or any part
thereof, as is equal to the tax rate applied to the amount due on this
Mortgage or any part thereof, and no deductions shall otherwise be made or
claimed from the taxable value of the Mortgaged Property or any part
thereof by reason of this Mortgage or the payment of the Indebtedness and
the performance of the Obligations secured hereby.
Section 4.2 No Releases. The Mortgagor agrees, that in the
event the Mortgaged Property or any part thereof or interest therein is
sold pursuant to the prior written consent of the Mortgagee as provided
herein, and the Mortgagee enters into any agreement with the then owner of
the Mortgaged Property extending the time of payment of the Indebtedness or
performance of the Obligations, or otherwise modifying the terms hereof,
the Mortgagor shall continue to be liable to pay the Indebtedness and
perform the Obligations according to the tenor of any such agreement unless
expressly released and discharged in writing by the Mortgagee.
Section 4.3 Notices. All notices, requests, demands and other
communications required or permitted to be given to or made upon any party
hereto shall be in writing and shall be personally delivered or sent by
registered or certified mail, postage prepaid, return receipt requested, or
by prepaid telex or telegram (with messenger delivery specified in the case
of a telegram), or by telecopier, or overnight air courier guaranteeing
next day delivery and shall be deemed to be delivered for purposes of this
Mortgage when delivered in person, upon acknowledged receipt if delivered
by telecopy or telex, or five (5) business days after depositing it in the
United States mail, registered or certified, with postage prepaid and
properly addressed, and the next business day after timely delivery to the
courier, if sent by overnight air courier guaranteeing next day delivery.
Unless otherwise specified in a notice sent or delivered in accordance with
the foregoing provisions of this Section 4.3, notices, demands,
instructions and other communications in writing shall be given to or made
upon the respective parties at their respective addresses (or to their
respective telex or telecopier numbers) indicated below:
If to Mortgagor:
Terex Corporation
500 Post Road East
Westport, Connecticut 06880
Attention: Marvin Rosenberg, Esq.
If to the Mortgagee:
United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Attn: Corporate Trust Department
Section 4.4 Binding Obligations. The provisions
and covenants of this Mortgage shall run with the land,
shall be binding upon the Mortgagor and shall inure to the
benefit of the Mortgagee, subsequent holders of this Mort-
gage, and the respective successors and assigns of the
foregoing. For the purpose of this Mortgage, the term
"Mortgagor" shall include and refer to the Mortgagor named
herein, any subsequent owners of the Mortgaged Property (or
any part thereof or interest therein), and their respective
heirs, executors, legal representatives, successors and
assigns. If there is more than one Mortgagor, all of their
undertakings hereunder shall be deemed to be joint and
several.
Section 4.5 Legal Construction. The creation of
this Mortgage, the perfection of the lien or security inter-
est thereof in the Mortgaged Property, and the rights and
remedies of the Mortgagee with respect to the Mortgaged
Property, as provided herein and by the laws of the state
wherein the Mortgaged Property is located, shall be governed
by and construed in accordance with the internal laws of the
state wherein the Mortgaged Property is located without
regard to principles of conflict of law. Otherwise, to the
extent permitted by applicable law, this Mortgage, the
Notes, the Security Documents, the Indenture and all other
obligations of the Mortgagor (including, without limitation,
the liability of the Mortgagor for any deficiency following
a foreclosure of all or any part of the Mortgaged Property)
shall be governed by and construed in accordance with the
internal laws of the State of New York without regard to
principles of conflicts of laws, such state being the state
where such documents were executed and delivered. Nothing
in this Mortgage, the Notes, the Indenture or in any other
agreement between the Mortgagor and the Mortgagee shall
require the Mortgagor to pay, or the Mortgagee to accept,
interest in an amount which would subject the Mortgagee to
any penalty or forfeiture under applicable law. All agree-
ments between the Mortgagor and the Mortgagee, whether now
existing or hereafter arising and whether oral or written,
are hereby expressly limited so that in no contingency or
event whatsoever shall the amount paid or agreed to be paid
by the Mortgagor for the use, forbearance or detention of
the money to be loaned under the Indenture, the Security
Documents, the Notes or any related document, or for the
payment or performance of any covenant or obligation con-
tained herein, in the Indenture, the Security Documents or
in the Notes exceed the maximum amount permissible under
applicable Federal or state usury laws. If under any cir-
cumstances whatsoever fulfillment of any such provision, at
the time performance of such provision shall be due, shall
involve exceeding the limit of validity prescribed by law,
then the obligation to be fulfilled shall be reduced to the
limit of such validity. If under any circumstances the
Mortgagor shall have paid an amount deemed interest by
applicable law, which would exceed the highest lawful rate,
such amount shall be applied to the reduction of the princi-
pal amount owing in respect of the Indebtedness and not to
the payment of interest, or if such excessive interest
exceeds such unpaid balance of principal and any other
amounts due hereunder or under the Notes, the Indenture or
any of the Security Documents, the excess shall be refunded
to the Mortgagor. All sums paid or agreed to be paid for
the use, forbearance or detention of the principal under any
extension of credit by the Mortgagee shall, to the extent
permitted by applicable law, and to the extent necessary to
preclude exceeding the limit of validity prescribed by law,
be amortized, prorated, allocated and spread from the date
of this Mortgage until payment in full of such sums so that
the actual rate of interest on account of such principal
amounts is uniform throughout the term hereof.
Section 4.6 Captions. The captions of the Sec-
tions of this Mortgage are for the purpose of convenience
only and are not intended to be a part of this Mortgage and
shall not be deemed to modify, explain, enlarge or restrict
any of the provisions hereof.
Section 4.7 Further Assurances. The Mortgagor
shall do, execute, acknowledge and deliver, at the sole cost
and expense of the Mortgagor, such further acts, deeds,
documents, instruments, conveyances, mortgages, assign-
ments, estoppel certificates, financing statements, fixture
filings, continuation statements, notices of assignment,
transfers and assurances as the Mortgagee may reasonably
require from time to time in order to assure, convey, grant,
assign, transfer and confirm unto the Mortgagee the rights
now or hereafter intended to be granted to the Mortgagee
under this Mortgage, any other instrument executed in con-
nection with this Mortgage or any other instrument under
which the Mortgagor may be or may hereafter become bound to
convey, mortgage or assign to the Mortgagee for carrying out
the intention of facilitating the performance of the terms
of this Mortgage. The Mortgagor hereby appoints the Mort-
gagee its attorney-in-fact to execute, acknowledge and
deliver for and in the name of the Mortgagor any and all of
the instruments mentioned in this Section 4.7 and this
power, being coupled with an interest, shall be irrevocable
as long as any part of the Indebtedness remains unpaid or
any Obligations remain unperformed, provided, however, that
the Mortgagee shall not exercise its powers as attorney-in-
fact without giving Mortgagor five (5) days' prior written
notice of its intention to do so.
Section 4.8 Severability. Any provision of this
Mortgage which is prohibited or unenforceable in any juris-
diction or prohibited or unenforceable as to any person or
entity shall, as to such jurisdiction, person or entity or
circumstance be ineffective to the extent of such prohibi-
tion or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceabili-
ty of such provisions in any other jurisdiction or as to any
other person or entity or circumstance.
Section 4.9 General Conditions.
(i) All covenants hereof shall be
construed as affording to the Mortgagee rights
additional to and not exclusive of the rights
conferred under the provisions of any other appli-
cable law. To the extent any specific provision
of this Mortgage and the provisions of any appli-
cable law conveying any beneficial rights to ei-
ther party directly conflict, the terms of this
Mortgage shall control.
\COH This Mortgage cannot be al-
tered, amended, modified or discharged orally and
no executory agreement shall be effective to modi-
fy or discharge it in whole or in part, unless it
is in writing and signed by the party against whom
enforcement of the modification, alteration,
amendment or discharge is sought.
(iii) No remedy herein conferred
upon or reserved to the Mortgagee is intended to
be exclusive of any other remedy or remedies, and
each and every such remedy shall be cumulative,
and shall be in addition to every other remedy
given hereunder or now or hereafter existing at
law or in equity or by statute. No delay or omis-
sion of the Mortgagee in exercising any right or
power accruing upon any Event of Default shall
impair any such right or power, or shall be con-
strued to be a waiver of any such Event of De-
fault, or any acquiescence therein. Acceptance of
any payment (other than a monetary payment in cure
of a monetary default) after the occurrence of an
Event of Default shall not be deemed a waiver of
or a cure of such Event of Default and every power
and remedy given by this Mortgage to the Mortgagee
may be exercised from time to time as often as may
be deemed expedient by the Mortgagee. Nothing in
this Mortgage or in the Notes shall limit or di-
minish the obligation of the Mortgagor to pay the
Indebtedness in the manner and at the time and
place therein respectively expressed.
(iv) No waiver by the Mortgagee or
the Mortgagor shall be effective unless it is in
writing and then only to the extent specifically
stated. Without limiting the generality of the
foregoing, any payment made by the Mortgagee for
insurance premiums, taxes, assessments, water
rates, sewer rentals, levies, fees or any other
charges affecting the Mortgaged Property shall not
constitute a waiver of the Mortgagor's default in
making such payments and shall not obligate the
Mortgagee to make any further payments.
(v) The Mortgagee shall have the
right to appear in and defend any action or pro-
ceeding, in the name and on behalf of the Mort-
gagor which the Mortgagee in its discretion deter-
mines may adversely affect the Mortgaged Property
or this Mortgage, provided, however, that the
Mortgagor shall have the right to defend any such
action with counsel reasonably acceptable to the
Mortgagee. In the event that any such action or
proceeding is one covered by title insurance,
defense thereof may be made by counsel to the
title company; if the proceeding is one covered by
insurance, defense thereof may be made by counsel
to the insurance company; notwithstanding the
foregoing, if the action is one not covered by in-
surance, the Mortgagor shall defend such action
with counsel reasonably satisfactory to the Mort-
gagee. The Mortgagee shall also have the right,
upon reasonable prior notice to Mortgagor (except
in the case of an emergency or other imminent
danger to the Mortgaged Property or Mortgagee's
interest therein, in which event no prior notice
shall be required), to institute any action or
proceeding which the Mortgagee in its reasonable
discretion determines should be brought to protect
its interest in the Mortgaged Property or its
rights hereunder. All costs and expenses incurred
by the Mortgagee in connection with any such
action or proceedings, including, without limita-
tion, attorneys' fees and expenses shall be paid
by the Mortgagor and shall be secured by this
Mortgage.
(vi) In the event of the passage
after the date of this Mortgage of any law of any
governmental authority having jurisdiction hereof
or of the Mortgaged Property, deducting from the
value of land for the purpose of taxation, affect-
ing any lien thereon or changing in any way the
laws for the taxation of mortgages or debts se-
cured by mortgages for federal, state or local
purposes, or the manner of the collection of any
such taxes, so as to affect this Mortgage, the
Mortgagor shall promptly pay to the Mortgagee, on
demand, all taxes, costs and charges for which the
Mortgagee is or may be liable as a result thereof;
provided that if said payment shall be prohibited
by law, render the Notes usurious or subject the
Mortgagee to any penalty or forfeiture, then and
in such event the Indebtedness shall, at the op-
tion of the Mortgagee, be immediately due and
payable.
(vii) The Mortgagor hereby ap-
points the Mortgagee as its attorney-in-fact in
connection with the personal property and fixtures
covered by this Mortgage, where permitted by law,
to file on its behalf any financing statements or
other statements in connection therewith with the
appropriate public office signed by the Mortgagee,
as secured party. This power being coupled with
an interest, shall be irrevocable so long as any
part of the Indebtedness remains unpaid.
Section 4.10 Multistate Real Estate Transaction.
The Mortgagor acknowledges that this Mortgage is one of a
number of other mortgages, deeds of trust and assignments of
leases and rents and other security documents (hereinafter
collectively the "Other Security Documents") which secure
the payment of the Indebtedness and performance of the
Obligations in whole or in part. The Mortgagor agrees that
the lien of this Mortgage shall, subject to the terms
hereof, be absolute and unconditional and shall not in any
manner be affected or impaired by any acts or omissions
whatsoever of the Mortgagee and, without limiting the
generality of the foregoing, the lien hereof shall not be
impaired by any acceptance by the Mortgagee of any security
for or guarantors upon any of the Indebtedness or by any
failure, neglect or omission on the part of the Mortgagee to
realize upon or protect any of the Indebtedness or any
collateral or security therefor. The lien hereof shall not
in any manner be impaired or affected by any release (except
as to the property released), sale, pledge, surrender,
compromise, settlement, renewal, extension, indulgence,
alteration, changing, modification or any disposition of any
of the Indebtedness or of any of the collateral or security
therefor. The Mortgagee may exercise any of the rights and
remedies under the Other Security Documents without first
exercising or enforcing any of its rights and remedies
hereunder, or may foreclose, exercise any power of sale, or
exercise any other right available under this Mortgage
without first exercising or enforcing any of its rights and
remedies under any or all of the Other Security Documents.
Such exercise of the Mortgagee's rights and remedies under
any or all of the Other Security Documents shall not in any
manner impair the Indebtedness or lien of this Mortgage, and
any exercise of the rights or remedies of the Mortgagee
hereunder shall not impair the lien of any of the Other
Security Documents or any of the Mortgagee's rights and
remedies thereunder. The Mortgagor specifically consents
and agrees that the Mortgagee may exercise its rights and
remedies hereunder and under the Other Security Documents
separately or concurrently and in any order that the Mort-
gagee may deem appropriate.
Section 4.11 Agreement Paramount. If and to the
extent that any of the provisions of this Mortgage conflict
or are otherwise inconsistent with any of the provisions of
the Indenture, the provisions of the Indenture shall pre-
vail. Notwithstanding the foregoing, the failure of the
Indenture to speak to or address a provision expressly set
forth in this Mortgage shall not be deemed to be such an
inconsistency or conflict.
IN WITNESS WHEREOF, this Mortgage has been duly
executed and delivered by the Mortgagor as of the date first
above written.
TEREX CORPORATION
By:____________________________
Name:
Title: [Vice] Presi-
dent
Attest:________________________
Name:
Title:
<PAGE>
STATE OF _____________________ )
) ss:
COUNTY OF ___________________ )
This instrument was acknowledged before me on this ______
day of ________________, 19___, by
________________________________________,
as [Vice] President of TEREX CORPORATION, a Delaware corporation.
____________________________________
Notary Public
My Commission Expires:
___________________________
[SEAL]
[Kentucky]
REAL ESTATE FEE & LEASEHOLD MORTGAGE, ASSIGNMENT OF RENTS, SECURITY AGREE-
MENT, FINANCING STATEMENT AND FIXTURE FILING
in the amount of
$250,000,000.00
FROM
CLARK MATERIAL HANDLING COMPANY, a Kentucky corporation,
having an office at:
c/o Terex Corporation
500 Post Road East
Westport, Connecticut 06880
(the "Mortgagor")
TO
UNITED STATES TRUST COMPANY OF NEW YORK, as collateral agent,
having an office at:
114 West 47th Street
New York, New York County, New York 10036
(the "Mortgagee")
This instrument was prepared by and,
after recording, please return to:
________________________________
Michael A. Woronoff, Esq.
Skadden, Arps, Slate, Meagher & Flom
300 South Grand Avenue
Los Angeles, California 90071
<PAGE>
REAL ESTATE FEE & LEASEHOLD MORTGAGE, ASSIGNMENT OF RENTS,
SECURITY AGREEMENT, FINANCING STATEMENT AND FIXTURE FILING
THIS REAL ESTATE FEE & LEASEHOLD MORTGAGE, ASSIGNMENT OF RENTS,
SECURITY AGREEMENT, FINANCING STATEMENT AND FIXTURE FILING (hereafter, as
amended, modified, replaced, consolidated and extended, this "Mortgage") is
made as of the 9th day of May, 1995 from CLARK MATERIAL HANDLING COMPANY, a
Kentucky corporation (the "Mortgagor"), a subsidiary of TEREX CORPORATION,
a Delaware corporation ("Terex"), with a mailing address of 500 Post Road
East, Westport, Connecticut 06880, to UNITED STATES TRUST COMPANY OF NEW
YORK, a New York corporation (the "Mortgagee"), as collateral agent, with a
mailing address of 114 West 47th Street, New York, New York County, New
York 10036.
R E C I T A L S:
1. The Mortgagor is the owner of a fee simple interest in Tract
I, a leasehold interest in Tract II, and a leasehold interest in Tract III
of the Real Property (as hereinafter defined).
2. Pursuant to a certain Indenture (the "Indenture") dated as of
even date herewith between Terex and the Mortgagee as trustee thereunder
(in such capacity, the "Indenture Trustee") for the benefit of the Holders
of the Notes (as defined below), Terex has obtained financing in the amount
of $250,000,000 (the "Loan") with a maturity date of May 15, 2002. All
capitalized terms used but not otherwise defined herein shall have the
meaning ascribed to them in the Indenture.
3. Mortgagor, as a subsidiary of Terex, will receive substantial
benefits from the Loan, and pursuant to Sections 10.7 and 10.8 of the
Indenture, has guaranteed the obligations of Terex under the Indenture and
the Notes.
4. To secure Mortgagor's obligations under the Guaranty and the
repayment of the Notes and performance of all terms and conditions of the
Indenture, the Mortgagor has agreed to create a first mortgage lien on the
Mortgaged Property herein described, in favor of the Mortgagee.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants herein contained, and (A) in order to secure (i) payment
of the indebtedness under the Indenture, as the same may be amended,
modified, restated, substituted and extended by the terms hereof,
aggregating $250,000,000 in principal amount (the various promissory notes
and securities evidencing said indebtedness and all supplements,
substitutions, extensions and renewals thereof are hereinafter referred to
collectively as the "Notes"), (ii) payment of the interest on such
indebtedness according to the terms of the Indenture and the Notes, (iii)
payment of all other sums payable to the Mortgagee pursuant to the terms of
this Mortgage, and (iv) payment of all other sums owed by the Mortgagor or
Terex to the Mortgagee, the Indenture Trustee or the Holders in accordance
with the terms of the Indenture or pursuant to the Notes, the Security
Documents or the Guaranty (the payment obligations described in the
foregoing clauses (i), (ii), (iii) and (iv) are hereinafter referred to
collectively as the "Indebtedness"); and (B) in order to secure the perfor-
mance of every obligation contained in the Indenture, the Notes, this
Mortgage, the Security Documents, the Guaranty and all other instruments
now or hereafter evidencing or securing any portion of the Indebtedness
(hereinafter referred to collectively as the "Obligations"), the Mortgagor
by these presents does hereby mortgage, warrant, grant a security interest
in, pledge, assign and transfer to the Mortgagee, and each of its
successors and assigns forever under and subject to the terms and condi-
tions hereof, all of the Mortgagor's estate, right, title and interest in
and to the following, whether now owned or held or hereafter acquired
(hereinafter collectively referred to as the "Mortgaged Property" or the
"Collateral"):
A. Mortgagor's fee and leasehold interest in that certain real
property (the "Real Property") more particularly described in Schedule A
attached hereto and made a part hereof by this reference; and
B. All of the buildings, structures and improvements (here-
inafter, collectively, together with all building equipment, the "Improve-
ments") now or hereafter located on the Real Property and all of its right,
title and interest, if any, in and to the streets and roads abutting the
Real Property to the center lines thereof, and strips and gores within or
adjoining the Real Property, the air space and right to use said air space
above the Real Property, all rights of ingress and egress by motor vehicles
to parking facilities on or within the Real Property, all easements now or
hereafter affecting the Real Property or the Improvements, all royalties
and all rights appertaining to the use and enjoyment of the Real Property
or the Improvements, including, without limitation, alley, drainage, crop,
timber, agricultural, horticultural, mineral, water, oil and gas rights;
and
C. All fixtures (the "Fixtures"), and all appurtenances and
additions thereto and substitutions or replacements thereof, now or
hereafter attached to the Real Property and/or the Improvements. Without
limiting the foregoing, to the extent permitted under applicable law, this
Mortgage shall be deemed to be a "security agreement" under the Uniform
Commercial Code of the State wherein the Real Property and improvements are
located (the "UCC"), and the Mortgagor hereby grants to the Mortgagee a
"security interest" (as defined in the UCC) in such portion of the
Mortgaged Property as constitutes personalty under the UCC and in all of
its present and future Fixtures and the Mortgagee shall have, in addition
to all rights and remedies provided herein, and in any other agreements,
commitments and undertakings made by the Mortgagor to the Mortgagee, all of
the rights and remedies of a "secured party" under the UCC; and
D. To the extent the same does not constitute Fixtures, all
equipment (as such term is defined in Article 9 of the UCC) now owned or
hereafter acquired and owned by the Mortgagor, which is used at or in
connection with the Improvements or the Real Property and is located
thereon or therein (including, without limitation, all machinery, produc-
tion equipment, furnishings, electronic data-processing and other office
equipment to the extent located on or in the Mortgaged Property), together
with all attachments, components, parts, equipment and accessories
installed thereon or affixed thereto and any and all extensions, additions,
improvements, betterments, renewals, substitutions and replacements to, for
or of any of the foregoing (collectively, the "Equipment"); and
E. All leases, lettings and licenses of the Real Property, the
Improvements and any other property or rights encumbered or conveyed
hereby, or any part thereof, now or hereafter entered into (each a "Lease,"
and collectively, the "Leases") and all right, title and interest of the
Mortgagor thereunder, including, without limitation, cash and securities
deposited thereunder, the right to receive and collect the rents, issues
and profits payable thereunder and the right to enforce, whether by action
at law or in equity or by other means, all provisions, covenants and
agreements thereof, including, without limitation, the right (i) to enter
upon and take possession of the Mortgaged Premises (as hereinafter defined)
for the purpose of collecting the said rents, issues and profits, (ii) to
dispossess by the usual summary proceedings (or any other proceedings of
the Mortgagee's selection) any tenant defaulting in the payment thereof to
the Mortgagee, (iii) to let the Mortgaged Premises, or any part thereof,
and (iv) subject to Mortgagor's license as hereinafter set forth, to apply
said rents, issues and profits, after payment of all necessary charges and
expenses, on account of the Indebtedness; and
F. Any and all permits, certificates, approvals and autho-
rizations, however characterized, related to the Real Property or the
Improvements, issued or in any way furnished, whether necessary or not for
the operation and use of the Real Property or the Improvements, including,
without limitation, operating licenses, franchise agreements, contracts,
contract rights, public utility deposits, building permits, certificates of
occupancy, environmental certificates, industrial permits and licenses and
certificates of operation; and
G. All unearned premiums, accrued, accruing or to accrue under
insurance policies related to the Real Property or the Improvements now or
hereafter obtained by the Mortgagor and all proceeds of the conversion,
voluntary or involuntary, of the Real Property, the Improvements and/or any
other property or rights encumbered or conveyed hereby, or any part
thereof, into cash or liquidated claims, including, without limitation,
proceeds of hazard and title insurance and all awards and compensation
heretofore and hereafter made to the present and all subsequent owners of
the Real Property, the Improvements and/or any other property or rights
encumbered or conveyed hereby by any governmental or other lawful authority
for the taking by eminent domain, condemnation or otherwise, of all or any
part of the Real Property, the Improvements and/or any other property or
rights encumbered or conveyed hereby or any easement therein, including,
but not limited to, awards for any change of grade of streets; and
H. All extensions, improvements, betterments, renewals, substi-
tutions and replacements of and all additions and appurtenances to the Real
Property, the Improvements and/or any other property or rights encumbered
or conveyed hereby, hereafter acquired by or released to the Mortgagor or
constructed, assembled or placed by the Mortgagor on the Real Property, the
Improvements and any other property or rights encumbered or conveyed
hereby, and all conversions of the security constituted thereby which,
immediately upon such acquisition, release, construction, assembling,
placement or conversion, as the case may be, and in each such case without
any further mortgage, conveyance, assignment or other act by the Mortgagor,
shall become subject to the lien of this Mortgage as fully and completely,
and with the same effect, as though now owned by the Mortgagor and
specifically described herein; and
I. All proceeds (as defined in the UCC) of the conversion,
voluntary or involuntary, of any of the foregoing into cash or liquidated
claims, including, without limitation, proceeds of insurance and condemna-
tion or other awards or payments with respect thereto, including interest
thereon.
TO HAVE AND TO HOLD the Mortgaged Property, with all powers of
sale and right of entry and possession (to the extent permitted by
applicable law), with all privileges and appurtenances to the same
belonging, with the right of possession thereof, unto the Mortgagee and its
successors and assigns, forever, and the Mortgagor hereby binds itself and
its successors and assigns to warrant and forever (but only until such time
as the Indebtedness has been paid in full and the Obligations have been
fully satisfied) defend title to the Mortgaged Property unto the Mortgagee
and its successors and assigns against the claim or claims of all parties
claiming or to claim the same, or any part thereof;
FOR THE PURPOSE OF SECURING THE OBLIGATIONS.
PROVIDED, HOWEVER, that if the Mortgagor shall pay or cause to be
paid indefeasibly in full all of the Indebtedness and if the Mortgagor
shall have kept, performed, observed and satisfied all of the Obligations,
then the Mortgagee shall deliver to the persons legally entitled thereto
all such documents, in recordable form, as shall be necessary to release
the Mortgaged Property from the lien of this Mortgage and to release to the
Mortgagor all deposits held by or on behalf of the Mortgagee, but otherwise
this Mortgage shall remain in full force and effect.
AND the Mortgagor represents, warrants, covenants and agrees as
follows:
ARTICLE I
Representations and Warranties of the Mortgagor
Section 1.1 Title to the Mortgaged Property.
(i) The right, title and interest of the Mortgagor constitutes a good,
marketable and insurable (a) fee simple estate in Tract I of the Mortgaged
Property, (b) leasehold estate in Tract II of the Mortgaged Property, and
(c) leasehold estate in Tract III of the Mortgaged Property, subject to no
Liens, except for Liens permitted pursuant to Section 4.12 of the Indenture
(collectively, the "Permitted Liens"). (ii) This Mortgage creates and
constitutes a valid and enforceable lien on the Mortgaged Property, and, to
the extent any of the Mortgaged Property shall consist of personalty (when
taken together with any fixture filings and financing statements delivered
in connection herewith and filed in accordance with the UCC), a perfected
security interest in such Mortgaged Property, subject only to the Permitted
Liens. (iii) The Mortgagor has full power and lawful authority to encumber
the Mortgaged Property in the manner and form set forth hereunder. (iv)
The Mortgagor owns all Fixtures and Equipment now or hereafter comprising
part of the Mortgaged Property, subject only to the matters set forth in
this Section. (v) This Mortgage is and will remain a valid, enforceable
and continuing first priority Lien on the Mortgaged Property subject only
to the Permitted Liens. (vi) The Mortgagor will preserve such title as set
forth herein and in the Indenture, and will forever (but only until such
time as the Indebtedness has been paid in full and the Obligations have
been fully satisfied) warrant and defend the validity and priority of the
lien hereof against the claims of all persons and parties whatsoever.
Section 1.2 Mortgage Authorized. The execution and delivery of
this Mortgage, the Guaranty, the Indenture and each other document or
instrument executed or delivered by Mortgagor in connection with any of the
foregoing or the Notes have been duly authorized by all necessary corporate
action of the Mortgagor and there is no provision in the articles or
certificate of incorporation or by-laws of the Mortgagor requiring further
consent for such action by any other entity or person. The Mortgagor is
duly organized and validly existing under the laws of the state of its
formation, and has (i) all necessary licenses, authorizations, registra-
tions, permits and/or approvals and (ii) full power and authority to own or
lease its properties and carry on its business as presently conducted, and
the execution and delivery by it of, and performance of the Obligations
under this Mortgage, the Guaranty, the Indenture and each other document or
instrument executed or delivered by Mortgagor in connection with any of the
foregoing or the Notes will not result in the Mortgagor being in default
under any provision of its articles or certificate of incorporation or by-
laws or of any mortgage, lease, credit or other agreement to which it is a
party or which affects it or the Mortgaged Property, or any part thereof.
Section 1.3 Operation of the Mortgaged Property. (i) The
Mortgagor has all certificates, licenses, authorizations, registrations,
permits and/or approvals and all required environmental permits necessary
for the operation of the Mortgaged Property or any part thereof, the lack
of which would have a Material Adverse Effect (as defined below), all of
which as of the date hereof are in full force and effect and are not, to
the knowledge of the Mortgagor, subject to any revocation, amendment,
release, suspension, forfeiture or the like. (ii) The Mortgaged Property
is served by all easements and utility lines and connections reasonably
required or necessary for the current use thereof. (iii) The Mortgaged
Property has adequate access to public roadways. As used in this Mortgage,
"Material Adverse Effect" shall mean a material adverse effect, singly or
in the aggregate, on (i) the properties, business, prospects, operations,
earnings, assets, liabilities or condition (financial or otherwise) of
Mortgagor or Terex, taken as a whole, (ii) the ability of Mortgagor to
perform its obligations under this Mortgage, the Guaranty or the Indenture,
(iii) the perfection or priority of the Lien of this Mortgage, or (iv) the
value or utility of the Mortgaged Property, taken as a whole.
ARTICLE II
Covenants of the Mortgagor
Section 2.1 Payment of Indebtedness and Performance of
Covenants. The Mortgagor shall (a) duly and punctually pay or cause to be
paid each payment of the principal of and interest on the Indebtedness and
any prepayments, late charges, premiums and fees provided for in the Inden-
ture and all other payment Obligations secured by this Mortgage at the time
and in the manner provided in this Mortgage, the Guaranty, the Indenture
and each other document or instrument executed or delivered by Mortgagor in
connection with any of the foregoing or the Notes, and (b) duly and
punctually perform and observe all of the terms, provisions, conditions,
covenants and agreements on the Mortgagor's part to be performed or
observed as provided in the Notes, this Mortgage, the Guaranty, the
Indenture and each other document or instrument executed or delivered by
Mortgagor in connection with any of the foregoing.
Section 2.2 Maintenance of the Mortgaged Property. (i) The
Mortgagor shall maintain the Mortgaged Property in a commercially
reasonable manner for the operation thereof and in accordance with the
requirements of the Indenture, and shall comply (and shall use commercially
reasonable efforts to cause any tenants to comply) with all federal, state
and local laws, statutes, regulations, ordinances, rules, codes, rulings,
judgments, decrees, orders, injunctions and other requirements of every
government or public agency having or claiming jurisdiction over the Mort-
gaged Property (and all permits, certificates, consents, licenses,
variances, orders, exemptions, approvals and authorizations issued thereby)
as the same relate to the Mortgaged Property and the use and occupancy
thereof and all covenants, conditions, restrictions, declarations and ease-
ments that affect or are binding upon the Mortgaged Property (each, a
"Requirement"). The Mortgagor shall permit the Mortgagee to enter upon the
Mortgaged Property and inspect the same at all reasonable hours and with
reasonable prior notice. The Mortgagor shall not, without the prior
written consent of the Mortgagee, threaten, commit, permit or suffer to
occur any alterations or changes to the Mortgaged Property or any part
thereof other than alterations or changes that do not materially adversely
affect the value or utility of the Mortgaged Property; provided, however,
that Fixtures owned by the Mortgagor may be removed from the Improvements
if such Fixtures are obsolete or if the Mortgagor concurrently therewith
replaces the same with items which do not reduce the value or utility of
the Mortgaged Property or the Improvements, free of any lien, charge or
claim superior to the lien and/or security interest created thereby.
(ii) Nothing in this Section 2.2 shall require
the Mortgagor to comply with any Requirement so long as (a) the
failure so to do shall not otherwise apart from the provisions of
this Section 2.2 (i) be an Event of Default under this Mortgage,
(b) the failure so to do shall not result in the voiding,
rescission or invalidation of the certificate of occupancy or any
other material license, certificate, permit or registration in
respect of the Mortgaged Property essential to the conduct of the
Mortgagor's business at the Mortgaged Property, (c) the failure
so to do shall not prevent, hinder or materially interfere with
the lawful use and occupancy of the Mortgaged Property or any
material portion thereof for the use and occupancy which the
Mortgagor reasonably determines is most advantageous to its busi-
ness, (d) the failure so to do shall not void or invalidate or
make unavailable any insurance required by this Mortgage to be
maintained by the Mortgagor in respect of the Mortgaged Property
and (e) the Mortgagor in good faith and at its own expense shall
contest the Requirement or the validity thereof by appropriate
legal proceedings, which proceedings must operate to prevent (l)
the occurrence of any of the events described in the preceding
clauses (a) through (d) of this paragraph (ii) and (2) the
collection or other realization of any material sums due or
payable as a consequence of the Requirement, the sale of any lien
arising in respect of the Requirement, and/or the sale or
forfeiture of the Mortgaged Property, any part thereof or
interest therein, or the sale of any lien connected therewith;
provided that during such contest the Mortgagor shall, at the
option of the Mortgagee, either establish adequate reserves in
accordance with generally accepted accounting principles or
provide security reasonably satisfactory to the Mortgagee (in
amount and form) assuring the discharge of the Mortgagor's
obligations hereunder and of any interest, charge, fine, penalty,
fee or expense arising from or incurred as a result of such con-
test, and, for purposes herein, the Mortgagee agrees that the
deposit of cash or an irrevocable letter of credit drawn on a
bank reasonably acceptable to Mortgagee shall be a satisfactory
form of security; and provided, further, that if at any time
compliance with any obligation imposed upon the Mortgagor by the
Requirement shall become necessary to prevent (l) the occurrence
of any of the events described in clauses (a) through (d) of this
paragraph (ii) or (2) the delivery of a deed conveying the
Mortgaged Property or any portion thereof or interest therein
because of noncompliance, or the sale of a lien in connection
therewith, or (3) the imposition of any material penalty, fine,
charge, fee, cost or expense on the Mortgagee, then the Mortgagor
shall comply with the Requirement in sufficient time to prevent
the occurrence of any such events, the delivery of such deed or
the sale of such lien, or the imposition of such material
penalty, fine, charge, fee, cost or expense on the Mortgagee.
Section 2.3 Insurance; Coverage. (i) The Mortgagor shall keep
the Mortgaged Property insured against (a) loss and damage by fire,
casualty and such other hazards as may be reasonably specified by the Mort-
gagee, including, without limitation, those hazards which are covered by
the standard extended coverage all-risk insurance policy, (b) damage by
vandalism and/or malicious mischief, (c) explosion insurance in respect of
any boilers or similar apparatus located on the Mortgaged Property and (d)
such other hazards as may be reasonably specified by the Mortgagee. Such
insurance shall be on forms and by companies reasonably satisfactory to the
Mortgagee. The amounts and coverage limits of each policy of insurance
required pursuant to this Section 2.3 shall be sufficient to prevent the
Mortgagor or the Mortgagee from becoming a co-insurer of any partial loss
under the applicable policies and otherwise satisfactory to the Mortgagee,
but in no event less than the actual replacement value of such Mortgaged
Property as determined by the Mortgagor in accordance with generally
accepted insurance practice and approved by the Mortgagee, or at the
Mortgagee's option, which shall be exercised not more frequently than
annually, as determined at the Mortgagor's expense by the insurer or an
expert appraiser approved by the Mortgagee. Notwithstanding anything to
the contrary contained herein, Mortgagor shall be permitted to maintain
self-insurance for all insurance required to be maintained hereby, provided
that such self-insurance is consistent with Mortgagor's prior practice and
has been heretofore adequately disclosed to Mortgagee.
(ii) The Mortgagor shall maintain in full force
liability insurance against claims of bodily injury, death or
property damage occurring on, in or about the Mortgaged Property,
with policy limits and deductibles in such amounts as from time
to time would be maintained by a prudent operator of property
similar in use and configuration to the Mortgaged Property and
located in the locality where the Mortgaged Property is located
(which policy limits and deductibles shall be reasonably satis-
factory to the Mortgagee), which policies of insurance shall name
the Mortgagee as an additional insured. All insurance policies
and endorsements required pursuant to this Section 2.3 shall be
fully paid for, nonassessable and contain such provisions (in-
cluding, without limitation, inflation guard or replacement cost
endorsements) and expiration dates and shall be in such form and
amounts and issued by such insurance companies with a rating of
"A VIII" or better as established by Best's Rating Guide (or an
equivalent rating with such other publication of a similar nature
as shall be in current use and as approved by the Mortgagee), or
such other companies, as shall be approved by the Mortgagee.
(iii) The Mortgagor shall additionally keep the
Mortgaged Property insured against loss by flood if the Mortgaged
Property is located in an area identified by the Secretary of
Housing and Urban Development as an area having special flood
hazards and which has been so identified under the Flood Insur-
ance Act of 1968 and the Flood Disaster Protection Act of 1973,
as the same may have been or may hereafter be amended or modified
(and any successor acts thereto) in amounts reasonably acceptable
to the Mortgagee, but in no event more than what is available
under such laws.
(iv) In all events and without limitation on the
foregoing, the Mortgagor will deliver the policy or policies (or
true copies or certificates thereof) of all such insurance re-
quired under this Mortgage to the Mortgagee, which policy or
policies shall be endorsed to name the Mortgagee as a mortgagee-
loss payee thereunder, with loss payable to the Mortgagee without
contribution or assessment under a New York Standard Mortgagee
clause or similar clause, and shall provide the Mortgagee with no
less than thirty (30) days' notice from the insurer prior to the
expiration, cancellation or termination (for any reason whatsoev-
er) of any such policy.
(v) Insurance required hereunder may be carried
by the Mortgagor pursuant to blanket policies, provided that all
other requirements herein set forth are satisfied and that the
underlying policy in respect of the Mortgaged Property is deliv-
ered to the Mortgagee as herein required. In the event that the
Mortgagor fails to keep the Mortgaged Property insured as
required hereunder, the Mortgagee may, but shall not be obligated
to, obtain insurance and pay the premiums therefor and the Mort-
gagor shall, on demand, reimburse the Mortgagee for all sums,
advances and expenses incurred in connection therewith and such
sums, advances and expenses shall be deemed a part of the
Indebtedness secured hereby and shall bear interest at the
Default Rate (as defined in Section 2.13 of this Mortgage) until
reimbursed.
Section 2.4 Insurance; Proceeds. The Mortgagor shall give the
Mortgagee prompt notice of any material loss covered by insurance and the
Mortgagee shall have the right to join the Mortgagor in adjusting any loss
during the continuance of an Event of Default. The proceeds of insurance
paid on account of any damage or destruction to the Mortgaged Property or
any part thereof shall be paid over to the Mortgagee to be applied as
hereinafter provided. Notwithstanding anything to the contrary contained
herein or in any provision of applicable law, the proceeds of insurance
policies coming into the possession of the Mortgagee shall not be deemed
trust funds.
Section 2.5 Restoration of the Mortgaged Property. In the event
of any material damage or destruction of the Mortgaged Property, or any
part thereof, as a result of casualty, condemnation, taking or other cause,
the Mortgagor shall give prompt written notice thereof to the Mortgagee.
In the event that the Mortgagee, in accordance with Section 2.6 hereof,
makes available to the Mortgagor the insurance proceeds received by it, if
any (or in the event of condemnation or taking, the award, if any, arising
out of such condemnation or taking), the Mortgagor shall with reasonable
promptness commence and diligently continue to perform the repair,
restoration and rebuilding of the Mortgaged Property (hereinafter, the
"Work") so as to restore the Mortgaged Property in full compliance with all
legal requirements and so that the Mortgaged Property shall, to the extent
reasonably practicable, be at least equal in value and general utility as
it was immediately prior to the damage or destruction. If the Work to be
done is materially structural (as reasonably determined by the Mortgagee)
or if the cost of the Work, as estimated by the Mortgagee, shall exceed
$_________________ (hereinafter, collectively, "Major Work"), the Mortgagor
shall, prior to the commencement of the Major Work, furnish to the Mort-
gagee for its approval not to be unreasonably withheld or delayed: (i)
complete plans and specifications for the Major Work, with reasonably
satisfactory evidence of the approval thereof (a) by all governmental
authorities whose approval is required for any or all of the Major Work,
(b) by all parties to or having an interest in the leases, if any, of any
portion of the Mortgaged Property whose approval is required, and (c) by an
architect or reputable contractor or construction manager or engineer
satisfactory to the Mortgagee (hereinafter, the "Architect") and which
shall be accompanied by the Architect's signed estimate, bearing the
Architect's seal, of the Architect's good faith estimate of the entire cost
of completing the Major Work; (ii) certified or photostatic copies of all
permits and approvals required by law in connection with the commencement
and/or the conduct of the Work; and (iii) such other documents, instruments
and certificates as Mortgagee may reasonably request. The Mortgagor shall
not be entitled to receive any of the insurance proceeds until the
Mortgagor shall have complied with the applicable requirements referred to
in this Section 2.5. After commencing any Major Work the Mortgagor shall
perform such Major Work diligently and in good faith in accordance with the
plans and specifications referred to in this Section 2.5.
Section 2.6 Restoration; Advances. Insurance proceeds received
by the Mortgagee (or, in the case of condemnation or taking, the award
therefor) less the cost, if any, to the Mortgagee of recovery of the same
and of paying out such proceeds (including reasonable attorneys' fees and
expenses and administrative costs), shall be applied by the Mortgagee to
reduce the Indebtedness; provided, however, that so long as no Event of
Default hereunder has occurred and is continuing, the Mortgagor shall have
the right to cause Mortgagee to apply such net insurance proceeds to the
payment of the cost of the Work in accordance with the terms of this
Section 2.6. Notwithstanding anything to the contrary contained herein,
and so long as no Event of Default hereunder has occurred and is
continuing, Mortgagor shall have the right, upon written notice to
Mortgagee, to not perform the Work, in which event the net amount of any
insurance proceeds received by Mortgagor or Mortgagee (or, in the case of
condemnation or taking, the award therefor) shall be either (i) applied to
repay the Indebtedness, or (ii) invested in assets related to the business
of the Mortgagor, Terex or any of its other Restricted Subsidiaries. If
Mortgagor elects (to the extent such an election is permitted hereby) to
perform or cause the Work to be performed, and the Work is not Major Work,
insurance proceeds will be paid in a lump sum to the Mortgagor. If
Mortgagor elects (to the extent such an election is permitted hereby) to
perform or cause the Work to be performed, and the Work is Major Work, the
proceeds shall be paid out from time to time, but not more often than
monthly, to the Mortgagor as said Major Work progresses, but subject to the
following conditions:
(i) an Architect shall be in charge of such Major
Work;
(ii) each request for payment shall be made on at
least seven (7) days' prior written notice to the Mortgagee and
shall be accompanied by (a) a certificate of the chief financial
officer or other authorized officer of the Mortgagor specifying
the party to whom (and for the account of which) such payment is
to be made, (b) copies of lien releases (in form and substance
customary and appropriate for the jurisdiction in which the
Mortgaged Property is located) from each party to whom payment is
to be made, and (c) a certificate of an Architect if an Architect
is required under Section 2.5 above, otherwise a certificate of
the chief financial officer or other authorized officer of the
Mortgagor stating (x) that all of the Work completed has been
done substantially in compliance with the approved plans and
specifications, if any, required under said Section 2.5, and in
accordance with all provisions of law; (y) the sum requested is
justly required to reimburse the Mortgagor for payments by the
Mortgagor to, or is justly due to, the contractor, subcon-
tractors, materialmen, laborers, engineers, architects or other
persons rendering services or materials for the Work (giving a
brief description of any such services and materials), and that
when added to all sums, if any, previously paid out by the Mort-
gagee does not exceed the cost of the Work done to the date of
such certificate and (z) that the amount of such proceeds re-
maining in the hands of the Mortgagee will be sufficient on
completion of the Work to pay for the same in full (giving in
such reasonable detail as the Mortgagee may require an estimate
of the cost of such completion) or that, if the proceeds are
inadequate, that a sufficient reserve has been created in
accordance with generally accepted accounting principles to
provide for the payment of such deficiency;
(iii) each request for payment shall be accom-
panied by sworn statements and partial or final waivers of liens,
as may be appropriate, or if unavailable, lien bonds, satisfacto-
ry to the Mortgagee covering that part of the Work previously
paid for, if any, and by a search prepared by a title insurance
company or a licensed abstractor reasonably satisfactory to the
Mortgagee or by other evidence satisfactory to the Mortgagee,
that there has not been filed with respect to the Mortgaged
Property any mechanic's lien or other lien or instrument for the
retention of title in respect of any part of the Work not dis-
charged of record and that there exist no encumbrances on or
affecting the Mortgaged Property (or any part thereof) other than
Permitted Liens;
(iv) no Event of Default shall have occurred and
be continuing; and
(v) the request for any payment after the Work
has been completed shall be accompanied by certified copies of
all certificates, permits, licenses, waivers and/or other docu-
ments required by law which are customarily issued in the state
and municipality in which the Mortgaged Property is located (or
pursuant to any agreement binding upon the Mortgagor or affecting
the Mortgaged Property or any part thereof) to render occupancy
or use of the Mortgaged Property legal.
Upon completion of any Work and payment in full therefor, and
provided that no Event of Default has occurred and is continuing, the Mort-
gagee shall deliver any excess proceeds to the Mortgagor; provided,
however, that nothing herein contained shall prevent the Mortgagee from
applying at any time the whole or any part of such proceeds to the curing
of any Event of Default.
Section 2.7 Restoration by the Mortgagee. Without limitation on
the foregoing, in the event the Mortgagee, in accordance with the
provisions of Section 2.6 hereof, is making available to the Mortgagor
insurance proceeds (if any) recovered by the Mortgagee, and if there is an
Event of Default which is continuing, then in addition to all other rights
herein set forth and notwithstanding anything to the contrary contained
herein, the Mortgagee, or any lawfully appointed receiver of the Mortgaged
Property, may at its option after giving the Mortgagor ten (10) days'
written notice of such Event of Default, perform or cause to be performed
such repair, restoration and rebuilding, and may take such other steps as
it deems reasonably advisable to perform such repair, restoration and
rebuilding, and upon twenty-four (24) hours' prior written notice to the
Mortgagor, the Mortgagee may enter upon the Mortgaged Property to the
extent reasonably necessary or appropriate for any of the foregoing
purposes, and the Mortgagor hereby waives, for the Mortgagor and all others
holding under the Mortgagor, any claim against the Mortgagee and/or such
receiver arising out of anything done by the Mortgagee or such receiver
pursuant hereto, and the Mortgagee may, at its option, apply insurance
proceeds, if any (without the need by the Mortgagee to fulfill any other
requirements of this Mortgage), to reimburse the Mortgagee and/or such
receiver for all amounts expended or incurred by either of them in connec-
tion with the performance of such Work, and any excess costs shall be paid
by the Mortgagor to the Mortgagee upon demand, and such payment of excess
costs shall be deemed part of the Indebtedness secured hereby and shall
bear interest at the Default Rate until paid.
Section 2.8 Intentionally Deleted.
Section 2.9 Taxes and Other Charges.
(i) The Mortgagor shall pay and discharge by the
last day payable without penalty or premium all taxes of every
kind and nature, water rates, sewer rents and assessments,
levies, permits, inspection and license fees and all other
charges imposed upon or assessed against the Mortgaged Property
or any part thereof or upon the revenues, rents, issues, income
and profits of the Mortgaged Property or arising in respect of
the occupancy, use or possession thereof (excluding any taxes in
the nature of income taxes). To the extent any such items are
payable in installments, the Mortgagor may elect to pay any such
item in installments, but each payment shall be made before any
penalty accrues. The Mortgagor shall exhibit to the Mortgagee
within a reasonable period of time after request and after the
same are required to be paid as specified herein, validated
receipts or other evidence reasonably satisfactory to the Mort-
gagee showing the payment of such taxes, assessments, water
rates, sewer rents, levies, fees and/or other charges. Should
the Mortgagor default in the payment of any of the foregoing
taxes, assessments, water rates, sewer rents, levies, fees or
other charges, the Mortgagee may, but shall not be obligated to,
pay the same or any part thereof and the Mortgagor shall reim-
burse the Mortgagee for all amounts so paid and such amounts
shall be deemed a part of the Indebtedness secured hereby and
shall bear interest at the Default Rate until reimbursed.
(ii) Nothing in this Section 2.9 shall require
the payment or discharge of any obligation imposed upon the
Mortgagor by subsection (i) of this Section 2.9 so long as the
Mortgagor shall in good faith and at its own expense contest the
same or the validity thereof by appropriate legal proceedings
which proceedings must operate to prevent the collection thereof
or other realization thereon, the sale of the lien thereof and
the sale or forfeiture of the Mortgaged Property or any part
thereof, to satisfy the same; provided that during such contest
the Mortgagor shall, at the option of the Mortgagee, establish
reserves in accordance with generally accepted accounting
principles or deposit cash or an irrevocable letter of credit
drawn on a bank reasonably acceptable to the Mortgagee, assuring
the discharge of the Mortgagor's obligation hereunder and of any
additional interest charge, penalty or expense arising from or
incurred as a result of such contest; and provided, further, that
if at any time payment of any obligation imposed upon the
Mortgagor by subsection (i) of this Section 2.9 shall become
necessary to prevent the delivery of a tax deed or similar
instrument conveying the Mortgaged Property or any portion
thereof or the sale of the tax lien therefor because of non-pay-
ment, or the imposition of any penalty, which is not reserved or
secured against, or cost on the Mortgagee not paid by the
Mortgagor, then the Mortgagor shall pay the same in sufficient
time to prevent the delivery of such tax deed or the sale of such
lien, or the imposition of such penalty or cost on the Mortgagee.
(iii) The Mortgagor shall pay when due all (a)
premiums for fire, hazard and other insurance required to be
maintained by the Mortgagor on the Mortgaged Property pursuant to
the terms of Section 2.3 hereof, (b) title insurance premiums, if
any, relating to the insurance to be obtained on the Mortgaged
Property in connection with this Mortgage, and (c) any and all
other costs, expenses and charges expressly required to be paid
hereunder.
Section 2.10 Mechanics' and Other Liens.
(i) To the extent that the following are not
Permitted Liens, within sixty (60) days from the date of the
filing of any such Lien, the Mortgagor shall pay, bond or dis-
charge of record, from time to time, forthwith, all Liens on the
Mortgaged Property or any part thereof, and, in general, the
Mortgagor forthwith shall do, at the cost of the Mortgagor and
without expense to the Mortgagee, everything necessary to fully
preserve the first priority Lien of this Mortgage. In the event
that the Mortgagor fails in a timely manner to make payment in
full of, bond or discharge, any such Liens, as required under the
preceding sentence, the Mortgagee may, but shall not be obligated
to, make payment, bond, or discharge such Liens, in order fully
to preserve the Lien of this Mortgage and the collateral value of
the Mortgaged Property, and the Mortgagor shall reimburse the
Mortgagee for all sums so expended and such sums shall be deemed
a part of the Indebtedness secured hereby and shall bear interest
at the Default Rate until reimbursed.
(ii) Nothing in this Section 2.10 shall require
the payment or discharge of any obligation imposed upon the
Mortgagor by subsection (i) of this Section 2.10 so long as the
Mortgagor shall bond or discharge any Lien on the Mortgaged
Property arising from such obligation or in good faith and at its
own expense contest the same or the validity thereof by appro-
priate legal proceedings which proceedings must operate to
prevent the collection thereof or other realization thereon, the
sale of the Lien thereof and the sale or forfeiture of the Mort-
gaged Property or any part thereof, to satisfy the same; provided
that during such contest the Mortgagor shall, at the option of
the Mortgagee, either (at the option of the Mortgagor) establish
an adequate reserve in accordance with generally acceptable
accounting principles or provide security satisfactory to the
Mortgagee, assuring the discharge of the Mortgagor's obligation
hereunder and of any additional interest charge, penalty or
expense arising from or incurred as a result of such contest,
which security can take the form of cash or an irrevocable letter
of credit drawn on a bank reasonably acceptable to the Mortgagee;
and provided, further, that if at any time payment of any obli-
gation imposed upon the Mortgagor by subsection (i) of this
Section 2.10 shall become necessary (a) to prevent the sale or
forfeiture of the Mortgaged Property or any portion thereof
because of non-payment, or (b) to protect the Lien of this Mort-
gage, then the Mortgagor shall pay the same in sufficient time to
prevent the sale or forfeiture of the Mortgaged Property or to
protect the Lien of this Mortgage, as the case may be.
Section 2.11 Condemnation Awards. The Mortgagor, immediately
upon obtaining knowledge in any manner of the institution of any
proceedings for the condemnation of the Mortgaged Property or any portion
thereof which could have a Material Adverse Effect, will notify the
Mortgagee of such proceedings. The Mortgagee may participate in any such
proceedings, and the Mortgagor from time to time will deliver to the
Mortgagee all instruments requested by it to permit such participation.
The Mortgagor and the Mortgagee shall both act reasonably and expeditiously
in connection with such proceedings. All awards and compensation payable
to the Mortgagor as a result of any condemnation or other taking or
purchase in lieu thereof of the Mortgaged Property or any part thereof are
hereby assigned to and shall be paid to the Mortgagee, and shall be treated
in accordance with the provisions of Sections 2.5 and 2.6 hereof. The
Mortgagor hereby authorizes the Mortgagee to collect and receive such
awards and compensation, to give proper receipts and acceptances therefor
and to apply the same in accordance with the provisions of Sections 2.5 and
2.6 of this Mortgage. The Mortgagor, upon request by the Mortgagee, shall
make, execute and deliver any and all instruments requested for the purpose
of confirming the assignment of the aforesaid awards and compensation to
the Mortgagee free and clear of any Liens, charges or encumbrances of any
kind or nature whatsoever.
Notwithstanding anything to the contrary in this Section 2.11,
the Mortgagor shall continue to pay the Indebtedness and perform the
Obligations at the time and in the manner provided for in the Notes, the
Security Documents and the Indenture. If the Mortgaged Property or any
portion thereof is sold, through foreclosure or otherwise, prior to the re-
ceipt by the Mortgagee of such payment, the Mortgagee shall have the right,
whether or not a deficiency judgment shall have been sought, recovered or
denied, to receive said payment, or a portion thereof sufficient to pay the
Indebtedness, whichever is less. The Mortgagor shall file and prosecute
its claim or claims for any such payment in good faith and with due
diligence and cause the same to be collected and paid over to the
Mortgagee, in the name of the Mortgagor or otherwise, to collect and give
receipt for any such payment and to file and prosecute such claim or
claims, and although it is hereby expressly agreed that the same shall not
be necessary in any event, the Mortgagor shall, upon demand of the Mort-
gagee, make, execute and deliver any and all assignments and other instru-
ments sufficient for the purpose of assigning any such payment to the
Mortgagee, free and clear of any encumbrances of any kind or nature whatso-
ever.
Section 2.12 Costs of Defending and Upholding the Lien. If any
action or proceeding is commenced to which action or proceeding the
Mortgagee is made a party or in which it becomes necessary to defend or
uphold the first priority Lien of this Mortgage, the Mortgagor shall reim-
burse the Mortgagee for all reasonable expenses (including, without limita-
tion, reasonable attorneys' fees and expenses) incurred by the Mortgagee in
any such action or proceeding and such expenses shall be deemed a part of
the Indebtedness secured hereby and shall bear interest at the Default Rate
until reimbursed. To the extent the subject of the action is covered by
title insurance, the Mortgagee may be defended by the title insurance
counsel reasonably satisfactory to it; if otherwise covered by insurance,
the Mortgagee may be defended by counsel for the insurance company reason-
ably satisfactory to the Mortgagee. Notwithstanding the foregoing, in an
action not covered by insurance, the Mortgagor may defend with counsel
reasonably satisfactory to the Mortgagee.
Section 2.13 Additional Advances and Disbursements. The
Mortgagor shall pay by the last day payable without premium or penalty all
payments and charges on all liens, encumbrances, ground and other leases
and security interests which affect or may affect or attach or may attach
to the Mortgaged Property, or any part thereof, and in default thereof, the
Mortgagee shall have the right, but shall not be obligated, to pay upon
notice to the Mortgagor, if practicable in order fully to preserve the
first priority Lien of this Mortgage and the collateral value of the Mort-
gaged Property, such payments and charges and the Mortgagor shall reimburse
the Mortgagee for any amounts so paid. In addition, upon the occurrence of
any material default of the Mortgagor in the performance of any other
terms, covenants, conditions or obligations by it to be performed hereunder
or under any such Lien, encumbrance, lease or security interest and after
the expiration of all applicable notice and cure periods, if any, the
Mortgagee shall have the right, but shall not be obligated, to cure such
default in the name and on behalf of the Mortgagor. All sums advanced and
reasonable expenses incurred at any time by the Mortgagee pursuant to this
Section 2.13 or as otherwise provided under the terms and provisions of
this Mortgage or under applicable law shall bear interest from the date
that such sum is advanced or expenses incurred, to and including the date
of reimbursement, computed at an interest rate per annum (the "Default
Rate") at all times equal to the highest default rate provided in the
Indenture, but in no event to exceed the maximum rate allowed by law. All
interest payable hereunder shall be computed on the basis of a 360-day year
over the actual number of days elapsed. Any such amounts advanced or in-
curred by the Mortgagee, together with the interest thereon, shall be
payable on demand, shall, until paid, be secured by this Mortgage as a Lien
on the Mortgaged Property and shall be deemed a part of the Indebtedness.
Section 2.14 Costs of Enforcement. The Mortgagor agrees to bear
and pay all expenses (including, without limitation, reasonable attorneys'
fees and expenses) of or incidental to (i) the enforcement of any provision
hereof, (ii) the enforcement of this Mortgage, the Notes, the Security
Documents, the Indenture and for the curing thereof, (iii) subject to
Section 2.12 hereof, defending the rights and claims of the Mortgagee in
respect of this Mortgage, the Notes, the Indenture and/or the Security
Documents, by litigation or otherwise, and (iv) the appointment of a
receiver or receivers as hereinafter contemplated. All rights and remedies
of the Mortgagee shall be cumulative and may be exercised singly or concur-
rently. Notwithstanding anything herein contained to the contrary, the
Mortgagor: (i) HEREBY WAIVES TRIAL BY JURY; and, to the fullest extent
allowed by law, (ii) shall not (a) at any time insist upon, or plead, or in
any manner whatever claim or take any benefit or advantage of any stay or
extension or moratorium law, any exemption from execution or sale of the
Mortgaged Property or any part thereof, wherever enacted, now or at any
time hereafter in force, which may affect the covenants and terms of
performance of this Mortgage, nor (b) after any such sale or sales, claim
or exercise any right under any statute heretofore or hereafter enacted to
redeem the property so sold or any part thereof; (iii) hereby expressly
waives all benefit or advantage of any such law or laws; and (iv) covenants
not to hinder, delay or impede the execution of any power herein granted or
delegated to the Mortgagee, but to suffer and permit the execution of every
power as though no such law or laws had been made or enacted. The Mort-
gagor, for itself and all who may claim under it, waives, to the extent
that it lawfully may, all right to have the Mortgaged Property or any part
thereof marshalled upon any foreclosure hereof. The appraisement of the
Mortgaged Property is hereby expressly waived or not waived at the option
of the Mortgagee, its successors or assigns, such option to be exercised
prior to or at the time judgment is rendered in any foreclosure hereof.
Section 2.15 Filing Charges, Recording Fees, Taxes, etc. The
Mortgagor shall pay any and all taxes, charges, filing, registration and
recording fees, excises and levies imposed upon the Mortgagee by reason of
its interest in the Mortgaged Property and this Mortgage or any mortgage
supplemental hereto, any security instrument with respect to any interest
of the Mortgagor in and to any fixture or personal property at the
Mortgaged Property or any instrument of further assurance, other than
income, franchise, succession, inheritance, business and similar taxes,
and shall pay all other taxes, if any, required to be paid on the debt
evidenced by the Notes. In the event the Mortgagor fails to make such
payment within ten (10) days after written notice thereof to the Mortgagor,
then the Mortgagee shall have the right, in its sole discretion, to elect
either to (i) declare the entire Indebtedness immediately due and payable
or (ii) to pay the amount due, and the Mortgagor shall reimburse the
Mortgagee for said amount, together with interest thereon computed at the
Default Rate.
Section 2.16 Restrictive Covenants and Leasing Requirements.
Promptly following the execution hereof, Mortgagor shall deliver a notice,
in form and substance reasonably satisfactory to Mortgagee, to all existing
tenants or other occupants of the Mortgaged Property, which notice shall
indicate that this Mortgage has been executed and, subject to the terms
hereof, all Leases have been assigned to Mortgagee. Mortgagor shall not
hereafter execute or permit to be executed any lease or other occupancy
agreement, whether singly or in a series of transactions, for all or
substantially all of the Mortgaged Property, without first delivering to
Mortgagee a subordination and attornment agreement to and for the benefit
of Mortgagee in form and substance reasonably satisfactory to Mortgagee.
Notwithstanding the foregoing, the Mortgagor shall be permitted, without
the delivery of a separate subordination and attornment agreement, to lease
up to one-half of the Mortgaged Property, provided (i) such lease is to a
bona fide third-party tenant on commercially reasonable terms, (ii) Mort-
gagor gives notice to the Mortgagee of such lease, or any such amendment,
modification or extension thereof with a copy thereof, and (iii) Mortgagor
gives prior written notice of this Mortgage to the tenant or other occupant
under any such lease, amendment, modification or extension.
Section 2.17 Assignment of Rents. The Mortgagor hereby
absolutely, presently and unconditionally assigns to the Mortgagee, as fur-
ther security for the payment of the Indebtedness and performance of the
Obligations, all of its interest in the rents, issues and profits of the
Mortgaged Property, together with its interest in all Leases of all or any
portion thereof and other documents evidencing such rents, issues and
profits now or hereafter in effect and its interest in any and all deposits
held as security under any such Leases, and shall deliver to the Mortgagee
a true and correct copy of an executed counterpart of each such Lease or
other material documents to which it is a party and which affects the Mort-
gaged Property. Nothing contained in the foregoing sentence shall be
construed to bind the Mortgagee to the performance of any of the covenants,
conditions or provisions contained in any such Lease or other document or
otherwise to impose any obligation on the Mortgagee, including, without
limitation, any liability under the covenants contained in any such Lease.
To the fullest extent permitted by applicable laws, the Mortgagor hereby
grants to the Mortgagee the present right (i) to collect and receive any
and all rents, issues and profits and to enter upon and take possession of
the Mortgaged Property for the purpose of collecting the said rents, issues
and profits, (ii) to dispossess by the usual summary proceedings (or any
other proceedings of the Mortgagee's selection) any tenant defaulting in
the payment thereof to the Mortgagee, (iii) to let the Mortgaged Property,
or any part thereof, and (iv) to apply said rents, issues and profits,
after payment of all necessary charges and expenses (including, without
limitation, costs of required maintenance and operation of the Mortgaged
Property, costs of collection, default associated charges, past due
interest and late charges and similar charges and expenses) , on account of
the Indebtedness. This Mortgage constitutes and evidences the irrevocable
consent of the Mortgagor to the entry upon and taking possession of the
Mortgaged Property by the Mortgagee pursuant to such grant, whether
foreclosure has been instituted or not and without applying for a receiver;
provided, however, that so long as no Event of Default shall have occurred
and be continuing, the Mortgagor shall have a revocable license to collect
and receive said rents, issues and profits and to otherwise manage the
Mortgaged Property, including, without limitation, a revocable license to
exercise the rights granted to Mortgagee pursuant to subsections (i), (ii),
(iii) and (iv) above. If an Event of Default shall have occurred and be
continuing, any rental or other income from the Mortgaged Property received
by the Mortgagor shall be deemed to be received by the Mortgagor in trust
for the Mortgagee and shall be paid over to the Mortgagee immediately upon
receipt by the Mortgagor. This license of the Mortgagor to collect and re-
ceive said rents, issues and profits shall be automatically revoked without
the requirement of any action by the Mortgagee upon the occurrence and
during the continuance of an Event of Default. Upon the occurrence and
during the continuance of an Event of Default, the Mortgagor hereby ap-
points the Mortgagee as its attorney-in-fact, coupled with an interest, to
receive and collect all rent, additional rent and other sums due under the
terms of each Lease to which the Mortgagor is a party and to direct any
such tenant, by written notice or by mail or in person to the Mortgagee.
If an Event of Default shall have occurred and be continuing, Mortgagee
may, without thereby becoming or being deemed a mortgagee in possession or
incurring any liability under any Lease, notify any lessee, tenant, conces-
sionaire, licensee or other occupant of all or any part of the Mortgaged
Property to pay all rental or other income payable by it, him or her to the
Mortgagee and all such rental and other income shall thereafter be paid di-
rectly to the Mortgagee until the Mortgagee agrees otherwise. If an Event
of Default has occurred and is continuing, to facilitate the Mortgagee's
collection of rental and other income, the Mortgagor hereby irrevocably
authorizes and empowers the Mortgagee to endorse on behalf of the Mortgagor
and in the Mortgagor's name all checks and other instruments received by
the Mortgagee as payment of rental or other income. The Mortgagee shall
apply to the Indebtedness the net amount (after deducting all costs and
expenses, including attorneys' fees and expenses, incident to the collec-
tion thereof, and after deducting all costs and expenses of operation,
maintenance and repairs of the Mortgaged Property) of any such rental or
other income received by it.
Section 2.18 Transfer Restrictions. Except as either permitted
or not prohibited by the provisions of Section 4.10 of the Indenture, the
Mortgagor may not, without the prior written consent of the Mortgagee,
further mortgage, encumber, hypothecate, sell, transfer, convey, assign or
sublet all or any part of the Mortgaged Property or the leases and rents
affecting the Mortgaged Property or any other interest in the Mortgaged
Property or such leases and rents or suffer any of the foregoing to occur
involuntarily or by operation of law or otherwise. In the event of a sale,
transfer or other conveyance of any of the Mortgaged Property permitted by
this section, Mortgagee shall, subject to the terms of Section 10.3 of the
Indenture, at the sole cost and expense of Mortgagor, execute such
documents as Mortgagor shall reasonably request to evidence the release of
the Lien of this Mortgage with respect to such Mortgaged Property.
Section 2.19 Indemnity. The Mortgagor agrees that it shall
indemnify, defend and hold harmless the Mortgagee from and against all
loss, liability, obligation, claim, damage, penalty, cause of action, cost
and expense, including, without limitation, any assessments, levies, impo-
sitions, judgments, reasonable attorneys' fees and disbursements, cost of
appeal bonds and printing costs, imposed upon or incurred by or asserted
against the Mortgagee by reason of (a) ownership of this Mortgage (other
than taxes, if any, in the nature of income taxes imposed on the Mortgagee
as the result of its ownership of this Mortgage); (b) any accident, injury
to or death of persons or loss of or damage to property occurring on or
about the Mortgaged Property (except to the extent the same shall be caused
by the Mortgagee's own gross negligence or willful misconduct); (c) any
use, non-use or condition of the Mortgaged Property (except to the extent
the same shall be caused by the Mortgagee's own gross negligence or willful
misconduct); (d) performance of any labor or services or the furnishing of
any materials or other property in respect of the Mortgaged Property or any
part thereof for maintenance or otherwise; (e) the imposition of any
mortgage, real estate or governmental tax incurred as a result of this
Mortgage or the Notes, other than income, franchise, succession, inheri-
tance, business and similar taxes payable by the Mortgagee, or (f) any
violation or alleged violation by the Mortgagor of any law. Any amounts
payable under this Section 2.19 shall be immediately due and payable
without demand, shall be deemed a part of the Indebtedness secured hereby,
and until paid shall bear interest at the Default Rate. If any action is
brought against the Mortgagee by reason of any of the foregoing occur-
rences, the Mortgagor will have the right to defend and resist such action,
suit or proceeding, at the Mortgagor's sole cost and expense by counsel
reasonably approved by the Mortgagee. The Mortgagor's obligations under
this Section 2.19 shall survive any change in law, the payment in full of
the Indebtedness, any discharge, release or satisfaction of this Mortgage
and/or the delivery of one or more deeds in lieu of foreclosure with
respect to this Mortgage.
Section 2.20 Security Interest in Fixtures.
(i) As provided in the granting clauses herein-
above, this Mortgage shall constitute a security agreement and
shall create and evidence a security interest in all Fixtures in
which a security interest or lien may be granted or a common law
pledge created pursuant to the UCC as in effect in the state in
which the Mortgaged Property is located or under common law in
such state, which security interest is hereby granted to
Mortgagee as "secured party" (as such term is defined in the
UCC), securing the Indebtedness and the Obligations of the
Mortgagor hereunder and upon recordation in the real property
records of the County in which the Mortgaged Property is located,
shall constitute a "fixture filing" within the meaning of Article
9 of the UCC creating a perfected security interest in all fix-
tures now or hereafter located upon the Mortgaged Property. The
Mortgagor, immediately upon the execution and delivery of this
Mortgage, and thereafter from time to time, shall cause this
Mortgage, any security instrument evidencing or perfecting the
Lien hereof in the Fixtures, and each instrument of further
assurance, including, without limitation, UCC financing state-
ments and continuation statements, to be filed, registered or
recorded in such manner and in such places as may be required by
any present or future law in order to publish notice of and fully
to perfect, preserve and protect the lien hereof upon the Mort-
gaged Property. The Mortgagor hereby appoints and authorizes the
Mortgagee to act on behalf of the Mortgagor upon the Mortgagor's
failure to comply with the provisions of this Section 2.20.
(ii) To the extent the mortgage foreclosure laws
of the state in which the Mortgaged Property is located do not
provide for foreclosure against some or all of the Fixtures, upon
the occurrence of any Event of Default, in addition to the
remedies set forth in Article III hereof, the Mortgagee shall
have the power to foreclose the Mortgagor's right of redemption
in the Fixtures by sale of the Fixtures in accordance with the
UCC as enacted in the state in which the Mortgaged Property is
located or under other applicable law in such state. It shall
not be necessary that any Fixtures offered be physically present
at any such sale or constructively be in the possession of the
Mortgagee or the person conducting the sale. Upon the occurrence
and during the continuance of any Event of Default, the Mortgagee
may sell the Fixtures or any portion thereof at public or private
sale with notice to the Mortgagor as hereinafter provided. The
proceeds of any such sale, after deducting all expenses of the
Mortgagee in taking, storing, repairing and selling the Fixtures
or any part thereof (including, without limitation, attorneys'
fees and expenses) shall be applied in the manner set forth in
Section 3.2 hereof. At any sale, public or private, of the
Fixtures or any part thereof, the Mortgagee may purchase any or
all of the Fixtures offered at such sale.
(iii) The Mortgagee shall give Mortgagor notice
of any sale of the Fixtures or any portion thereof pursuant to
the provisions of this Section 2.20. Any such notice shall
conclusively be deemed to be effective if such notice is mailed
at least ten (10) business days prior to any sale, by first class
or certified mail, postage prepaid, to the Mortgagor at its
address determined in accordance with the provisions of Section
4.3 hereof.
Section 2.21 Compliance with Agreements. The Mortgagor shall
timely comply and perform all of the obligations imposed upon it by the
Notes, the Indenture and the Security Documents.
Section 2.22 Environmental. Except as could not, singly or in
the aggregate, have a Material Adverse Effect:
(i) Mortgagor (a) has obtained all Permits that
are required with respect to the operation of the Mortgaged
Property under the Environmental Laws (as defined below) and is
in compliance with all terms and conditions of such required
Permits, and (b) is in compliance with all Environmental Laws
(including, without limitation, compliance with standards,
schedules and timetables therein);
(ii) no portion of or interest in the Mortgaged
Property 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 Mortgagor has not received any notification of potential
or actual liability or request for information under CERCLA or
any comparable state or local law;
(iii) no underground storage tank or other under-
ground storage receptacle, or related piping, is located on the
Mortgaged Property;
(iv) there have been no releases (including,
without limitation, any past or present releasing, spilling,
leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, disposing or dumping, on-site or,
to the best of Mortgagor's knowledge after due inquiry, off-site)
of Hazardous Materials (as defined below) by Mortgagor or, to the
best of Mortgagor's knowledge after due inquiry, any predecessor
in interest, or any person or entity whose liability for any
release of Hazardous Materials, Mortgagor or any of its affili-
ates has retained or assumed either contractually or by operation
of law at, on, under, from or into any portion of the Mortgaged
Property;
(v) neither Mortgagor nor any person or entity
whose liability Mortgagor or any of its affiliates has retained
or assumed either contractually or 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, investi-
gation, 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;
(vi) there are no events, activities, practices,
incidents or actions or, to the best of Mortgagor's knowledge
after due inquiry, conditions, circumstances or plans that may
interfere with or prevent compliance by Mortgagor with any Envi-
ronmental Law, or that may give rise to any liability under any
Environmental Laws; and
(vii) in the ordinary course of its businesses,
Mortgagor conducts a periodic review of the effect of Environ-
mental Laws on the business, operations and properties of
Mortgagor in the course of which it identifies and evaluates
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 par-
ties). On the basis of such review, Mortgagor has reasonably
concluded that such associated costs and liabilities could not
reasonably be expected to, singly or in the aggregate, have a
Material Adverse Effect on Mortgagor, 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 envi-
ronment, 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 (collec-
tively referred to as "Hazardous Materials"), into the environment (in-
cluding, without limitation, ambient air, surface water, ground water, land
surface or subsurface strata), (2) the manufacture, processing, distribu-
tion, 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 there-
from.
ARTICLE III
Default and Remedies
Section 3.1 Events of Default. The following shall each
constitute an "Event of Default" under this Mortgage:
(i) the occurrence of any Event of Default under
the Notes, the Indenture, the Guaranty or any of the Security
Documents;
(ii) if the Mortgagor shall fail to make any
other payment required by this Mortgage within ten (10) days
after written notice thereof to the Mortgagor by the Mortgagee;
(iii) if any representation or warranty contained
herein shall be false or incorrect in any material respect when
made; or
(iv) if the Mortgagor fails to keep, observe
and/or perform any of the other covenants, conditions,
Obligations or agreements contained in this Mortgage, and such
default continues for a period of thirty (30) days after written
notice to the Mortgagor by the Mortgagee; provided, however, that
it shall not be an Event of Default hereunder if the default is
such that cannot reasonably be cured within 30 days and the
Mortgagor commences to cure the default within such thirty-day
period, diligently pursues a cure, and cures such default within
120 days from the date of the initial written notice of default
thereof to the Mortgagor by the Mortgagee.
Section 3.2 Remedies. Upon the occurrence and during the
continuance of any Event of Default, the Mortgagee may:
(i) in addition to any rights or remedies avail-
able to it hereunder, take such action as it deems advisable to
protect and enforce its rights against the Mortgagor and in and
to the Mortgaged Property, including, without limitation, the
following actions, each of which may be pursued concurrently or
otherwise, at such time and in such order as the Mortgagee may
determine, in its sole discretion, without impairing or otherwise
affecting any of the other rights and remedies of the Mortgagee:
(1) declare the entire unpaid Indebtedness to be immediately due
and payable; or (2) after accelerating the Indebtedness, to the
extent permitted by law, immediately enter into or upon the
Mortgaged Property, either personally or by its agents, nominees
or attorneys and dispossess the Mortgagor and its agents and ser-
vants there-from, and at once take possession of the Mortgaged
Property, and thereupon the Mortgagee may (a) use, operate,
manage, control, insure, maintain, repair, restore and otherwise
deal with all and every part of the Mortgaged Property and
conduct the business thereat; (b) complete any construction on
the Mortgaged Property in such manner and form as the Mortgagee
deems advisable; (c) make such alterations, additions, renewals,
replacements and improvements to or on the Improvements and the
balance of the Mortgaged Property necessary or advisable as
determined by the Mortgagee to continue to operate the business;
(d) exercise all rights and powers of the Mortgagor with respect
to the Mortgaged Property, whether in the name of the Mortgagor
or otherwise, including, without limitation, the right to make,
cancel, enforce or modify leases, obtain and evict tenants, and
sue for, collect and receive all earnings, revenues, rents,
issues, profits and other income of the Mortgaged Property and
every part thereof; and (e) apply the receipts from the Mortgaged
Property to the payment of the Indebtedness, after deducting
therefrom all expenses (including reasonable attorneys' fees and
disbursements) incurred in connection with the aforesaid
operations and all amounts necessary to pay the taxes, as-
sessments, insurance and other charges in connection with the
Mortgaged Property, as well as just and reasonable compensation
for the services of the Mortgagee, its counsel, agents and
employees; or (3) institute proceedings for the complete
foreclosure of this Mortgage in which case the Mortgaged Property
may be sold for cash or credit in one or more parcels; or (4)
with or without entry and, to the extent permitted, and pursuant
to the procedures provided by applicable law, institute
proceedings for the foreclosure of this Mortgage for the portion
of the Indebtedness then due and payable, subject to the Lien of
this Mortgage continuing unimpaired and without loss of priority
so as to secure the balance of the Indebtedness not then due; or
(5) institute an action, suit or proceeding in equity for the
specific performance of any covenants, condition or agreement
contained herein; or (6) recover judgment on the Notes or any
guaranty either before, during or after or in lieu of any
proceedings for the enforcement of this Mortgage; or (7) apply
for the appointment of a trustee, receiver, liquidator or
conservator of the Mortgaged Property, without regard for the
adequacy of the security for the Indebtedness and without regard
for the solvency of the Mortgagor, any guarantor or of any
person, firm or other entity liable for the payment of the
Indebtedness or performance of the Obligations to which
appointment the Mortgagor does hereby consent; or (8) to the
extent permitted by applicable law, to proceed under the POWER OF
SALE granted herein and sell the Mortgaged Property or any part
thereof to the extent permitted and pursuant to the procedures
provided by the laws of the State in which the Mortgaged Property
is located, and all estate, right, title and interest, claim and
demand therein, and right of redemption thereof, at one or more
sales, as an entirety or in parcels, and at such time and place,
upon such terms and after such notice thereof as may be required
by applicable law or (9) pursue such other remedies as the
Mortgagee may have under applicable law.
(ii) In addition to any other remedies available
to the Mortgagee hereunder or at law or in equity, the Mortgagor
hereby confers unto the Mortgagee a power of sale for the Mort-
gaged Property exercisable upon an Event of Default under this
Mortgage and agrees that the Mortgagee, at its option, may
proceed under this power of sale pursuant to the applicable
procedures provided therefor by the laws of the State in which
the Mortgaged Property is located or foreclose this Mortgage as
provided by such laws. The Mortgagor represents and warrants
that the Mortgaged Property is not the Mortgagor's homestead and
that the Indebtedness is not an extension of credit made pri-
marily for agricultural purposes.
Notwithstanding anything contained in this Mortgage to the
contrary, any notices of sale given in accordance with the applicable
requirements provided therefor by the laws of the State in which the
Mortgaged Property is located shall constitute sufficient notice of sale.
The conduct of a sale pursuant to a power of sale shall be sufficient
hereunder if conducted in accordance with such requirements in effect at
the time of such sale, notwithstanding any other provision contained in
this Mortgage to the contrary. The proceeds of any sale of the Mortgaged
Property pursuant to the power of sale herein granted shall be applied in
accordance with such requirements in effect at the time of such sale.
(iii) The proceeds of any sale made under or by
virtue of this Article III, together with any other sums which
then may be held by the Mortgagee under this Mortgage, whether
under the provisions of this Article III or otherwise, shall be
applied:
First: To the payment of the costs and expenses of any
such sale, or the costs and expenses of entering upon, taking
possession of, removing from, holding, operating and/or managing
the Mortgaged Property or any part thereof, as the case may be,
and of all expenses, liabilities and advances made or incurred by
the Mortgagee under this Mortgage, together with interest at the
Default Rate as provided herein on all advances made by the
Mortgagee and all taxes or assessments, except any taxes,
assessments or other charges subject to which the Mortgaged
Property shall have been sold.
Second: In accordance with the provisions of Section
6.10 of the Indenture.
The Mortgagee and any receiver of the Mortgaged Property or any part
thereof shall be liable to account for only those rents, issues and profits
actually received by it.
(iv) The Mortgagee may adjourn from time to time
any sale by it to be made under or by virtue of this Mortgage by
announcement at the time and place appointed for such sale or for
such adjourned sale or sales; and except as otherwise provided by
any applicable provision of law, the Mortgagee, without further
notice or publication, may make such sale at the time and place
to which the same shall be so adjourned.
(v) Upon the completion of any sale or sales made
by the Mortgagee under or by virtue of this Article III, the
Mortgagee, or an officer of any court empowered to do so, shall
execute and deliver to the accepted purchaser or purchasers a
good and sufficient instrument, or good and sufficient instru-
ments, granting, conveying, assigning and transferring all
estate, right, title and interest in and to the property and
rights sold. The Mortgagee is hereby irrevocably appointed the
true and lawful attorney-in-fact of the Mortgagor (coupled with
an interest), in its name and stead, to make all necessary
conveyances, assignments, transfers and deliveries of the Mort-
gaged Property and rights so sold and for that purpose the Mort-
gagee may execute all necessary instruments of conveyance,
assignment, transfer and delivery, and may substitute one or more
persons with like power, the Mortgagor hereby ratifying and
confirming all that said attorney-in-fact or such substitute or
substitutes shall lawfully do by virtue hereof. Nevertheless,
the Mortgagor, if so requested by the Mortgagee, shall ratify and
confirm any such sale or sales by executing and delivering to the
Mortgagee or to such purchaser or purchasers all such instruments
as may be advisable, in the judgment of the Mortgagee, for the
purpose, and as may be designated in such request. Any such sale
or sales made under or by virtue of this Article III, whether
made under the POWER OF SALE herein granted or under or by virtue
of judicial proceedings or of a judgment or decree of foreclosure
and sale, shall operate to divest all of the estate, right,
title, interest, claim and demand whatsoever, whether at law or
in equity, of the Mortgagor in and to the properties and rights
so sold, and shall be a perpetual bar both at law and in equity
against the Mortgagor and against any and all persons claiming or
who may claim the same or any part thereof from, through or under
the Mortgagor.
(vi) In the event of any sale made under or by
virtue of this Article III (whether made under the POWER OF SALE
provided for herein or under or by virtue of judicial proceedings
or of a judgment or decree of foreclosure and sale), the entire
Indebtedness, if not previously due and payable, immediately
thereupon shall, anything in any Note, the Indenture, any of the
Security Documents or in this Mortgage to the contrary notwith-
standing, become due and payable.
(vii) Upon any sale made under or by virtue of
this Article III (whether made under the POWER OF SALE provided
for herein or under or by virtue of judicial proceedings or of a
judgment or decree of foreclosure and sale), the Mortgagee may
bid for and acquire the Mortgaged Property or any part thereof or
interest therein and in lieu of paying cash therefor may make
settlement for the purchase price by crediting upon the Indebted-
ness of the Mortgagor secured by this Mortgage the net sales
price after deducting therefrom the expenses of the sale and the
costs of the action (including attorneys' fees and expenses) and
any other sums which the Mortgagee is authorized to deduct under
this Mortgage.
(viii) No recovery of any judgment by the Mort-
gagee and no levy of an execution under any judgment upon the
Mortgaged Property or any part thereof or upon any other property
of the Mortgagor shall effect in any manner or to any extent, the
lien of this Mortgage upon the Mortgaged Property or any part
thereof, or any liens, rights, powers or remedies of the
Mortgagee hereunder, but such Liens, rights, powers and remedies
of the Mortgagee shall continue unimpaired as before.
Section 3.3 Payment of Indebtedness After Default. Upon the
occurrence of any Event of Default and the acceleration of the maturity of
the Indebtedness as provided herein, if, at any time prior to foreclosure
sale, the Mortgagor or any other person tenders payment of the amount
necessary to satisfy the Indebtedness, the same shall constitute an evasion
of the payment terms hereof and/or the Indenture or the Security Documents
or the Notes and shall be deemed to be a voluntary prepayment hereunder, in
which case such payment must include the premium and/or fee required under
the prepayment provision, if any, contained herein or in the Notes, the
Security Documents and/or the Indenture. This provision shall be of no
force or effect if at the time that such tender of payment is made, the
Mortgagor has the right under this Mortgage, the Security Documents, the
Indenture or the Notes to prepay the Indebtedness without penalty or
premium.
Section 3.4 Intentionally Omitted.
Section 3.5 Mortgagor's Actions After Default. Effective after
the happening of any Event of Default and immediately upon the commencement
of any action, suit or other legal proceedings by the Mortgagee to obtain
judgment for the Indebtedness, or of any other nature in aid of the
enforcement of the Notes, the Indenture, the Guaranty, the Security Docu-
ments or this Mortgage, the Mortgagor hereby (i) waives the issuance and
service of process in any such action, suit or proceeding, provided,
however, that notice of such process is given to Mortgagor in accordance
with Section 4.3 hereof, (ii) waives the right to trial by jury and (iii)
if required by the Mortgagee, consents to the appointment of a receiver or
receivers with respect to the Mortgaged Property and of all the earnings,
revenues, rents, issues, profits and income thereof.
Section 3.6 Control by Mortgagee After Default. Upon and
following the appointment of any receiver, liquidator or trustee of the
Mortgagor, or of any of its property, or of the Mortgaged Property or any
part thereof, the Mortgagee shall be entitled to possession and control of
all property now and hereafter covered by this Mortgage, and shall not be
deemed to be a mortgagee-in-possession as a result thereof.
ARTICLE IV
Miscellaneous
Section 4.1 Credits Waived. The Mortgagor will not claim or
demand or be entitled to any credit or credits against the Indebtedness for
so much of the taxes assessed against the Mortgaged Property or any part
thereof, as is equal to the tax rate applied to the amount due on this
Mortgage or any part thereof, and no deductions shall otherwise be made or
claimed from the taxable value of the Mortgaged Property or any part
thereof by reason of this Mortgage or the payment of the Indebtedness and
the performance of the Obligations secured hereby.
Section 4.2 No Releases. The Mortgagor agrees, that in the
event the Mortgaged Property or any part thereof or interest therein is
sold pursuant to the prior written consent of the Mortgagee as provided
herein, and the Mortgagee enters into any agreement with the then owner of
the Mortgaged Property extending the time of payment of the Indebtedness or
performance of the Obligations, or otherwise modifying the terms hereof,
the Mortgagor shall continue to be liable to pay the Indebtedness and
perform the Obligations according to the tenor of any such agreement unless
expressly released and discharged in writing by the Mortgagee.
Section 4.3 Notices. All notices, requests, demands and other
communications required or permitted to be given to or made upon any party
hereto shall be in writing and shall be personally delivered or sent by
registered or certified mail, postage prepaid, return receipt requested, or
by prepaid telex or telegram (with messenger delivery specified in the case
of a telegram), or by telecopier, or overnight air courier guaranteeing
next day delivery and shall be deemed to be delivered for purposes of this
Mortgage when delivered in person, upon acknowledged receipt if delivered
by telecopy or telex, or five (5) business days after depositing it in the
United States mail, registered or certified, with postage prepaid and
properly addressed, and the next business day after timely delivery to the
courier, if sent by overnight air courier guaranteeing next day delivery.
Unless otherwise specified in a notice sent or delivered in accordance with
the foregoing provisions of this Section 4.3, notices, demands,
instructions and other communications in writing shall be given to or made
upon the respective parties at their respective addresses (or to their
respective telex or telecopier numbers) indicated below:
If to Mortgagor:
Clark Material Handling Company
c/o Terex Corporation
500 Post Road East
Westport, Connecticut 06880
Attention: Marvin Rosenberg, Esq.
If to the Mortgagee:
United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Attn: Corporate Trust Department
Section 4.4 Binding Obligations. The provisions and covenants
of this Mortgage shall run with the land, shall be binding upon the
Mortgagor and shall inure to the benefit of the Mortgagee, subsequent
holders of this Mortgage, and the respective successors and assigns of the
foregoing. For the purpose of this Mortgage, the term "Mortgagor" shall
include and refer to the Mortgagor named herein, any subsequent owners of
the Mortgaged Property (or any part thereof or interest therein), and their
respective heirs, executors, legal representatives, successors and assigns.
If there is more than one Mortgagor, all of their undertakings hereunder
shall be deemed to be joint and several.
Section \CO Legal Construction. The creation of this Mortgage,
the perfection of the lien or security interest thereof in the Mortgaged
Property, and the rights and remedies of the Mortgagee with respect to the
Mortgaged Property, as provided herein and by the laws of the state wherein
the Mortgaged Property is located, shall be governed by and construed in
accordance with the internal laws of the state wherein the Mortgaged
Property is located without regard to principles of conflict of law.
Otherwise, to the extent permitted by applicable law, this Mortgage, the
Notes, the Security Documents, the Indenture and all other obligations of
the Mortgagor (including, without limitation, the liability of the
Mortgagor for any deficiency following a foreclosure of all or any part of
the Mortgaged Property) shall be governed by and construed in accordance
with the internal laws of the State of New York without regard to
principles of conflicts of laws, such state being the state where such
documents were executed and delivered. Nothing in this Mortgage, the
Notes, the Indenture or in any other agreement between the Mortgagor and
the Mortgagee shall require the Mortgagor to pay, or the Mortgagee to
accept, interest in an amount which would subject the Mortgagee to any
penalty or forfeiture under applicable law. All agreements between the
Mortgagor and the Mortgagee, whether now existing or hereafter arising and
whether oral or written, are hereby expressly limited so that in no
contingency or event whatsoever shall the amount paid or agreed to be paid
by the Mortgagor for the use, forbearance or detention of the money to be
loaned under the Indenture, the Security Documents, the Notes or any
related document, or for the payment or performance of any covenant or
obligation contained herein, in the Indenture, the Security Documents or in
the Notes exceed the maximum amount permissible under applicable Federal or
state usury laws. If under any circumstances whatsoever fulfillment of any
such provision, at the time performance of such provision shall be due,
shall involve exceeding the limit of validity prescribed by law, then the
obligation to be fulfilled shall be reduced to the limit of such validity.
If under any circumstances the Mortgagor shall have paid an amount deemed
interest by applicable law, which would exceed the highest lawful rate,
such amount shall be applied to the reduction of the principal amount owing
in respect of the Indebtedness and not to the payment of interest, or if
such excessive interest exceeds such unpaid balance of principal and any
other amounts due hereunder or under the Notes, the Indenture or any of the
Security Documents, the excess shall be refunded to the Mortgagor. All
sums paid or agreed to be paid for the use, forbearance or detention of the
principal under any extension of credit by the Mortgagee shall, to the
extent permitted by applicable law, and to the extent necessary to preclude
exceeding the limit of validity prescribed by law, be amortized, prorated,
allocated and spread from the date of this Mortgage until payment in full
of such sums so that the actual rate of interest on account of such princi-
pal amounts is uniform throughout the term hereof.
Section 4.6 Captions. The captions of the Sections of this
Mortgage are for the purpose of convenience only and are not intended to be
a part of this Mortgage and shall not be deemed to modify, explain, enlarge
or restrict any of the provisions hereof.
Section 4.7 Further Assurances. The Mortgagor shall do,
execute, acknowledge and deliver, at the sole cost and expense of the
Mortgagor, such further acts, deeds, documents, instruments, conveyances,
mortgages, assignments, estoppel certificates, financing statements,
fixture filings, continuation statements, notices of assignment, transfers
and assurances as the Mortgagee may reasonably require from time to time in
order to assure, convey, grant, assign, transfer and confirm unto the Mort-
gagee the rights now or hereafter intended to be granted to the Mortgagee
under this Mortgage, any other instrument executed in connection with this
Mortgage or any other instrument under which the Mortgagor may be or may
hereafter become bound to convey, mortgage or assign to the Mortgagee for
carrying out the intention of facilitating the performance of the terms of
this Mortgage. The Mortgagor hereby appoints the Mortgagee its attorney-
in-fact to execute, acknowledge and deliver for and in the name of the
Mortgagor any and all of the instruments mentioned in this Section 4.7 and
this power, being coupled with an interest, shall be irrevocable as long as
any part of the Indebtedness remains unpaid or any Obligations remain
unperformed, provided, however, that the Mortgagee shall not exercise its
powers as attorney-in-fact without giving Mortgagor five (5) days' prior
written notice of its intention to do so.
Section 4.8 Severability. Any provision of this Mortgage which
is prohibited or unenforceable in any jurisdiction or prohibited or
unenforceable as to any person or entity shall, as to such jurisdiction,
person or entity or circumstance be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provi-
sions hereof or affecting the validity or enforceability of such provisions
in any other jurisdiction or as to any other person or entity or circum-
stance.
Section 4.9 General Conditions.
(i) All covenants hereof shall be construed as
affording to the Mortgagee rights additional to and not exclusive
of the rights conferred under the provisions of any other appli-
cable law. To the extent any specific provision of this Mortgage
and the provisions of any applicable law conveying any beneficial
rights to either party directly conflict, the terms of this
Mortgage shall control.
(ii) This Mortgage cannot be altered, amended,
modified or discharged orally and no executory agreement shall be
effective to modify or discharge it in whole or in part, unless
it is in writing and signed by the party against whom enforcement
of the modification, alteration, amendment or discharge is
sought.
(iii) No remedy herein conferred upon or reserved
to the Mortgagee is intended to be exclusive of any other remedy
or remedies, and each and every such remedy shall be cumulative,
and shall be in addition to every other remedy given hereunder or
now or hereafter existing at law or in equity or by statute. No
delay or omission of the Mortgagee in exercising any right or
power accruing upon any Event of Default shall impair any such
right or power, or shall be construed to be a waiver of any such
Event of Default, or any acquiescence therein. Acceptance of any
payment (other than a monetary payment in cure of a monetary
default) after the occurrence of an Event of Default shall not be
deemed a waiver of or a cure of such Event of Default and every
power and remedy given by this Mortgage to the Mortgagee may be
exercised from time to time as often as may be deemed expedient
by the Mortgagee. Nothing in this Mortgage or in the Notes shall
limit or diminish the obligation of the Mortgagor to pay the
Indebtedness in the manner and at the time and place therein
respectively expressed.
SSFI No waiver by the Mortgagee or the Mortgagor
shall be effective unless it is in writing and then only to the
extent specifically stated. Without limiting the generality of
the foregoing, any payment made by the Mortgagee for insurance
premiums, taxes, assessments, water rates, sewer rentals, levies,
fees or any other charges affecting the Mortgaged Property shall
not constitute a waiver of the Mortgagor's default in making such
payments and shall not obligate the Mortgagee to make any further
payments.
(v) The Mortgagee shall have the right to appear
in and defend any action or proceeding, in the name and on behalf
of the Mortgagor which the Mortgagee in its discretion determines
may adversely affect the Mortgaged Property or this Mortgage,
provided, however, that the Mortgagor shall have the right to
defend any such action with counsel reasonably acceptable to the
Mortgagee. In the event that any such action or proceeding is
one covered by title insurance, defense thereof may be made by
counsel to the title company; if the proceeding is one covered by
insurance, defense thereof may be made by counsel to the
insurance company; notwithstanding the foregoing, if the action
is one not covered by insurance, the Mortgagor shall defend such
action with counsel reasonably satisfactory to the Mortgagee.
The Mortgagee shall also have the right, upon reasonable prior
notice to Mortgagor (except in the case of an emergency or other
imminent danger to the Mortgaged Property or Mortgagee's interest
therein, in which event no prior notice shall be required), to
institute any action or proceeding which the Mortgagee in its
reasonable discretion determines should be brought to protect its
interest in the Mortgaged Property or its rights hereunder. All
costs and expenses incurred by the Mortgagee in connection with
any such action or proceedings, including, without limitation,
attorneys' fees and expenses shall be paid by the Mortgagor and
shall be secured by this Mortgage.
(vi) In the event of the passage after the date
of this Mortgage of any law of any governmental authority having
jurisdiction hereof or of the Mortgaged Property, deducting from
the value of land for the purpose of taxation, affecting any lien
thereon or changing in any way the laws for the taxation of
mortgages or debts secured by mortgages for federal, state or
local purposes, or the manner of the collection of any such
taxes, so as to affect this Mortgage, the Mortgagor shall prompt-
ly pay to the Mortgagee, on demand, all taxes, costs and charges
for which the Mortgagee is or may be liable as a result thereof;
provided that if said payment shall be prohibited by law, render
the Notes usurious or subject the Mortgagee to any penalty or
forfeiture, then and in such event the Indebtedness shall, at the
option of the Mortgagee, be immediately due and payable.
(vii) The Mortgagor hereby appoints the Mortgagee
as its attorney-in-fact in connection with the personal property
and fixtures covered by this Mortgage, where permitted by law, to
file on its behalf any financing statements or other statements
in connection therewith with the appropriate public office signed
by the Mortgagee, as secured party. This power being coupled
with an interest, shall be irrevocable so long as any part of the
Indebtedness remains unpaid.
Section 4.10 Multistate Real Estate Transaction. The Mortgagor
acknowledges that this Mortgage is one of a number of other mortgages,
deeds of trust and assignments of leases and rents and other security
documents (hereinafter collectively the "Other Security Documents") which
secure the payment of the Indebtedness and performance of the Obligations
in whole or in part. The Mortgagor agrees that the lien of this Mortgage
shall, subject to the terms hereof, be absolute and unconditional and shall
not in any manner be affected or impaired by any acts or omissions whatso-
ever of the Mortgagee and, without limiting the generality of the
foregoing, the lien hereof shall not be impaired by any acceptance by the
Mortgagee of any security for or guarantors upon any of the Indebtedness or
by any failure, neglect or omission on the part of the Mortgagee to realize
upon or protect any of the Indebtedness or any collateral or security
therefor. The lien hereof shall not in any manner be impaired or affected
by any release (except as to the property released), sale, pledge, surren-
der, compromise, settlement, renewal, extension, indulgence, alteration,
changing, modification or any disposition of any of the Indebtedness or of
any of the collateral or security therefor. The Mortgagee may exercise any
of the rights and remedies under the Other Security Documents without first
exercising or enforcing any of its rights and remedies hereunder, or may
foreclose, exercise any power of sale, or exercise any other right avail-
able under this Mortgage without first exercising or enforcing any of its
rights and remedies under any or all of the Other Security Documents.
Such exercise of the Mortgagee's rights and remedies under any or all of
the Other Security Documents shall not in any manner impair the
Indebtedness or lien of this Mortgage, and any exercise of the rights or
remedies of the Mortgagee hereunder shall not impair the lien of any of the
Other Security Documents or any of the Mortgagee's rights and remedies
thereunder. The Mortgagor specifically consents and agrees that the Mort-
gagee may exercise its rights and remedies hereunder and under the Other
Security Documents separately or concurrently and in any order that the
Mortgagee may deem appropriate.
Section 4.11 Agreement Paramount. If and to the extent that any
of the provisions of this Mortgage conflict or are otherwise inconsistent
with any of the provisions of the Indenture, the provisions of the
Indenture shall prevail. Notwithstanding the foregoing, the failure of the
Indenture to speak to or address a provision expressly set forth in this
Mortgage shall not be deemed to be such an inconsistency or conflict.
IN WITNESS WHEREOF, this Mortgage has been duly executed and
delivered by the Mortgagor as of the date first above written.
CLARK MATERIAL HANDLING COMPANY
By:____________________________
Name:
Title:
Attest:________________________
Name:
Title:
<PAGE>
STATE OF _____________________ )
) ss:
COUNTY OF ___________________ )
This instrument was acknowledged before me on this ______ day of
________________, 19___, by _____________________________________,
as ______________________ President of _______________________________,
a(n) _____________________ corporation.
____________________________________
Notary Public
My Commission Expires:
___________________________
[SEAL]
<PAGE>
[Kentucky]
SCHEDULE A
Description of the Property
All that certain real property located in Fayette County, Kentucky and
more particularly described as follows:
Tract I:
Being all of Parcels 1, 2, 3, 4, 5, 6, 7 and 8 as shown by that
Consolidation Record Plat of the Lexington-Fayette Urban County
Government of record in Plat Cabinet F, Slide 757, in the Fayette
County Clerk's office, the property being more particularly designated
as 749 West Short Street, Lexington, KY.
HOWEVER, there is EXCEPTED from the foregoing property all of
Parcel 1 as shown by Consolidation Record Plat of the Clark Equipment
Property (formerly LFUCG Old City Plat and the Charles and M.
Cunningham Property) of record in Plat Cabinet H, Slide 394, in the
Fayette County Clerk's office, which was conveyed by Clark Equipment
Company, a Delaware corporation, to Margaret Cunningham, a widow, by
quit-claim deed dated December 6, 1988, and of record in Deed Book
1499, page 268, in the aforesaid Clerk's office.
Being the same property conveyed to Clark Material Handling
Company, a Kentucky corporation, by deed dated March 31, 1992, from
Clark Equipment Company, a Delaware corporation, of record in Deed
Book 1637, page 634, in the Fayette County Clerk's office.
Tract II:
Being all of Lot No. 8 and all of Parcel 1 of Block "A", Leestown
Industrial Park, Unit 3-A, as shown by the Amended Record Plat of Lot
8, Block "A", Leestown Industrial Park, Unit 3-A, which appears of
record in Plat Cabinet F, Slide 665, in the Fayette County Clerk's
office, to which plat reference is made for a more particular
description of the property; the improvements thereon being known and
designated as 172 Trade Street, Lexington, Kentucky.
The instrument constituting the source of the Mortgagor's
interest in Tract II was a Memorandum of Lease, Recorded in Deed Book
1440, Page 453, in the Fayette County Clerk's office.
<PAGE>
[Kentucky]
SCHEDULE A (cont.)
Tract III:
Being all of Parcels 1, 2 and 3 of the Geary-Buckley Warehouse,
Lexington, Fayette County, Kentucky, a plat of which appears of record
in Plat Cabinet H, Slide 295, of record in the Office of the Fayette
County Clerk; said premises being known and designated as 422-456
Angliana Avenue, Lexington, Kentucky; and
All of Lot No. 10, as shown on the plat of the Forman property
recorded in Plat Cabinet H, Slide 295, in the Fayette County Clerk's
office, said property fronting on the North side of Curry Avenue 40
feet and extending back of even width in a Northerly direction 145
feet, but there is excepted from said description 20 feet off the rear
of said Lot No. 10 which was conveyed by M. Thompson and wife to
Luther Stivers by deed of record in the aforesaid Clerk's office in
Deed Book 176, page 162;
Being the same property conveyed to Kentucky Central Life Insur-
ance Company by deed of Master Commissioner of Fayette Circuit Court,
dated March 24, 1994, of record in Deed Book 1721, page 721, in the
Fayette County Clerk's office.
Being the same property in which a leasehold interest was con-
veyed to Clark Material Handling Company by lease dated February 19,
1991 between Bruce E. Burnett and Barbara B. Burnett, predecessors-in-
interest to Kentucky Central Life Insurance Company, collectively as
lessor, and Clark Material Handling Company, as lessee, a memorandum
of which was recorded in Deed Book ____, page ____, in the Fayette
County Clerk's office.
[Mississippi]
REAL ESTATE LEASEHOLD DEED OF TRUST, ASSIGNMENT OF RENTS,
SECURITY AGREEMENT, FINANCING STATEMENT AND FIXTURE FILING
in the amount of
$250,000,000.00
FROM
TEREX CORPORATION, a Delaware corporation,
having an office at:
500 Post Road East
Westport, Connecticut 06880
(the "Mortgagor")
TO
JIM B. TOHILL, an individual,
having an office at:
Watkins, Ludlam & Stennis
633 North State Street
Jackson, Mississippi 39202
(the "Trustee")
FOR THE BENEFIT OF
UNITED STATES TRUST COMPANY OF NEW YORK, as collateral agent,
having an office at:
114 West 47th Street
New York, New York 10036
(the "Mortgagee")
INDEXING INSTRUCTIONS:
LOTS 18-27, FREEPORT INDUSTRIAL PARK UNIT 1, PLAT BOOK 11,
PAGE 43, DESOTO COUNTY, MISSISSIPPI
This instrument was prepared by and,
after recording, please return to:
Michael A. Woronoff, Esq.
Skadden, Arps, Slate, Meagher & Flom
300 South Grand Avenue
Los Angeles, California 90071
<PAGE>
REAL ESTATE LEASEHOLD DEED OF TRUST, ASSIGNMENT OF
RENTS, SECURITY AGREEMENT, FINANCING STATEMENT AND
FIXTURE FILING
THIS REAL ESTATE LEASEHOLD DEED OF TRUST, ASSIGNMENT
OF RENTS, SECURITY AGREEMENT, FINANCING STATEMENT AND FIXTURE
FILING (hereafter, as amended, modified, replaced,
consolidated and extended, this "Mortgage") is made as of the
9th day of May, 1995 from TEREX CORPORATION, a Delaware corpo-
ration (the "Mortgagor" or "Terex"), with a mailing address of
500 Post Road East, Westport, Connecticut 06880, to JIM B.
TOHILL, an individual, as trustee (the "Trustee"), with a
mailing address of 633 North State Street, Jackson,
Mississippi 39202, for the benefit of UNITED STATES TRUST COM-
PANY OF NEW YORK, a New York corporation (the "Mortgagee"), as
collateral agent, with a mailing address of 114 West 47th
Street, New York, New York 10036.
R E C I T A L S:
1. The Mortgagor is the owner of a leasehold
interest in the Real Property (as hereinafter defined).
2. Pursuant to a certain Indenture (the
"Indenture") dated as of even date herewith between Terex and
the Mortgagee as trustee thereunder (in such capacity, the
"Indenture Trustee") for the benefit of the Holders of the
Notes (as defined below), Terex has obtained financing in the
amount of $250,000,000 (the "Loan") with a maturity date of
May 15, 2002. All capitalized terms used but not otherwise
defined herein shall have the meaning ascribed to them in the
Indenture.
3. To secure Mortgagor's obligations under the
Notes and performance of all terms and conditions of the
Indenture, the Mortgagor has agreed to create a first mortgage
lien on the Mortgaged Property herein described, in favor of
the Trustee, for the benefit of the Mortgagee.
NOW, THEREFORE, in consideration of the premises and
of the mutual covenants herein contained, and (A) in order to
secure (i) payment of the indebtedness under the Indenture, as
the same may be amended, modified, restated, substituted and
extended by the terms hereof, aggregating $250,000,000 in
principal amount (the various promissory notes and securities
evidencing said indebtedness and all supplements,
substitutions, extensions and renewals thereof are hereinafter
referred to collectively as the "Notes"), (ii) payment of the
interest on such indebtedness according to the terms of the
Indenture and the Notes, (iii) payment of all other sums
payable to the Mortgagee pursuant to the terms of this
Mortgage, and (iv) payment of all other sums owed by the
Mortgagor to the Mortgagee, the Indenture Trustee or the
Holders in accordance with the terms of the Indenture or
pursuant to the Notes or the Security Documents (the payment
obligations described in the foregoing clauses (i), (ii),
(iii) and (iv) are hereinafter referred to collectively as the
"Indebtedness"); and (B) in order to secure the performance of
every obligation contained in the Indenture, the Notes, this
Mortgage, the Security Documents and all other instruments now
or hereafter evidencing or securing any portion of the Indebt-
edness (hereinafter referred to collectively as the "Obliga-
tions"), the Mortgagor by these presents does hereby mortgage,
warrant, grant, grant a security interest in, bargain, sell,
convey, pledge, alienate, remise, confirm, assign and transfer
to the Trustee, for the benefit of the Mortgagee, and each of
their successors and assigns forever under and subject to the
terms and conditions hereof, all of the Mortgagor's estate,
right, title and interest in and to the following, whether now
owned or held or hereafter acquired (hereinafter collectively
referred to as the "Mortgaged Property" or the "Collateral"):
A. Mortgagor's leasehold interest in that certain
real property (the "Real Property") more particularly
described in Schedule A attached hereto and made a part hereof
by this reference; and
B. All of the buildings, structures and improve-
ments (hereinafter, collectively, together with all building
equipment, the "Improvements") now or hereafter located on the
Real Property and all of its right, title and interest, if
any, in and to the streets and roads abutting the Real
Property to the center lines thereof, and strips and gores
within or adjoining the Real Property, the air space and right
to use said air space above the Real Property, all rights of
ingress and egress by motor vehicles to parking facilities on
or within the Real Property, all easements now or hereafter
affecting the Real Property or the Improvements, all royalties
and all rights appertaining to the use and enjoyment of the
Real Property or the Improvements, including, without
limitation, alley, drainage, crop, timber, agricultural,
horticultural, mineral, water, oil and gas rights; and
C. All fixtures (the "Fixtures"), and all appurte-
nances and additions thereto and substitutions or replacements
thereof, now or hereafter attached to the Real Property and/or
the Improvements. Without limiting the foregoing, to the
extent permitted under applicable law, this Mortgage shall be
deemed to be a "security agreement" under the Uniform Com-
mercial Code of the State wherein the Real Property and
improvements are located (the "UCC"), and the Mortgagor hereby
grants to the Mortgagee a "security interest" (as defined in
the UCC) in all of its present and future Fixtures and the
Mortgagee shall have, in addition to all rights and remedies
provided herein, and in any other agreements, commitments and
undertakings made by the Mortgagor to the Mortgagee, all of
the rights and remedies of a "secured party" under the UCC;
and
D. To the extent the same does not constitute
Fixtures, all equipment (as such term is defined in Article 9
of the UCC) now owned or hereafter acquired and owned by the
Mortgagor, which is used at or in connection with the Improve-
ments or the Real Property and is located thereon or therein
(including, without limitation, all machinery, production
equipment, furnishings, electronic data-processing and other
office equipment to the extent located on or in the Mortgaged
Property), together with all attachments, components, parts,
equipment and accessories installed thereon or affixed thereto
and any and all extensions, additions, improvements,
betterments, renewals, substitutions and replacements to, for
or of any of the foregoing (collectively, the "Equipment");
and
E. All leases, lettings and licenses of the Real
Property, the Improvements and any other property or rights
encumbered or conveyed hereby, or any part thereof, now or
hereafter entered into (each a "Lease," and collectively, the
"Leases") and all right, title and interest of the Mortgagor
thereunder, including, without limitation, cash and securities
deposited thereunder, the right to receive and collect the
rents, issues and profits payable thereunder and the right to
enforce, whether by action at law or in equity or by other
means, all provisions, covenants and agreements thereof,
including, without limitation, the right (i) to enter upon and
take possession of the Mortgaged Premises (as hereinafter
defined) for the purpose of collecting the said rents, issues
and profits, (ii) to dispossess by the usual summary
proceedings (or any other proceedings of either the Trustee's
or the Mortgagee's selection) any tenant defaulting in the
payment thereof to either the Trustee or the Mortgagee, (iii)
to let the Mortgaged Premises, or any part thereof, and (iv)
subject to Mortgagor's license as hereinafter set forth, to
apply said rents, issues and profits, after payment of all
necessary charges and expenses, on account of the
Indebtedness; and
F. Any and all permits, certificates, approvals and
authorizations, however characterized, related to the Real
Property or the Improvements, issued or in any way furnished,
whether necessary or not for the operation and use of the Real
Property or the Improvements, including, without limitation,
operating licenses, franchise agreements, contracts, contract
rights, public utility deposits, building permits, certifi-
cates of occupancy, environmental certificates, industrial
permits and licenses and certificates of operation; and
G. All unearned premiums, accrued, accruing or to
accrue under insurance policies related to the Real Property
or the Improvements now or hereafter obtained by the Mortgagor
and all proceeds of the conversion, voluntary or involuntary,
of the Real Property, the Improvements and/or any other
property or rights encumbered or conveyed hereby, or any part
thereof, into cash or liquidated claims, including, without
limitation, proceeds of hazard and title insurance and all
awards and compensation heretofore and hereafter made to the
present and all subsequent owners of the Real Property, the
Improvements and/or any other property or rights encumbered or
conveyed hereby by any governmental or other lawful authority
for the taking by eminent domain, condemnation or otherwise,
of all or any part of the Real Property, the Improvements
and/or any other property or rights encumbered or conveyed
hereby or any easement therein, including, but not limited to,
awards for any change of grade of streets; and
H. All extensions, improvements, betterments,
renewals, substitutions and replacements of and all additions
and appurtenances to the Real Property, the Improvements
and/or any other property or rights encumbered or conveyed
hereby, hereafter acquired by or released to the Mortgagor or
constructed, assembled or placed by the Mortgagor on the Real
Property, the Improvements and any other property or rights
encumbered or conveyed hereby, and all conversions of the
security constituted thereby which, immediately upon such
acquisition, release, construction, assembling, placement or
conversion, as the case may be, and in each such case without
any further mortgage, conveyance, assignment or other act by
the Mortgagor, shall become subject to the lien of this
Mortgage as fully and completely, and with the same effect, as
though now owned by the Mortgagor and specifically described
herein; and
I. All proceeds (as defined in the UCC) of the con-
version, voluntary or involuntary, of any of the foregoing
into cash or liquidated claims, including, without limitation,
proceeds of insurance and condemnation or other awards or
payments with respect thereto, including interest thereon.
TO HAVE AND TO HOLD the Mortgaged Property, with all
powers of sale and right of entry and possession (to the
extent permitted by applicable law), with all privileges and
appurtenances to the same belonging, with the right of
possession thereof, unto the Trustee, for the benefit of the
Mortgagee, and their successors and assigns, forever, and the
Mortgagor hereby binds itself and its successors and assigns
to warrant and forever (but only until such time as the
Indebtedness has been paid in full and the Obligations have
been fully satisfied) defend title to the Mortgaged Property
unto the Trustee and the Mortgagee and their successors and
assigns against the claim or claims of all parties claiming or
to claim the same, or any part thereof;
FOR THE PURPOSE OF SECURING THE OBLIGATIONS.
PROVIDED, HOWEVER, that if the Mortgagor shall pay
or cause to be paid indefeasibly in full all of the Indebt-
edness and if the Mortgagor shall have kept, performed,
observed and satisfied all of the Obligations, then the
Mortgagee shall deliver to the persons legally entitled
thereto all such documents, in recordable form, as shall be
necessary to release the Mortgaged Property from the lien of
this Mortgage and to release to the Mortgagor all deposits
held by or on behalf of the Mortgagee, but otherwise this
Mortgage shall remain in full force and effect.
AND the Mortgagor represents, warrants, covenants
and agrees as follows:
ARTICLE I
Representations and Warranties of the Mortgagor
Section 1.1 Title to the Mortgaged Property.
(i) The right, title and interest of the Mortgagor constitutes
a good, marketable and insurable leasehold estate in the
Mortgaged Property, subject to no Liens, except for Liens
permitted pursuant to Section 4.12 of the Indenture (collec-
tively, the "Permitted Liens"). (ii) This Mortgage creates
and constitutes a valid and enforceable lien on the Mortgaged
Property, and, to the extent any of the Mortgaged Property
shall consist of personalty (when taken together with any
fixture filings and financing statements delivered in
connection herewith and filed in accordance with the UCC), a
perfected security interest in such Mortgaged Property,
subject only to the Permitted Liens. (iii) The Mortgagor has
full power and lawful authority to encumber the Mortgaged
Property in the manner and form set forth hereunder. (iv) The
Mortgagor owns all Fixtures and Equipment now or hereafter
comprising part of the Mortgaged Property, subject only to the
matters set forth in this Section. (v) This Mortgage is and
will remain a valid, enforceable and continuing first priority
Lien on the Mortgaged Property subject only to the Permitted
Liens. (vi) The Mortgagor will preserve such title as set
forth herein and in the Indenture, and will forever (but only
until such time as the Indebtedness has been paid in full and
the Obligations have been fully satisfied) warrant and defend
the validity and priority of the lien hereof against the
claims of all persons and parties whatsoever.
Section 1.2 Mortgage Authorized. The execution and
delivery of this Mortgage, the Security Documents, the
Indenture and each other document or instrument executed or
delivered by Mortgagor in connection with any of the foregoing
or the Notes have been duly authorized by all necessary
corporate action of the Mortgagor and there is no provision in
the articles or certificate of incorporation or by-laws of the
Mortgagor requiring further consent for such action by any
other entity or person. The Mortgagor is duly organized,
validly existing and in good standing under the laws of the
state of its formation, and has (i) all necessary licenses,
authorizations, registrations, permits and/or approvals and
(ii) full power and authority to own or lease its properties
and carry on its business as presently conducted, and the
execution and delivery by it of, and performance of the
Obligations under this Mortgage, the Indenture and each other
document or instrument executed or delivered by Mortgagor in
connection with any of the foregoing or the Notes will not
result in the Mortgagor being in default under any provision
of its articles or certificate of incorporation or by-laws or
of any mortgage, lease, credit or other agreement to which it
is a party or which affects it or the Mortgaged Property, or
any part thereof.
Section 1.3 Operation of the Mortgaged Property.
(i) The Mortgagor has all certificates, licenses, authoriza-
tions, registrations, permits and/or approvals and all
required environmental permits necessary for the operation of
the Mortgaged Property or any part thereof, the lack of which
would have a Material Adverse Effect (as defined below), all
of which as of the date hereof are in full force and effect
and are not, to the knowledge of the Mortgagor, subject to any
revocation, amendment, release, suspension, forfeiture or the
like. (ii) The Mortgaged Property is served by all easements
and utility lines and connections reasonably required or
necessary for the current use thereof. (iii) The Mortgaged
Property has adequate access to public roadways. As used in
this Mortgage, "Material Adverse Effect" shall mean a material
adverse effect, singly or in the aggregate, on (i) the
properties, business, prospects, operations, earnings, assets,
liabilities or condition (financial or otherwise) of
Mortgagor, taken as a whole, (ii) the ability of Mortgagor to
perform its obligations under this Mortgage or the Indenture,
(iii) the perfection or priority of the Lien of this Mortgage,
or (iv) the value or utility of the Mortgaged Property, taken
as a whole.
ARTICLE II
Covenants of the Mortgagor
Section 2.1 Payment of Indebtedness and Performance
of Covenants. The Mortgagor shall (a) duly and punctually pay
or cause to be paid each payment of the principal of and
interest on the Indebtedness and any prepayments, late
charges, premiums and fees provided for in the Indenture and
all other payment Obligations secured by this Mortgage at the
time and in the manner provided in this Mortgage, the Security
Documents, the Indenture and each other document or instrument
executed or delivered by Mortgagor in connection with any of
the foregoing or the Notes, and (b) duly and punctually
perform and observe all of the terms, provisions, conditions,
covenants and agreements on the Mortgagor's part to be
performed or observed as provided in the Notes, this Mortgage,
the Indenture and each other document or instrument executed
or delivered by Mortgagor in connection with any of the
foregoing.
Section 2.2 Maintenance of the Mortgaged Property.
(i) The Mortgagor shall maintain the Mortgaged Property in a
commercially reasonable manner for the operation thereof and
in accordance with the requirements of the Indenture, and
shall comply (and shall use commercially reasonable efforts to
cause any tenants to comply) with all federal, state and local
laws, statutes, regulations, ordinances, rules, codes,
rulings, judgments, decrees, orders, injunctions and other
requirements of every government or public agency having or
claiming jurisdiction over the Mortgaged Property (and all
permits, certificates, consents, licenses, variances, orders,
exemptions, approvals and authorizations issued thereby) as
the same relate to the Mortgaged Property and the use and
occupancy thereof and all covenants, conditions, restrictions,
declarations and easements that affect or are binding upon the
Mortgaged Property (each, a "Requirement"). The Mortgagor
shall permit the Mortgagee to enter upon the Mortgaged
Property and inspect the same at all reasonable hours and with
reasonable prior notice. The Mortgagor shall not, without the
prior written consent of the Mortgagee, threaten, commit,
permit or suffer to occur any alterations or changes to the
Mortgaged Property or any part thereof other than alterations
or changes that do not materially adversely affect the value
or utility of the Mortgaged Property; provided, however, that
Fixtures owned by the Mortgagor may be removed from the
Improvements if such Fixtures are obsolete or if the Mortgagor
concurrently therewith replaces the same with items which do
not reduce the value or utility of the Mortgaged Property or
the Improvements, free of any lien, charge or claim superior
to the lien and/or security interest created thereby.
(ii) Nothing in this Section 2.2
shall require the Mortgagor to comply with any Re-
quirement so long as (a) the failure so to do shall
not otherwise apart from the provisions of this
Section 2.2 (i) be an Event of Default under this
Mortgage, (b) the failure so to do shall not result
in the voiding, rescission or invalidation of the
certificate of occupancy or any other material
license, certificate, permit or registration in
respect of the Mortgaged Property essential to the
conduct of the Mortgagor's business at the Mort-
gaged Property, (c) the failure so to do shall not
prevent, hinder or materially interfere with the
lawful use and occupancy of the Mortgaged Property
or any material portion thereof for the use and
occupancy which the Mortgagor reasonably determines
is most advantageous to its business, (d) the
failure so to do shall not void or invalidate or
make unavailable any insurance required by this
Mortgage to be maintained by the Mortgagor in
respect of the Mortgaged Property and (e) the
Mortgagor in good faith and at its own expense
shall contest the Requirement or the validity
thereof by appropriate legal proceedings, which
proceedings must operate to prevent (l) the occur-
rence of any of the events described in the preced-
ing clauses (a) through (d) of this paragraph (ii)
and (2) the collection or other realization of any
material sums due or payable as a consequence of
the Requirement, the sale of any lien arising in
respect of the Requirement, and/or the sale or
forfeiture of the Mortgaged Property, any part
thereof or interest therein, or the sale of any
lien connected therewith; provided that during such
contest the Mortgagor shall, at the option of the
Mortgagee, either establish adequate reserves in
accordance with generally accepted accounting
principles or provide security reasonably satis-
factory to the Mortgagee (in amount and form)
assuring the discharge of the Mortgagor's obliga-
tions hereunder and of any interest, charge, fine,
penalty, fee or expense arising from or incurred as
a result of such contest, and, for purposes herein,
the Mortgagee agrees that the deposit of cash or an
irrevocable letter of credit drawn on a bank
reasonably acceptable to Mortgagee shall be a
satisfactory form of security; and provided, fur-
ther, that if at any time compliance with any
obligation imposed upon the Mortgagor by the Re-
quirement shall become necessary to prevent (l) the
occurrence of any of the events described in
clauses (a) through (d) of this paragraph (ii) or
(2) the delivery of a deed conveying the Mortgaged
Property or any portion thereof or interest therein
because of noncompliance, or the sale of a lien in
connection therewith, or (3) the imposition of any
material penalty, fine, charge, fee, cost or
expense on the Mortgagee, then the Mortgagor shall
comply with the Requirement in sufficient time to
prevent the occurrence of any such events, the
delivery of such deed or the sale of such lien, or
the imposition of such material penalty, fine,
charge, fee, cost or expense on the Mortgagee.
Section 2.3 Insurance; Coverage. (i) The Mortgagor
shall keep the Mortgaged Property insured against (a) loss and
damage by fire, casualty and such other hazards as may be
reasonably specified by the Mortgagee, including, without
limitation, those hazards which are covered by the standard
extended coverage all-risk insurance policy, (b) damage by
vandalism and/or malicious mischief, (c) explosion insurance
in respect of any boilers or similar apparatus located on the
Mortgaged Property and (d) such other hazards as may be
reasonably specified by the Mortgagee. Such insurance shall
be on forms and by companies reasonably satisfactory to the
Mortgagee. The amounts and coverage limits of each policy of
insurance required pursuant to this Section 2.3 shall be
sufficient to prevent the Mortgagor, the Trustee or the
Mortgagee from becoming a co-insurer of any partial loss under
the applicable policies and otherwise satisfactory to the
Mortgagee, but in no event less than the actual replacement
value of such Mortgaged Property as determined by the
Mortgagor in accordance with generally accepted insurance
practice and approved by the Mortgagee, or at the Mortgagee's
option, which shall be exercised not more frequently than
annually, as determined at the Mortgagor's expense by the
insurer or an expert appraiser approved by the Mortgagee.
Notwithstanding anything to the contrary contained herein,
Mortgagor shall be permitted to maintain self-insurance for
all insurance required to be maintained hereby, provided that
such self-insurance is consistent with Mortgagor's prior
practice and has been heretofore adequately disclosed to
Mortgagee.
(ii) The Mortgagor shall maintain
in full force liability insurance against claims of
bodily injury, death or property damage occurring
on, in or about the Mortgaged Property, with policy
limits and deductibles in such amounts as from time
to time would be maintained by a prudent operator
of property similar in use and configuration to the
Mortgaged Property and located in the locality
where the Mortgaged Property is located (which
policy limits and deductibles shall be reasonably
satisfactory to the Mortgagee), which policies of
insurance shall name both the Trustee and the
Mortgagee as additional insureds. All insurance
policies and endorsements required pursuant to this
Section 2.3 shall be fully paid for, nonassessable
and contain such provisions (including, without
limitation, inflation guard or replacement cost en-
dorsements) and expiration dates and shall be in
such form and amounts and issued by such insurance
companies with a rating of "A VIII" or better as
established by Best's Rating Guide (or an equiva-
lent rating with such other publication of a simi-
lar nature as shall be in current use and as
approved by the Mortgagee), or such other compa-
nies, as shall be approved by the Mortgagee.
(iii) The Mortgagor shall addition-
ally keep the Mortgaged Property insured against
loss by flood if the Mortgaged Property is located
in an area identified by the Secretary of Housing
and Urban Development as an area having special
flood hazards and which has been so identified
under the Flood Insurance Act of 1968 and the Flood
Disaster Protection Act of 1973, as the same may
have been or may hereafter be amended or modified
(and any successor acts thereto) in amounts
reasonably acceptable to the Mortgagee, but in no
event more than what is available under such laws.
(iv) In all events and without
limitation on the foregoing, the Mortgagor will
deliver the policy or policies (or true copies or
certificates thereof) of all such insurance re-
quired under this Mortgage to the Mortgagee, which
policy or policies shall be endorsed to name the
Mortgagee as a mortgagee-loss payee thereunder,
with loss payable to the Mortgagee without contri-
bution or assessment under a New York Standard
Mortgagee clause or similar clause, and shall
provide the Mortgagee with no less than thirty (30)
days' notice from the insurer prior to the
expiration, cancellation or termination (for any
reason whatsoever) of any such policy.
(v) Insurance required hereunder
may be carried by the Mortgagor pursuant to blanket
policies, provided that all other requirements
herein set forth are satisfied and that the under-
lying policy in respect of the Mortgaged Property
is delivered to the Mortgagee as herein required.
In the event that the Mortgagor fails to keep the
Mortgaged Property insured as required hereunder,
the Mortgagee may, but shall not be obligated to,
obtain insurance and pay the premiums therefor and
the Mortgagor shall, on demand, reimburse the
Mortgagee for all sums, advances and expenses
incurred in connection therewith and such sums,
advances and expenses shall be deemed a part of the
Indebtedness secured hereby and shall bear interest
at the Default Rate (as defined in Section 2.13 of
this Mortgage) until reimbursed.
Section 2.4 Insurance; Proceeds. The Mortgagor
shall give the Mortgagee prompt notice of any material loss
covered by insurance and the Mortgagee shall have the right to
join the Mortgagor in adjusting any loss during the continu-
ance of an Event of Default. The proceeds of insurance paid
on account of any damage or destruction to the Mortgaged Prop-
erty or any part thereof shall be paid over to the Mortgagee
to be applied as hereinafter provided. Notwithstanding
anything to the contrary contained herein or in any provision
of applicable law, the proceeds of insurance policies coming
into the possession of the Mortgagee shall not be deemed trust
funds.
Section 2.5 Restoration of the Mortgaged Property.
In the event of any material damage or destruction of the
Mortgaged Property, or any part thereof, as a result of
casualty, condemnation, taking or other cause, the Mortgagor
shall give prompt written notice thereof to the Mortgagee. In
the event that the Mortgagee, in accordance with Section 2.6
hereof, makes available to the Mortgagor the insurance pro-
ceeds received by it, if any (or in the event of condemnation
or taking, the award, if any, arising out of such condemnation
or taking), the Mortgagor shall with reasonable promptness
commence and diligently continue to perform the repair,
restoration and rebuilding of the Mortgaged Property (here-
inafter, the "Work") so as to restore the Mortgaged Property
in full compliance with all legal requirements and so that the
Mortgaged Property shall, to the extent reasonably
practicable, be at least equal in value and general utility as
it was immediately prior to the damage or destruction. If the
Work to be done is materially structural (as reasonably
determined by the Mortgagee) or if the cost of the Work, as
estimated by the Mortgagee, shall exceed $___________________
(hereinafter, collectively, "Major Work"), the Mortgagor
shall, prior to the commencement of the Major Work, furnish to
the Mortgagee for its approval not to be unreasonably withheld
or delayed: (i) complete plans and specifications for the
Major Work, with reasonably satisfactory evidence of the
approval thereof (a) by all governmental authorities whose
approval is required for any or all of the Major Work, (b) by
all parties to or having an interest in the leases, if any, of
any portion of the Mortgaged Property whose approval is re-
quired, and (c) by an architect or reputable contractor or
construction manager or engineer satisfactory to the Mortgagee
(hereinafter, the "Architect") and which shall be accompanied
by the Architect's signed estimate, bearing the Architect's
seal, of the Architect's good faith estimate of the entire
cost of completing the Major Work; (ii) certified or
photostatic copies of all permits and approvals required by
law in connection with the commencement and/or the conduct of
the Work; and (iii) such other documents, instruments and
certificates as Mortgagee may reasonably request. The Mort-
gagor shall not be entitled to receive any of the insurance
proceeds until the Mortgagor shall have complied with the
applicable requirements referred to in this Section 2.5.
After commencing any Major Work the Mortgagor shall perform
such Major Work diligently and in good faith in accordance
with the plans and specifications referred to in this Section
2.5.
Section 2.6 Restoration; Advances. Insurance
proceeds received by the Mortgagee (or, in the case of
condemnation or taking, the award therefor) less the cost, if
any, to the Mortgagee of recovery of the same and of paying
out such proceeds (including reasonable attorneys' fees and
expenses and administrative costs), shall be applied by the
Mortgagee to reduce the Indebtedness; provided, however, that
so long as no Event of Default hereunder has occurred and is
continuing, the Mortgagor shall have the right to cause
Mortgagee to apply such net insurance proceeds to the payment
of the cost of the Work in accordance with the terms of this
Section 2.6. Notwithstanding anything to the contrary
contained herein, and so long as no Event of Default hereunder
has occurred and is continuing, Mortgagor shall have the
right, upon written notice to Mortgagee, to not perform the
Work, in which event the net amount of any insurance proceeds
received by Mortgagor or Mortgagee (or, in the case of condem-
nation or taking, the award therefor) shall be either (i)
applied to repay the Indebtedness, or (ii) invested in assets
related to the business of the Mortgagor or any of its other
Restricted Subsidiaries. If Mortgagor elects (to the extent
such an election is permitted hereby) to perform or cause the
Work to be performed, and the Work is not Major Work, insur-
ance proceeds will be paid in a lump sum to the Mortgagor.
If Mortgagor elects (to the extent such an election is permit-
ted hereby) to perform or cause the Work to be performed, and
the Work is Major Work, the proceeds shall be paid out from
time to time, but not more often than monthly, to the Mortgag-
or as said Major Work progresses, but subject to the following
conditions:
(i) an Architect shall be in charge
of such Major Work;
(ii) each request for payment shall
be made on at least seven (7) days' prior written
notice to the Mortgagee and shall be accompanied by
(a) a certificate of the chief financial officer or
other authorized officer of the Mortgagor
specifying the party to whom (and for the account
of which) such payment is to be made, (b) copies of
lien releases (in form and substance customary and
appropriate for the jurisdiction in which the
Mortgaged Property is located) from each party to
whom payment is to be made, and (c) a certificate
of an Architect if an Architect is required under
Section 2.5 above, otherwise a certificate of the
chief financial officer or other authorized officer
of the Mortgagor stating (x) that all of the Work
completed has been done substantially in compliance
with the approved plans and specifications, if any,
required under said Section 2.5, and in accordance
with all provisions of law; (y) the sum requested
is justly required to reimburse the Mortgagor for
payments by the Mortgagor to, or is justly due to,
the contractor, subcontractors, materialmen, la-
borers, engineers, architects or other persons
rendering services or materials for the Work (giv-
ing a brief description of any such services and
materials), and that when added to all sums, if
any, previously paid out by the Mortgagee does not
exceed the cost of the Work done to the date of
such certificate and (z) that the amount of such
proceeds remaining in the hands of the Mortgagee
will be sufficient on completion of the Work to pay
for the same in full (giving in such reasonable
detail as the Mortgagee may require an estimate of
the cost of such completion) or that, if the pro-
ceeds are inadequate, that a sufficient reserve has
been created in accordance with generally accepted
accounting principles to provide for the payment of
such deficiency;
(iii) each request for payment
shall be accompanied by sworn statements and par-
tial or final waivers of liens, as may be appro-
priate, or if unavailable, lien bonds, satisfactory
to the Mortgagee covering that part of the Work
previously paid for, if any, and by a search pre-
pared by a title insurance company or a licensed
abstractor reasonably satisfactory to the Mortgagee
or by other evidence satisfactory to the Mortgagee,
that there has not been filed with respect to the
Mortgaged Property any mechanic's lien or other
lien or instrument for the retention of title in
respect of any part of the Work not discharged of
record and that there exist no encumbrances on or
affecting the Mortgaged Property (or any part
thereof) other than Permitted Liens;
(iv) no Event of Default shall have
occurred and be continuing; and
(v) the request for any payment
after the Work has been completed shall be accom-
panied by certified copies of all certificates,
permits, licenses, waivers and/or other documents
required by law which are customarily issued in the
state and municipality in which the Mortgaged
Property is located (or pursuant to any agreement
binding upon the Mortgagor or affecting the Mort-
gaged Property or any part thereof) to render
occupancy or use of the Mortgaged Property legal.
Upon completion of any Work and payment in full
therefor, and provided that no Event of Default has occurred
and is continuing, the Mortgagee shall deliver any excess pro-
ceeds to the Mortgagor; provided, however, that nothing herein
contained shall prevent the Mortgagee from applying at any
time the whole or any part of such proceeds to the curing of
any Event of Default.
Section 2.7 Restoration by the Mortgagee. Without
limitation on the foregoing, in the event the Mortgagee, in
accordance with the provisions of Section 2.6 hereof, is
making available to the Mortgagor insurance proceeds (if any)
recovered by the Mortgagee, and if there is an Event of
Default which is continuing, then in addition to all other
rights herein set forth and notwithstanding anything to the
contrary contained herein, the Mortgagee, or any lawfully
appointed receiver of the Mortgaged Property, may at its
option after giving the Mortgagor ten (10) days' written
notice of such Event of Default, perform or cause to be per-
formed such repair, restoration and rebuilding, and may take
such other steps as it deems reasonably advisable to perform
such repair, restoration and rebuilding, and upon twenty-four
(24) hours' prior written notice to the Mortgagor, the
Mortgagee may enter upon the Mortgaged Property to the extent
reasonably necessary or appropriate for any of the foregoing
purposes, and the Mortgagor hereby waives, for the Mortgagor
and all others holding under the Mortgagor, any claim against
the Mortgagee and/or such receiver arising out of anything
done by the Mortgagee or such receiver pursuant hereto, and
the Mortgagee may, at its option, apply insurance proceeds, if
any (without the need by the Mortgagee to fulfill any other
requirements of this Mortgage), to reimburse the Mortgagee
and/or such receiver for all amounts expended or incurred by
either of them in connection with the performance of such
Work, and any excess costs shall be paid by the Mortgagor to
the Mortgagee upon demand, and such payment of excess costs
shall be deemed part of the Indebtedness secured hereby and
shall bear interest at the Default Rate until paid.
Section 2.8 Intentionally Deleted.
Section 2.9 Taxes and Other Charges.
(i) The Mortgagor shall pay and
discharge by the last day payable without penalty
or premium all taxes of every kind and nature,
water rates, sewer rents and assessments, levies,
permits, inspection and license fees and all other
charges imposed upon or assessed against the Mort-
gaged Property or any part thereof or upon the
revenues, rents, issues, income and profits of the
Mortgaged Property or arising in respect of the
occupancy, use or possession thereof (excluding any
taxes in the nature of income taxes). To the
extent any such items are payable in installments,
the Mortgagor may elect to pay any such item in in-
stallments, but each payment shall be made before
any penalty accrues. The Mortgagor shall exhibit
to the Mortgagee within a reasonable period of time
after request and after the same are required to be
paid as specified herein, validated receipts or
other evidence reasonably satisfactory to the Mort-
gagee showing the payment of such taxes, as-
sessments, water rates, sewer rents, levies, fees
and/or other charges. Should the Mortgagor default
in the payment of any of the foregoing taxes, as-
sessments, water rates, sewer rents, levies, fees
or other charges, the Mortgagee may, but shall not
be obligated to, pay the same or any part thereof
and the Mortgagor shall reimburse the Mortgagee for
all amounts so paid and such amounts shall be
deemed a part of the Indebtedness secured hereby
and shall bear interest at the Default Rate until
reimbursed.
(ii) Nothing in this Section 2.9
shall require the payment or discharge of any
obligation imposed upon the Mortgagor by subsection
(i) of this Section 2.9 so long as the Mortgagor
shall in good faith and at its own expense contest
the same or the validity thereof by appropriate
legal proceedings which proceedings must operate to
prevent the collection thereof or other realization
thereon, the sale of the lien thereof and the sale
or forfeiture of the Mortgaged Property or any part
thereof, to satisfy the same; provided that during
such contest the Mortgagor shall, at the option of
the Mortgagee, establish reserves in accordance
with generally accepted accounting principles or
deposit cash or an irrevocable letter of credit
drawn on a bank reasonably acceptable to the
Mortgagee, assuring the discharge of the
Mortgagor's obligation hereunder and of any addi-
tional interest charge, penalty or expense arising
from or incurred as a result of such contest; and
provided, further, that if at any time payment of
any obligation imposed upon the Mortgagor by sub-
section (i) of this Section 2.9 shall become neces-
sary to prevent the delivery of a tax deed or
similar instrument conveying the Mortgaged Property
or any portion thereof or the sale of the tax lien
therefor because of non-payment, or the imposition
of any penalty, which is not reserved or secured
against, or cost on the Mortgagee not paid by the
Mortgagor, then the Mortgagor shall pay the same in
sufficient time to prevent the delivery of such tax
deed or the sale of such lien, or the imposition of
such penalty or cost on the Mortgagee.
(iii) The Mortgagor shall pay when
due all (a) premiums for fire, hazard and other
insurance required to be maintained by the Mort-
gagor on the Mortgaged Property pursuant to the
terms of Section 2.3 hereof, (b) title insurance
premiums, if any, relating to the insurance to be
obtained on the Mortgaged Property in connection
with this Mortgage, and (c) any and all other
costs, expenses and charges expressly required to
be paid hereunder.
Section 2.10 Mechanics' and Other Liens.
(i) To the extent that the follow-
ing are not Permitted Liens, within sixty (60) days
from the date of the filing of any such Lien, the
Mortgagor shall pay, bond or discharge of record,
from time to time, forthwith, all Liens on the
Mortgaged Property or any part thereof, and, in
general, the Mortgagor forthwith shall do, at the
cost of the Mortgagor and without expense to the
Mortgagee, everything necessary to fully preserve
the first priority Lien of this Mortgage. In the
event that the Mortgagor fails in a timely manner
to make payment in full of, bond or discharge, any
such Liens, as required under the preceding
sentence, the Mortgagee may, but shall not be
obligated to, make payment, bond, or discharge such
Liens, in order fully to preserve the Lien of this
Mortgage and the collateral value of the Mortgaged
Property, and the Mortgagor shall reimburse the
Mortgagee for all sums so expended and such sums
shall be deemed a part of the Indebtedness secured
hereby and shall bear interest at the Default Rate
until reimbursed.
(ii) Nothing in this Section 2.10
shall require the payment or discharge of any
obligation imposed upon the Mortgagor by subsection
(i) of this Section 2.10 so long as the Mortgagor
shall bond or discharge any Lien on the Mortgaged
Property arising from such obligation or in good
faith and at its own expense contest the same or
the validity thereof by appropriate legal proceed-
ings which proceedings must operate to prevent the
collection thereof or other realization thereon,
the sale of the Lien thereof and the sale or for-
feiture of the Mortgaged Property or any part
thereof, to satisfy the same; provided that during
such contest the Mortgagor shall, at the option of
the Mortgagee, either (at the option of the
Mortgagor) establish an adequate reserve in
accordance with generally acceptable accounting
principles or provide security satisfactory to the
Mortgagee, assuring the discharge of the
Mortgagor's obligation hereunder and of any addi-
tional interest charge, penalty or expense arising
from or incurred as a result of such contest, which
security can take the form of cash or an
irrevocable letter of credit drawn on a bank rea-
sonably acceptable to the Mortgagee; and provided,
further, that if at any time payment of any obli-
gation imposed upon the Mortgagor by subsection (i)
of this Section 2.10 shall become necessary (a) to
prevent the sale or forfeiture of the Mortgaged
Property or any portion thereof because of non-
payment, or (b) to protect the Lien of this Mort-
gage, then the Mortgagor shall pay the same in
sufficient time to prevent the sale or forfeiture
of the Mortgaged Property or to protect the Lien of
this Mortgage, as the case may be.
Section 2.11 Condemnation Awards. The Mortgagor,
immediately upon obtaining knowledge in any manner of the
institution of any proceedings for the condemnation of the
Mortgaged Property or any portion thereof which could have a
Material Adverse Effect, will notify the Mortgagee of such
proceedings. The Mortgagee may participate in any such
proceedings, and the Mortgagor from time to time will deliver
to the Mortgagee all instruments requested by it to permit
such participation. The Mortgagor and the Mortgagee shall
both act reasonably and expeditiously in connection with such
proceedings. All awards and compensation payable to the Mort-
gagor as a result of any condemnation or other taking or
purchase in lieu thereof of the Mortgaged Property or any part
thereof are hereby assigned to and shall be paid to the
Mortgagee, and shall be treated in accordance with the
provisions of Sections 2.5 and 2.6 hereof. The Mortgagor
hereby authorizes the Mortgagee to collect and receive such
awards and compensation, to give proper receipts and
acceptances therefor and to apply the same in accordance with
the provisions of Sections 2.5 and 2.6 of this Mortgage. The
Mortgagor, upon request by the Mortgagee, shall make, execute
and deliver any and all instruments requested for the purpose
of confirming the assignment of the aforesaid awards and com-
pensation to the Mortgagee free and clear of any Liens,
charges or encumbrances of any kind or nature whatsoever.
Notwithstanding anything to the contrary in this
Section 2.11, the Mortgagor shall continue to pay the In-
debtedness and perform the Obligations at the time and in the
manner provided for in the Notes, the Security Documents and
the Indenture. If the Mortgaged Property or any portion
thereof is sold, through foreclosure or otherwise, prior to
the receipt by the Mortgagee of such payment, the Mortgagee
shall have the right, whether or not a deficiency judgment
shall have been sought, recovered or denied, to receive said
payment, or a portion thereof sufficient to pay the Indebt-
edness, whichever is less. The Mortgagor shall file and
prosecute its claim or claims for any such payment in good
faith and with due diligence and cause the same to be col-
lected and paid over to the Mortgagee, in the name of the
Mortgagor or otherwise, to collect and give receipt for any
such payment and to file and prosecute such claim or claims,
and although it is hereby expressly agreed that the same shall
not be necessary in any event, the Mortgagor shall, upon
demand of the Mortgagee, make, execute and deliver any and all
assignments and other instruments sufficient for the purpose
of assigning any such payment to the Mortgagee, free and clear
of any encumbrances of any kind or nature whatsoever.
Section 2.12 Costs of Defending and Upholding the
Lien. If any action or proceeding is commenced to which
action or proceeding either the Trustee or the Mortgagee is
made a party or in which it becomes necessary to defend or
uphold the first priority Lien of this Mortgage, the Mortgagor
shall reimburse the Trustee and the Mortgagee for all reason-
able expenses (including, without limitation, reasonable
attorneys' fees and expenses) incurred by either the Trustee
or the Mortgagee in any such action or proceeding and such
expenses shall be deemed a part of the Indebtedness secured
hereby and shall bear interest at the Default Rate until
reimbursed. To the extent the subject of the action is
covered by title insurance, the Trustee or the Mortgagee may
be defended by the title insurance counsel reasonably satis-
factory to the Trustee or the Mortgagee; if otherwise covered
by insurance, the Trustee or the Mortgagee may be defended by
counsel for the insurance company reasonably satisfactory to
the Trustee or the Mortgagee. Notwithstanding the foregoing,
in an action not covered by insurance, the Mortgagor may
defend with counsel reasonably satisfactory to the Mortgagee.
Section 2.13 Additional Advances and Disbursements.
The Mortgagor shall pay by the last day payable without
premium or penalty all payments and charges on all liens,
encumbrances, ground and other leases and security interests
which affect or may affect or attach or may attach to the
Mortgaged Property, or any part thereof, and in default
thereof, the Mortgagee shall have the right, but shall not be
obligated, to pay upon notice to the Mortgagor, if practicable
in order fully to preserve the first priority Lien of this
Mortgage and the collateral value of the Mortgaged Property,
such payments and charges and the Mortgagor shall reimburse
the Mortgagee for any amounts so paid. In addition, upon the
occurrence of any material default of the Mortgagor in the
performance of any other terms, covenants, conditions or
obligations by it to be performed hereunder or under any such
Lien, encumbrance, lease or security interest and after the
expiration of all applicable notice and cure periods, if any,
the Mortgagee shall have the right, but shall not be
obligated, to cure such default in the name and on behalf of
the Mortgagor. All sums advanced and reasonable expenses
incurred at any time by the Mortgagee pursuant to this Section
2.13 or as otherwise provided under the terms and provisions
of this Mortgage or under applicable law shall bear interest
from the date that such sum is advanced or expenses incurred,
to and including the date of reimbursement, computed at an
interest rate per annum (the "Default Rate") at all times
equal to the highest default rate provided in the Indenture,
but in no event to exceed the maximum rate allowed by law.
All interest payable hereunder shall be computed on the basis
of a 360-day year over the actual number of days elapsed. Any
such amounts advanced or incurred by the Mortgagee, together
with the interest thereon, shall be payable on demand, shall,
until paid, be secured by this Mortgage as a Lien on the
Mortgaged Property and shall be deemed a part of the Indebt-
edness.
Section 2.14 Costs of Enforcement. The Mortgagor
agrees to bear and pay all expenses (including, without
limitation, reasonable attorneys' fees and expenses) of or
incidental to (i) the enforcement of any provision hereof,
(ii) the enforcement of this Mortgage, the Notes, the Security
Documents, the Indenture and for the curing thereof, (iii)
subject to Section 2.12 hereof, defending the rights and
claims of either the Trustee or the Mortgagee in respect of
this Mortgage, the Notes, the Indenture and/or the Security
Documents, by litigation or otherwise, and (iv) the appoint-
ment of a receiver or receivers as hereinafter contemplated.
All rights and remedies of the Trustee and the Mortgagee shall
be cumulative and may be exercised singly or concurrently.
Notwithstanding anything herein contained to the contrary,
the Mortgagor: (i) HEREBY WAIVES TRIAL BY JURY; and, to the
fullest extent allowed by law, (ii) shall not (a) at any time
insist upon, or plead, or in any manner whatever claim or take
any benefit or advantage of any stay or extension or moratori-
um law, any exemption from execution or sale of the Mortgaged
Property or any part thereof, wherever enacted, now or at any
time hereafter in force, which may affect the covenants and
terms of performance of this Mortgage, nor (b) after any such
sale or sales, claim or exercise any right under any statute
heretofore or hereafter enacted to redeem the property so sold
or any part thereof; (iii) hereby expressly waives all benefit
or advantage of any such law or laws; and (iv) covenants not
to hinder, delay or impede the execution of any power herein
granted or delegated to either the Trustee or the Mortgagee,
but to suffer and permit the execution of every power as
though no such law or laws had been made or enacted. The
Mortgagor, for itself and all who may claim under it, waives,
to the extent that it lawfully may, all right to have the
Mortgaged Property or any part thereof marshalled upon any
foreclosure hereof. The appraisement of the Mortgaged
Property is hereby expressly waived or not waived at the
option of the Trustee and the Mortgagee, their successors or
assigns, such option to be exercised prior to or at the time
judgment is rendered in any foreclosure hereof.
Section 2.15 Filing Charges, Recording Fees,
Taxes, etc. The Mortgagor shall pay any and all taxes,
charges, filing, registration and recording fees, excises and
levies imposed upon the Trustee and the Mortgagee by reason of
its interest in the Mortgaged Property and this Mortgage or
any mortgage supplemental hereto, any security instrument with
respect to any interest of the Mortgagor in and to any fixture
or personal property at the Mortgaged Property or any
instrument of further assurance, other than income, franchise,
succession, inheritance, business and similar taxes, and shall
pay all other taxes, if any, required to be paid on the debt
evidenced by the Notes. In the event the Mortgagor fails to
make such payment within ten (10) days after written notice
thereof to the Mortgagor, then the Trustee and the Mortgagee
shall have the right, in the sole discretion of either of
them, to elect either to (i) declare the entire Indebtedness
immediately due and payable or (ii) to pay the amount due, and
the Mortgagor shall reimburse the Trustee and the Mortgagee
for said amount, together with interest thereon computed at
the Default Rate.
Section 2.16 Restrictive Covenants and Leasing
Requirements. Promptly following the execution hereof,
Mortgagor shall deliver a notice, in form and substance
reasonably satisfactory to Mortgagee, to all existing tenants
or other occupants of the Mortgaged Property, which notice
shall indicate that this Mortgage has been executed and,
subject to the terms hereof, all Leases have been assigned to
Mortgagee. Mortgagor shall not hereafter execute or permit
to be executed any lease or other occupancy agreement, whether
singly or in a series of transactions, for all or substan-
tially all of the Mortgaged Property, without first delivering
to Mortgagee a subordination and attornment agreement to and
for the benefit of Mortgagee in form and substance reasonably
satisfactory to Mortgagee. Notwithstanding the foregoing, the
Mortgagor shall be permitted, without the delivery of a
separate subordination and attornment agreement, to lease up
to one-half of the Mortgaged Property, provided (i) such lease
is to a bona fide third-party tenant on commercially
reasonable terms, (ii) Mortgagor gives notice to the Mortgagee
of such lease, or any such amendment, modification or
extension thereof with a copy thereof, and (iii) Mortgagor
gives prior written notice of this Mortgage to the tenant or
other occupant under any such lease, amendment, modification
or extension.
Section 2.17 Assignment of Rents. The Mortgagor
hereby absolutely, presently and unconditionally assigns to
the Mortgagee, as further security for the payment of the In-
debtedness and performance of the Obligations, all of its
interest in the rents, issues and profits of the Mortgaged
Property, together with its interest in all Leases of all or
any portion thereof and other documents evidencing such rents,
issues and profits now or hereafter in effect and its interest
in any and all deposits held as security under any such
Leases, and shall deliver to the Mortgagee a true and correct
copy of an executed counterpart of each such Lease or other
material documents to which it is a party and which affects
the Mortgaged Property. Nothing contained in the foregoing
sentence shall be construed to bind the Mortgagee to the
performance of any of the covenants, conditions or provisions
contained in any such Lease or other document or otherwise to
impose any obligation on the Mortgagee, including, without
limitation, any liability under the covenants contained in any
such Lease. To the fullest extent permitted by applicable
laws, the Mortgagor hereby grants to the Mortgagee the present
right (i) to collect and receive any and all rents, issues and
profits and to enter upon and take possession of the Mortgaged
Property for the purpose of collecting the said rents, issues
and profits, (ii) to dispossess by the usual summary proceed-
ings (or any other proceedings of the Mortgagee's selection)
any tenant defaulting in the payment thereof to the Mortgagee,
(iii) to let the Mortgaged Property, or any part thereof, and
(iv) to apply said rents, issues and profits, after payment of
all necessary charges and expenses (including, without
limitation, costs of required maintenance and operation of the
Mortgaged Property, costs of collection, default associated
charges, past due interest and late charges and similar
charges and expenses) , on account of the Indebtedness. This
Mortgage constitutes and evidences the irrevocable consent of
the Mortgagor to the entry upon and taking possession of the
Mortgaged Property by the Mortgagee pursuant to such grant,
whether foreclosure has been instituted or not and without
applying for a receiver; provided, however, that so long as no
Event of Default shall have occurred and be continuing, the
Mortgagor shall have a revocable license to collect and
receive said rents, issues and profits and to otherwise manage
the Mortgaged Property, including, without limitation, a
revocable license to exercise the rights granted to Mortgagee
pursuant to subsections (i), (ii), (iii) and (iv) above. If
an Event of Default shall have occurred and be continuing, any
rental or other income from the Mortgaged Property received by
the Mortgagor shall be deemed to be received by the Mortgagor
in trust for the Mortgagee and shall be paid over to the Mort-
gagee immediately upon receipt by the Mortgagor. This license
of the Mortgagor to collect and receive said rents, issues and
profits shall be automatically revoked without the requirement
of any action by the Mortgagee upon the occurrence and during
the continuance of an Event of Default. Upon the occurrence
and during the continuance of an Event of Default, the Mort-
gagor hereby appoints the Mortgagee as its attorney-in-fact,
coupled with an interest, to receive and collect all rent,
additional rent and other sums due under the terms of each
Lease to which the Mortgagor is a party and to direct any such
tenant, by written notice or by mail or in person to the Mort-
gagee. If an Event of Default shall have occurred and be
continuing, Mortgagee may, without thereby becoming or being
deemed a mortgagee in possession or incurring any liability
under any Lease, notify any lessee, tenant, concessionaire,
licensee or other occupant of all or any part of the Mortgaged
Property to pay all rental or other income payable by it, him
or her to the Mortgagee and all such rental and other income
shall thereafter be paid directly to the Mortgagee until the
Mortgagee agrees otherwise. If an Event of Default has
occurred and is continuing, to facilitate the Mortgagee's
collection of rental and other income, the Mortgagor hereby
irrevocably authorizes and empowers the Mortgagee to endorse
on behalf of the Mortgagor and in the Mortgagor's name all
checks and other instruments received by the Mortgagee as pay-
ment of rental or other income. The Mortgagee shall apply to
the Indebtedness the net amount (after deducting all costs and
expenses, including attorneys' fees and expenses, incident to
the collection thereof, and after deducting all costs and ex-
penses of operation, maintenance and repairs of the Mortgaged
Property) of any such rental or other income received by it.
Section 2.18 Transfer Restrictions. Except as
either permitted or not prohibited by the provisions of
Section 4.10 of the Indenture, the Mortgagor may not, without
the prior written consent of the Mortgagee, further mortgage,
encumber, hypothecate, sell, transfer, convey, assign or
sublet all or any part of the Mortgaged Property or the leases
and rents affecting the Mortgaged Property or any other
interest in the Mortgaged Property or such leases and rents or
suffer any of the foregoing to occur involuntarily or by
operation of law or otherwise. In the event of a sale,
transfer or other conveyance of any of the Mortgaged Property
permitted by this section, Mortgagee shall, subject to the
terms of Section 10.3 of the Indenture, at the sole cost and
expense of Mortgagor, execute such documents as Mortgagor
shall reasonably request to evidence the release of the Lien
of this Mortgage with respect to such Mortgaged Property.
Section 2.19 Indemnity. The Mortgagor agrees that
it shall indemnify, defend and hold harmless both the Trustee
and the Mortgagee from and against all loss, liability,
obligation, claim, damage, penalty, cause of action, cost and
expense, including, without limitation, any assessments,
levies, impositions, judgments, reasonable attorneys' fees and
disbursements, cost of appeal bonds and printing costs,
imposed upon or incurred by or asserted against either the
Trustee or the Mortgagee by reason of (a) ownership of this
Mortgage (other than taxes, if any, in the nature of income
taxes imposed on either the Trustee or the Mortgagee as the
result of its ownership of this Mortgage); (b) any accident,
injury to or death of persons or loss of or damage to property
occurring on or about the Mortgaged Property (except to the
extent the same shall be caused by the Mortgagee's own gross
negligence or willful misconduct); (c) any use, non-use or
condition of the Mortgaged Property (except to the extent the
same shall be caused by the Mortgagee's own gross negligence
or willful misconduct); (d) performance of any labor or
services or the furnishing of any materials or other property
in respect of the Mortgaged Property or any part thereof for
maintenance or otherwise; (e) the imposition of any mortgage,
real estate or governmental tax incurred as a result of this
Mortgage or the Notes, other than income, franchise,
succession, inheritance, business and similar taxes payable by
the Trustee or the Mortgagee, or (f) any violation or alleged
violation by the Mortgagor of any law. Any amounts payable
under this Section 2.19 shall be immediately due and payable
without demand, shall be deemed a part of the Indebtedness
secured hereby, and until paid shall bear interest at the
Default Rate. If any action is brought against either the
Trustee or the Mortgagee by reason of any of the foregoing
occurrences, the Mortgagor will have the right to defend and
resist such action, suit or proceeding, at the Mortgagor's
sole cost and expense by counsel reasonably approved by the
Trustee and the Mortgagee. The Mortgagor's obligations under
this Section 2.19 shall survive any change in law, the payment
in full of the Indebtedness, any discharge, release or
satisfaction of this Mortgage and/or the delivery of one or
more deeds in lieu of foreclosure with respect to this
Mortgage.
Section 2.20 Security Interest in Fixtures.
(i) As provided in the granting
clauses hereinabove, this Mortgage shall constitute
a security agreement and shall create and evidence
a security interest in all Fixtures in which a
security interest or lien may be granted or a
common law pledge created pursuant to the UCC as in
effect in the state in which the Mortgaged Property
is located or under common law in such state, which
security interest is hereby granted to Mortgagee as
"secured party" (as such term is defined in the
UCC), securing the Indebtedness and the Obligations
of the Mortgagor hereunder and upon recordation in
the real property records of the County in which
the Mortgaged Property is located, shall constitute
a "fixture filing" within the meaning of Article 9
of the UCC creating a perfected security interest
in all fixtures now or hereafter located upon the
Mortgaged Property. The Mortgagor, immediately
upon the execution and delivery of this Mortgage,
and thereafter from time to time, shall cause this
Mortgage, any security instrument evidencing or
perfecting the Lien hereof in the Fixtures, and
each instrument of further assurance, including,
without limitation, UCC financing statements and
continuation statements, to be filed, registered or
recorded in such manner and in such places as may
be required by any present or future law in order
to publish notice of and fully to perfect, preserve
and protect the lien hereof upon the Mortgaged
Property. The Mortgagor hereby appoints and autho-
rizes the Mortgagee to act on behalf of the
Mortgagor upon the Mortgagor's failure to comply
with the provisions of this Section 2.20.
(ii) To the extent the mortgage
foreclosure laws of the state in which the Mort-
gaged Property is located do not provide for fore-
closure against some or all of the Fixtures, upon
the occurrence of any Event of Default, in addition
to the remedies set forth in Article III hereof,
the Mortgagee shall have the power to foreclose the
Mortgagor's right of redemption in the Fixtures by
sale of the Fixtures in accordance with the UCC as
enacted in the state in which the Mortgaged Prop-
erty is located or under other applicable law in
such state. It shall not be necessary that any
Fixtures offered be physically present at any such
sale or constructively be in the possession of the
Mortgagee or the person conducting the sale. Upon
the occurrence and during the continuance of any
Event of Default, the Mortgagee may sell the Fix-
tures or any portion thereof at public or private
sale with notice to the Mortgagor as hereinafter
provided. The proceeds of any such sale, after de-
ducting all expenses of the Mortgagee in taking,
storing, repairing and selling the Fixtures or any
part thereof (including, without limitation,
attorneys' fees and expenses) shall be applied in
the manner set forth in Section 3.2 hereof. At any
sale, public or private, of the Fixtures or any
part thereof, the Mortgagee may purchase any or all
of the Fixtures offered at such sale.
(iii) The Mortgagee shall give
Mortgagor notice of any sale of the Fixtures or any
portion thereof pursuant to the provisions of this
Section 2.20. Any such notice shall conclusively
be deemed to be effective if such notice is mailed
at least ten (10) business days prior to any sale,
by first class or certified mail, postage prepaid,
to the Mortgagor at its address determined in ac-
cordance with the provisions of Section 4.3 hereof.
Section 2.21 Compliance with Agreements. The Mort-
gagor shall timely comply and perform all of the obligations
imposed upon it by the Notes, the Indenture and the Security
Documents.
Section 2.22 Environmental. Except as could not,
singly or in the aggregate, have a Material Adverse Effect:
(i) Mortgagor (a) has obtained all
Permits that are required with respect to the
operation of the Mortgaged Property under the Envi-
ronmental Laws (as defined below) and is in com-
pliance with all terms and conditions of such re-
quired Permits, and (b) is in compliance with all
Environmental Laws (including, without limitation,
compliance with standards, schedules and timetables
therein);
(ii) no portion of or interest in
the Mortgaged Property 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
Mortgagor has not received any notification of po-
tential or actual liability or request for infor-
mation under CERCLA or any comparable state or
local law;
(iii) no underground storage tank
or other underground storage receptacle, or related
piping, is located on the Mortgaged Property;
(iv) there have been no releases
(including, without limitation, any past or present
releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escap-
ing, leaching, disposing or dumping, on-site or, to
the best of Mortgagor's knowledge after due
inquiry, off-site) of Hazardous Materials (as de-
fined below) by Mortgagor or, to the best of
Mortgagor's knowledge after due inquiry, any prede-
cessor in interest, or any person or entity whose
liability for any release of Hazardous Materials,
Mortgagor or any of its affiliates has retained or
assumed either contractually or by operation of law
at, on, under, from or into any portion of the
Mortgaged Property;
(v) neither Mortgagor nor any
person or entity whose liability Mortgagor or any
of its affiliates has retained or assumed either
contractually or by operation of law has any lia-
bility, absolute or contingent, under any Environ-
mental 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 Envi-
ronmental Law;
(vi) there are no events, ac-
tivities, practices, incidents or actions or, to
the best of Mortgagor's knowledge after due
inquiry, conditions, circumstances or plans that
may interfere with or prevent compliance by Mort-
gagor with any Environmental Law, or that may give
rise to any liability under any Environmental Laws;
and
(vii) in the ordinary course of its
businesses, Mortgagor conducts a periodic review of
the effect of Environmental Laws on the business,
operations and properties of Mortgagor in the
course of which it identifies and evaluates
associated costs and liabilities (including,
without limitation, any capital or operating
expenditures required for cleanup, closure of prop-
erties or compliance with Environmental Laws or any
permit, license or approval, any related con-
straints on operating activities and any potential
liabilities to third parties). On the basis of
such review, Mortgagor has reasonably concluded
that such associated costs and liabilities could
not reasonably be expected to, singly or in the
aggregate, have a Material Adverse Effect on
Mortgagor, 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 limita-
tion, 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 produc-
tion activities, including crude oil or any fraction thereof,
or any petroleum product or other wastes, chemicals or sub-
stances 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 threat-
ened releases therefrom.
ARTICLE III
Default and Remedies
Section 3.1 Events of Default. The following shall
each constitute an "Event of Default" under this Mortgage:
(i) the occurrence of any Event of
Default under the Notes, the Indenture or any of
the Security Documents;
(ii) if the Mortgagor shall fail to
make any other payment required by this Mortgage
within ten (10) days after written notice thereof
to the Mortgagor by the Mortgagee;
(iii) if any representation or
warranty contained herein shall be false or incor-
rect in any material respect when made; or
(iv) if the Mortgagor fails to
keep, observe and/or perform any of the other
covenants, conditions, Obligations or agreements
contained in this Mortgage, and such default con-
tinues for a period of thirty (30) days after
written notice to the Mortgagor by the Trustee or
the Mortgagee; provided, however, that it shall not
be an Event of Default hereunder if the default is
such that cannot reasonably be cured within 30 days
and the Mortgagor commences to cure the default
within such thirty-day period, diligently pursues a
cure, and cures such default within 120 days from
the date of the initial written notice of default
thereof to the Mortgagor by the Trustee or the
Mortgagee.
Section 3.2 Remedies. Upon the occurrence and
during the continuance of any Event of Default, either the
Trustee or the Mortgagee may:
(i) in addition to any rights or
remedies available to either of them hereunder,
take such action as either of them deem advisable
to protect and enforce either of their rights
against the Mortgagor and in and to the Mortgaged
Property, including, without limitation, the
following actions, each of which may be pursued
concurrently or otherwise, at such time and in such
order as either the Trustee or the Mortgagee may
determine, in the sole discretion of either of
them, without impairing or otherwise affecting any
of the other rights and remedies of either the
Trustee or the Mortgagee: (1) declare the entire
unpaid Indebtedness to be immediately due and pay-
able; or (2) after accelerating the Indebtedness,
to the extent permitted by law, immediately enter
into or upon the Mortgaged Property, either per-
sonally or by their agents, nominees or attorneys
and dispossess the Mortgagor and its agents and
servants there-from, and at once take possession of
the Mortgaged Property, and thereupon the Trustee
or the Mortgagee may (a) use, operate, manage,
control, insure, maintain, repair, restore and
otherwise deal with all and every part of the Mort-
gaged Property and conduct the business thereat;
(b) complete any construction on the Mortgaged
Property in such manner and form as either the
Trustee or the Mortgagee deem advisable; (c) make
such alterations, additions, renewals, replacements
and improvements to or on the Improvements and the
balance of the Mortgaged Property necessary or
advisable as determined by either the Trustee or
the Mortgagee to continue to operate the business;
(d) exercise all rights and powers of the Mortgagor
with respect to the Mortgaged Property, whether in
the name of the Mortgagor or otherwise, including,
without limitation, the right to make, cancel,
enforce or modify leases, obtain and evict tenants,
and sue for, collect and receive all earnings,
revenues, rents, issues, profits and other income
of the Mortgaged Property and every part thereof;
and (e) apply the receipts from the Mortgaged
Property to the payment of the Indebtedness, after
deducting therefrom all expenses (including reason-
able attorneys' fees and disbursements) incurred in
connection with the aforesaid operations and all
amounts necessary to pay the taxes, assessments,
insurance and other charges in connection with the
Mortgaged Property, as well as just and reasonable
compensation for the services of the Trustee and
the Mortgagee, their counsel, agents and employees;
or (3) institute proceedings for the complete
foreclosure of this Mortgage in which case the
Mortgaged Property may be sold for cash or credit
in one or more parcels; or (4) with or without
entry and, to the extent permitted, and pursuant to
the procedures provided by applicable law,
institute proceedings for the foreclosure of this
Mortgage for the portion of the Indebtedness then
due and payable, subject to the Lien of this Mort-
gage continuing unimpaired and without loss of
priority so as to secure the balance of the In-
debtedness not then due; or (5) institute an ac-
tion, suit or proceeding in equity for the specific
performance of any covenants, condition or
agreement contained herein; or (6) recover judgment
on the Notes or any guaranty either before, during
or after or in lieu of any proceedings for the
enforcement of this Mortgage; or (7) apply for the
appointment of a trustee, receiver, liquidator or
conservator of the Mortgaged Property, without
regard for the adequacy of the security for the
Indebtedness and without regard for the solvency of
the Mortgagor, any guarantor or of any person, firm
or other entity liable for the payment of the
Indebtedness or performance of the Obligations to
which appointment the Mortgagor does hereby con-
sent; or (8) to the extent permitted by applicable
law, to proceed under the POWER OF SALE granted
herein and sell the Mortgaged Property or any part
thereof to the extent permitted and pursuant to the
procedures provided by the laws of the State in
which the Mortgaged Property is located, and all
estate, right, title and interest, claim and demand
therein, and right of redemption thereof, at one or
more sales, as an entirety or in parcels, and at
such time and place, upon such terms and after such
notice thereof as may be required by applicable law
or (9) pursue such other remedies as the Trustee or
the Mortgagee may have under applicable law.
(ii) In addition to any other
remedies available to the Trustee or the Mortgagee
hereunder or at law or in equity, the Mortgagor
hereby confers unto the Trustee, for the benefit of
the Mortgagee, a power of sale for the Mortgaged
Property exercisable upon an Event of Default under
this Mortgage and agrees that the Trustee, at its
option, may proceed under this power of sale pur-
suant to the applicable procedures provided
therefor by the laws of the State in which the
Mortgaged Property is located or foreclose this
Mortgage as provided by such laws. The Mortgagor
represents and warrants that the Mortgaged Property
is not the Mortgagor's homestead and that the In-
debtedness is not an extension of credit made pri-
marily for agricultural purposes. If the Mortgagee
invokes the power of sale, the Trustee shall give
notice of sale by advertisement once each week for
three consecutive weeks in the manner prescribed by
applicable law. The Trustee, without demand on the
Mortgagor, shall sell the Mortgaged Property at
public auction to the highest bidder for cash at
such time and place in DeSoto County, Mississippi,
as the Trustee designates in the notice of sale in
one or more parcels and in such order as the
Trustee may determine. The Trustee may appoint an
agent to conduct foreclosure proceedings and any
sale thereunder, which appointment need not be
recorded. Any foreclosure sale may be adjourned or
continued from time to time in the discretion of
the Trustee until such time as such sale can be
validly and legally completed. The Mortgagee or
the Mortgagee's designee may purchase the Mortgaged
Property at any sale. The Trustee shall deliver to
the purchaser the Trustee's deed or other
appropriate conveyance instrument conveying the
Mortgaged Property so sold without any covenant or
warranty, expressed or implied. The recitals in
such instrument shall be prima facie evidence of
the truth of the statements made therein, and
failure to give any notice to the Mortgagor as
provided herein shall not adversely affect any
foreclosure sale or create any liability on the
part of the Trustee or the Mortgagee to the
Mortgagor.
Notwithstanding anything contained in this Mortgage
to the contrary, any notices of sale given in accordance with
the applicable requirements provided therefor by the laws of
the State in which the Mortgaged Property is located shall
constitute sufficient notice of sale. The conduct of a sale
pursuant to a power of sale shall be sufficient hereunder if
conducted in accordance with such requirements in effect at
the time of such sale, notwithstanding any other provision
contained in this Mortgage to the contrary. The proceeds of
any sale of the Mortgaged Property pursuant to the power of
sale herein granted shall be applied in accordance with such
requirements in effect at the time of such sale.
(iii) The proceeds of any sale made
under or by virtue of this Article III, together
with any other sums which then may be held by the
Trustee or the Mortgagee under this Mortgage,
whether under the provisions of this Article III or
otherwise, shall be applied:
First: To the payment of the costs and
expenses of any such sale, or the costs and ex-
penses of entering upon, taking possession of,
removing from, holding, operating and/or managing
the Mortgaged Property or any part thereof, as the
case may be, and of all expenses, liabilities and
advances made or incurred by the Trustee and the
Mortgagee under this Mortgage, together with inter-
est at the Default Rate as provided herein on all
advances made by the Trustee or the Mortgagee and
all taxes or assessments, except any taxes,
assessments or other charges subject to which the
Mortgaged Property shall have been sold.
Second: In accordance with the provi-
sions of Section 6.10 of the Indenture.
The Mortgagee and any receiver of the Mortgaged Property or
any part thereof shall be liable to account for only those
rents, issues and profits actually received by it.
(iv) The Trustee, for the benefit
of the Mortgagee, may adjourn from time to time any
sale by it to be made under or by virtue of this
Mortgage by announcement at the time and place
appointed for such sale or for such adjourned sale
or sales; and except as otherwise provided by any
applicable provision of law, the Trustee, without
further notice or publication, may make such sale
at the time and place to which the same shall be so
adjourned.
(v) Upon the completion of any sale
or sales made by the Trustee, for the benefit of
the Mortgagee, under or by virtue of this Article
III, the Trustee, or an officer of any court empow-
ered to do so, shall execute and deliver to the
accepted purchaser or purchasers a good and suffi-
cient instrument, or good and sufficient instru-
ments, granting, conveying, assigning and
transferring all estate, right, title and interest
in and to the property and rights sold. The
Trustee, for the benefit of the Mortgagee, is
hereby irrevocably appointed the true and lawful
attorney-in-fact of the Mortgagor (coupled with an
interest), in its name and stead, to make all
necessary conveyances, assignments, transfers and
deliveries of the Mortgaged Property and rights so
sold and for that purpose the Trustee may execute
all necessary instruments of conveyance, assign-
ment, transfer and delivery, and may substitute one
or more persons with like power, the Mortgagor
hereby ratifying and confirming all that said
attorney-in-fact or such substitute or substitutes
shall lawfully do by virtue hereof. Nevertheless,
the Mortgagor, if so requested by either the
Trustee or the Mortgagee, shall ratify and confirm
any such sale or sales by executing and delivering
to the Trustee or to such purchaser or purchasers
all such instruments as may be advisable, in the
judgment of either the Trustee or the Mortgagee,
for the purpose, and as may be designated in such
request. Any such sale or sales made under or by
virtue of this Article III, whether made under the
POWER OF SALE herein granted or under or by virtue
of judicial proceedings or of a judgment or decree
of foreclosure and sale, shall operate to divest
all of the estate, right, title, interest, claim
and demand whatsoever, whether at law or in equity,
of the Mortgagor in and to the properties and
rights so sold, and shall be a perpetual bar both
at law and in equity against the Mortgagor and
against any and all persons claiming or who may
claim the same or any part thereof from, through or
under the Mortgagor.
(vi) In the event of any sale made
under or by virtue of this Article III (whether
made under the POWER OF SALE provided for herein or
under or by virtue of judicial proceedings or of a
judgment or decree of foreclosure and sale), the
entire Indebtedness, if not previously due and pay-
able, immediately thereupon shall, anything in any
Note, the Indenture, any of the Security Documents
or in this Mortgage to the contrary notwithstand-
ing, become due and payable.
(vii) Upon any sale made under or
by virtue of this Article III (whether made under
the POWER OF SALE provided for herein or under or
by virtue of judicial proceedings or of a judgment
or decree of foreclosure and sale), either the
Mortgagee or the Trustee, for the benefit of the
Mortgagee, may bid for and acquire the Mortgaged
Property or any part thereof or interest therein
and in lieu of paying cash therefor may make set-
tlement for the purchase price by crediting upon
the Indebtedness of the Mortgagor secured by this
Mortgage the net sales price after deducting
therefrom the expenses of the sale and the costs of
the action (including attorneys' fees and expenses)
and any other sums which the Trustee or the
Mortgagee are authorized to deduct under this Mort-
gage.
(viii) No recovery of any judgment
by the Trustee or the Mortgagee and no levy of an
execution under any judgment upon the Mortgaged
Property or any part thereof or upon any other
property of the Mortgagor shall effect in any
manner or to any extent, the lien of this Mortgage
upon the Mortgaged Property or any part thereof, or
any liens, rights, powers or remedies of either the
Trustee or the Mortgagee hereunder, but such Liens,
rights, powers and remedies of the Trustee and the
Mortgagee shall continue unimpaired as before.
Section 3.3 Payment of Indebtedness After Default.
Upon the occurrence of any Event of Default and the acceler-
ation of the maturity of the Indebtedness as provided herein,
if, at any time prior to foreclosure sale, the Mortgagor or
any other person tenders payment of the amount necessary to
satisfy the Indebtedness, the same shall constitute an evasion
of the payment terms hereof and/or the Indenture or the
Security Documents or the Notes and shall be deemed to be a
voluntary prepayment hereunder, in which case such payment
must include the premium and/or fee required under the
prepayment provision, if any, contained herein or in the
Notes, the Security Documents and/or the Indenture. This
provision shall be of no force or effect if at the time that
such tender of payment is made, the Mortgagor has the right
under this Mortgage, the Security Documents, the Indenture or
the Notes to prepay the Indebtedness without penalty or
premium.
Section 3.4 Intentionally Omitted.
Section 3.5 Mortgagor's Actions After Default.
Effective after the happening of any Event of Default and
immediately upon the commencement of any action, suit or other
legal proceedings by the Trustee or the Mortgagee to obtain
judgment for the Indebtedness, or of any other nature in aid
of the enforcement of the Notes, the Indenture, the Security
Documents or this Mortgage, the Mortgagor hereby (i) waives
the issuance and service of process in any such action, suit
or proceeding, provided, however, that notice of such process
is given to Mortgagor in accordance with Section 4.3 hereof,
(ii) waives the right to trial by jury and (iii) if required
by the Mortgagee, consents to the appointment of a receiver or
receivers with respect to the Mortgaged Property and of all
the earnings, revenues, rents, issues, profits and income
thereof.
Section 3.6 Control by Mortgagee After Default.
Upon and following the appointment of any receiver, liquidator
or trustee of the Mortgagor, or of any of its property, or of
the Mortgaged Property or any part thereof, the Mortgagee
shall be entitled to possession and control of all property
now and hereafter covered by this Mortgage, and shall not be
deemed to be a mortgagee-in-possession as a result thereof.
ARTICLE IV
Miscellaneous
Section 4.1 Credits Waived. The Mortgagor will not
claim or demand or be entitled to any credit or credits
against the Indebtedness for so much of the taxes assessed
against the Mortgaged Property or any part thereof, as is
equal to the tax rate applied to the amount due on this
Mortgage or any part thereof, and no deductions shall other-
wise be made or claimed from the taxable value of the Mort-
gaged Property or any part thereof by reason of this Mortgage
or the payment of the Indebtedness and the performance of the
Obligations secured hereby.
Section 4.2 No Releases. The Mortgagor agrees,
that in the event the Mortgaged Property or any part thereof
or interest therein is sold pursuant to the prior written con-
sent of the Mortgagee as provided herein, and the Mortgagee
enters into any agreement with the then owner of the Mortgaged
Property extending the time of payment of the Indebtedness or
performance of the Obligations, or otherwise modifying the
terms hereof, the Mortgagor shall continue to be liable to pay
the Indebtedness and perform the Obligations according to the
tenor of any such agreement unless expressly released and
discharged in writing by the Mortgagee.
Section 4.3 Notices. All notices, requests,
demands and other communications required or permitted to be
given to or made upon any party hereto shall be in writing and
shall be personally delivered or sent by registered or
certified mail, postage prepaid, return receipt requested, or
by prepaid telex or telegram (with messenger delivery
specified in the case of a telegram), or by telecopier, or
overnight air courier guaranteeing next day delivery and shall
be deemed to be delivered for purposes of this Mortgage when
delivered in person, upon acknowledged receipt if delivered by
telecopy or telex, or five (5) business days after depositing
it in the United States mail, registered or certified, with
postage prepaid and properly addressed, and the next business
day after timely delivery to the courier, if sent by overnight
air courier guaranteeing next day delivery. Unless otherwise
specified in a notice sent or delivered in accordance with the
foregoing provisions of this Section 4.3, notices, demands,
instructions and other communications in writing shall be
given to or made upon the respective parties at their
respective addresses (or to their respective telex or
telecopier numbers) indicated below:
If to Mortgagor:
Terex Corporation
500 Post Road East
Westport, Connecticut 06880
Attention: Marvin Rosenberg, Esq.
If to the Trustee:
Jim B. Tohill
Watkins, Ludlam & Stennis
633 North State Street
Jackson, Mississippi 39202
If to the Mortgagee:
United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Attn: Corporate Trust Department
Section 4.4 Binding Obligations. The provisions
and covenants of this Mortgage shall run with the land, shall
be binding upon the Mortgagor and shall inure to the benefit
of both the Trustee and the Mortgagee, subsequent holders of
this Mortgage, and the respective successors and assigns of
the foregoing. For the purpose of this Mortgage, the term
"Mortgagor" shall include and refer to the Mortgagor named
herein, any subsequent owners of the Mortgaged Property (or
any part thereof or interest therein), and their respective
heirs, executors, legal representatives, successors and
assigns. If there is more than one Mortgagor, all of their
undertakings hereunder shall be deemed to be joint and sever-
al.
Section 4.5 Legal Construction. The creation of
this Mortgage, the perfection of the lien or security interest
thereof in the Mortgaged Property, and the rights and remedies
of both the Trustee and the Mortgagee with respect to the
Mortgaged Property, as provided herein and by the laws of the
state wherein the Mortgaged Property is located, shall be
governed by and construed in accordance with the internal laws
of the state wherein the Mortgaged Property is located without
regard to principles of conflict of law. Otherwise, to the
extent permitted by applicable law, this Mortgage, the Notes,
the Security Documents, the Indenture and all other
obligations of the Mortgagor (including, without limitation,
the liability of the Mortgagor for any deficiency following a
foreclosure of all or any part of the Mortgaged Property)
shall be governed by and construed in accordance with the
internal laws of the State of New York without regard to
principles of conflicts of laws, such state being the state
where such documents were executed and delivered. Nothing in
this Mortgage, the Notes, the Indenture or in any other
agreement between the Mortgagor and the Mortgagee shall
require the Mortgagor to pay, or the Mortgagee to accept,
interest in an amount which would subject the Mortgagee to any
penalty or forfeiture under applicable law. All agreements
between the Mortgagor and the Mortgagee, whether now existing
or hereafter arising and whether oral or written, are hereby
expressly limited so that in no contingency or event whatsoev-
er shall the amount paid or agreed to be paid by the Mortgagor
for the use, forbearance or detention of the money to be
loaned under the Indenture, the Security Documents, the Notes
or any related document, or for the payment or performance of
any covenant or obligation contained herein, in the Indenture,
the Security Documents or in the Notes exceed the maximum
amount permissible under applicable Federal or state usury
laws. If under any circumstances whatsoever fulfillment of
any such provision, at the time performance of such provision
shall be due, shall involve exceeding the limit of validity
prescribed by law, then the obligation to be fulfilled shall
be reduced to the limit of such validity. If under any
circumstances the Mortgagor shall have paid an amount deemed
interest by applicable law, which would exceed the highest
lawful rate, such amount shall be applied to the reduction of
the principal amount owing in respect of the Indebtedness and
not to the payment of interest, or if such excessive interest
exceeds such unpaid balance of principal and any other amounts
due hereunder or under the Notes, the Indenture or any of the
Security Documents, the excess shall be refunded to the Mort-
gagor. All sums paid or agreed to be paid for the use, for-
bearance or detention of the principal under any extension of
credit by the Mortgagee shall, to the extent permitted by
applicable law, and to the extent necessary to preclude
exceeding the limit of validity prescribed by law, be amor-
tized, prorated, allocated and spread from the date of this
Mortgage until payment in full of such sums so that the actual
rate of interest on account of such principal amounts is
uniform throughout the term hereof.
Section 4.6 Captions. The captions of the Sections
of this Mortgage are for the purpose of convenience only and
are not intended to be a part of this Mortgage and shall not
be deemed to modify, explain, enlarge or restrict any of the
provisions hereof.
Section 4.7 Further Assurances. The Mortgagor
shall do, execute, acknowledge and deliver, at the sole cost
and expense of the Mortgagor, such further acts, deeds,
documents, instruments, conveyances, mortgages, assignments,
estoppel certificates, financing statements, fixture filings,
continuation statements, notices of assignment, transfers and
assurances as the Trustee or the Mortgagee may reasonably
require from time to time in order to assure, convey, grant,
assign, transfer and confirm unto the Trustee and the
Mortgagee the rights now or hereafter intended to be granted
to the Trustee and the Mortgagee under this Mortgage, any
other instrument executed in connection with this Mortgage or
any other instrument under which the Mortgagor may be or may
hereafter become bound to convey, mortgage or assign to the
Trustee or the Mortgagee for carrying out the intention of
facilitating the performance of the terms of this Mortgage.
The Mortgagor hereby appoints the Mortgagee as its attorney-
in-fact to execute, acknowledge and deliver for and in the
name of the Mortgagor any and all of the instruments mentioned
in this Section 4.7 and this power, being coupled with an
interest, shall be irrevocable as long as any part of the
Indebtedness remains unpaid or any Obligations remain unper-
formed, provided, however, that the Mortgagee shall not
exercise its powers as attorney-in-fact without giving the
Mortgagor five (5) days' prior written notice of its intention
to do so.
Section 4.8 Severability. Any provision of this
Mortgage which is prohibited or unenforceable in any juris-
diction or prohibited or unenforceable as to any person or
entity shall, as to such jurisdiction, person or entity or
circumstance be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provi-
sions hereof or affecting the validity or enforceability of
such provisions in any other jurisdiction or as to any other
person or entity or circumstance.
Section 4.9 General Conditions.
(i) All covenants hereof shall be
construed as affording to the Trustee and the
Mortgagee rights additional to and not exclusive of
the rights conferred under the provisions of any
other applicable law. To the extent any specific
provision of this Mortgage and the provisions of
any applicable law conveying any beneficial rights
to either party directly conflict, the terms of
this Mortgage shall control.
(ii) This Mortgage cannot be al-
tered, amended, modified or discharged orally and
no executory agreement shall be effective to modify
or discharge it in whole or in part, unless it is
in writing and signed by the party against whom en-
forcement of the modification, alteration,
amendment or discharge is sought.
(iii) No remedy herein conferred
upon or reserved to the Trustee or the Mortgagee is
intended to be exclusive of any other remedy or
remedies, and each and every such remedy shall be
cumulative, and shall be in addition to every other
remedy given hereunder or now or hereafter existing
at law or in equity or by statute. No delay or
omission of the Trustee or the Mortgagee in
exercising any right or power accruing upon any
Event of Default shall impair any such right or
power, or shall be construed to be a waiver of any
such Event of Default, or any acquiescence therein.
Acceptance of any payment (other than a monetary
payment in cure of a monetary default) after the
occurrence of an Event of Default shall not be
deemed a waiver of or a cure of such Event of
Default and every power and remedy given by this
Mortgage to the Trustee or the Mortgagee may be
exercised from time to time as often as may be
deemed expedient by the Trustee or the Mortgagee.
Nothing in this Mortgage or in the Notes shall
limit or diminish the obligation of the Mortgagor
to pay the Indebtedness in the manner and at the
time and place therein respectively expressed.
(iv) No waiver by the Trustee, the
Mortgagee or the Mortgagor shall be effective
unless it is in writing and then only to the extent
specifically stated. Without limiting the
generality of the foregoing, any payment made by
the Trustee or the Mortgagee for insurance premi-
ums, taxes, assessments, water rates, sewer
rentals, levies, fees or any other charges
affecting the Mortgaged Property shall not consti-
tute a waiver of the Mortgagor's default in making
such payments and shall not obligate the Mortgagee
to make any further payments.
(v) The Mortgagee shall have the
right to appear in and defend any action or pro-
ceeding, in the name and on behalf of the Mortgagor
which the Mortgagee in its discretion determines
may adversely affect the Mortgaged Property or this
Mortgage, provided, however, that the Mortgagor
shall have the right to defend any such action with
counsel reasonably acceptable to the Mortgagee. In
the event that any such action or proceeding is one
covered by title insurance, defense thereof may be
made by counsel to the title company; if the pro-
ceeding is one covered by insurance, defense
thereof may be made by counsel to the insurance
company; notwithstanding the foregoing, if the
action is one not covered by insurance, the Mort-
gagor shall defend such action with counsel reason-
ably satisfactory to the Mortgagee. The Mortgagee
shall also have the right, upon reasonable prior
notice to Mortgagor (except in the case of an
emergency or other imminent danger to the Mortgaged
Property or Mortgagee's interest therein, in which
event no prior notice shall be required), to insti-
tute any action or proceeding which the Mortgagee
in its reasonable discretion determines should be
brought to protect its interest in the Mortgaged
Property or its rights hereunder. All costs and
expenses incurred by the Mortgagee in connection
with any such action or proceedings, including,
without limitation, attorneys' fees and expenses
shall be paid by the Mortgagor and shall be secured
by this Mortgage.
(vi) In the event of the passage
after the date of this Mortgage of any law of any
governmental authority having jurisdiction hereof
or of the Mortgaged Property, deducting from the
value of land for the purpose of taxation, affect-
ing any lien thereon or changing in any way the
laws for the taxation of mortgages or debts secured
by mortgages for federal, state or local purposes,
or the manner of the collection of any such taxes,
so as to affect this Mortgage, the Mortgagor shall
promptly pay to the Trustee and the Mortgagee, on
demand, all taxes, costs and charges for which the
Trustee and the Mortgagee are or may be liable as a
result thereof; provided that if said payment shall
be prohibited by law, render the Notes usurious or
subject the Trustee or the Mortgagee to any penalty
or forfeiture, then and in such event the Indebted-
ness shall, at the option of either the Trustee or
the Mortgagee, be immediately due and payable.
(vii) The Mortgagor hereby appoints
the Mortgagee as its attorney-in-fact in connection
with the personal property and fixtures covered by
this Mortgage, where permitted by law, to file on
its behalf any financing statements or other state-
ments in connection therewith with the appropriate
public office signed by the Mortgagee, as secured
party. This power being coupled with an interest,
shall be irrevocable so long as any part of the
Indebtedness remains unpaid.
Section 4.10 Multistate Real Estate Transaction.
The Mortgagor acknowledges that this Mortgage is one of a
number of other mortgages, deeds of trust and assignments of
leases and rents and other security documents (hereinafter
collectively the "Other Security Documents") which secure the
payment of the Indebtedness and performance of the Obligations
in whole or in part. The Mortgagor agrees that the lien of
this Mortgage shall, subject to the terms hereof, be absolute
and unconditional and shall not in any manner be affected or
impaired by any acts or omissions whatsoever of the Trustee or
the Mortgagee and, without limiting the generality of the
foregoing, the lien hereof shall not be impaired by any
acceptance by the Trustee or the Mortgagee of any security for
or guarantors upon any of the Indebtedness or by any failure,
neglect or omission on the part of the Trustee or the
Mortgagee to realize upon or protect any of the Indebtedness
or any collateral or security therefor. The lien hereof shall
not in any manner be impaired or affected by any release
(except as to the property released), sale, pledge, surrender,
compromise, settlement, renewal, extension, indulgence,
alteration, changing, modification or any disposition of any
of the Indebtedness or of any of the collateral or security
therefor. The Trustee or the Mortgagee may exercise any of
the rights and remedies under the Other Security Documents
without first exercising or enforcing any of its rights and
remedies hereunder, or may foreclose, exercise any power of
sale, or exercise any other right available under this
Mortgage without first exercising or enforcing any of its
rights and remedies under any or all of the Other Security
Documents. Such exercise of the Trustee's or the Mortgagee's
rights and remedies under any or all of the Other Security
Documents shall not in any manner impair the Indebtedness or
lien of this Mortgage, and any exercise of the rights or
remedies of the Trustee or the Mortgagee hereunder shall not
impair the lien of any of the Other Security Documents or any
of the Trustee's or the Mortgagee's rights and remedies
thereunder. The Mortgagor specifically consents and agrees
that either the Trustee or the Mortgagee may exercise its
rights and remedies hereunder and under the Other Security
Documents separately or concurrently and in any order that the
Trustee and the Mortgagee may deem appropriate.
Section 4.11 Agreement Paramount. If and to the
extent that any of the provisions of this Mortgage conflict or
are otherwise inconsistent with any of the provisions of the
Indenture, the provisions of the Indenture shall prevail.
Notwithstanding the foregoing, the failure of the Indenture to
speak to or address a provision expressly set forth in this
Mortgage shall not be deemed to be such an inconsistency or
conflict.
Section 4.12 Trustee. The following provisions
shall govern with respect to the Trustee:
(i) To the extent permitted by law,
the Trustee shall not be liable for any error of
judgment or act done by the Trustee in good faith,
or be otherwise responsible or accountable to the
Mortgagor under any circumstances whatsoever, nor
shall the Trustee be personally liable in case of
entry by him, or anyone entering by virtue of the
powers herein granted, upon the Mortgaged Property
for debts contracted or liability or damages
incurred in the management or operation of the
Mortgaged Property. The Trustee shall have the
right to rely on any instrument, document or
signature authorizing or supporting any action
taken or proposed to be taken by him hereunder,
believed by him in good faith to be genuine. The
Trustee shall be entitled to reimbursement for
expenses incurred by him in the performance of his
duties hereunder and to reasonable compensation for
such of his services hereunder as shall be
rendered. The Mortgagor will, from time to time,
pay the compensation due to the Trustee hereunder
and reimburse the Trustee for, and save him
harmless against, any and all liability and
expenses which may be incurred by him in the
performance of his duties.
(ii) All moneys received by the
Trustee shall, until used or applied as herein
provided, be held in trust for the purposes for
which they were received, but need not be
segregated in any manner from any other moneys
(except to the extent required by law), and the
Trustee shall be under no liability for interest on
any money received by him hereunder.
(iii) The Trustee may resign at any
time with or without notice. If the Trustee shall
die, resign or become disqualified from acting in
the execution of this trust or shall fail or refuse
to execute the same when requested by the Mortgagee
so to do, or if, for any reason, the Mortgagee
shall prefer to appoint a substitute trustee to act
instead of the Trustee, the Mortgagee shall have
full power to appoint a substitute trustee or
trustees, either of whom may act, and, if preferred
and, to the extent permitted by law, several
substitute trustees in succession who shall succeed
to all the estates, rights, powers and duties of
the Trustee.
(iv) Any new trustee appointed
pursuant to any of the provisions hereof shall,
without any further act, deed or conveyance, become
vested with all the estates, properties, rights,
powers and trusts of its or his predecessor in the
rights hereunder with like effect as if originally
named as trustee herein; but nevertheless, upon the
written request of the Mortgagor or of the
successor trustee, the trustee ceasing to act shall
execute and deliver an instrument transferring to
such successor trustee, upon the trusts herein
expressed, all the estates, properties, rights,
powers and trusts of the trustee so ceasing to act,
and shall duly assign, transfer and deliver any of
the property and money held by such trustee to the
successor trustee so appointed in his place.
<PAGE>
IN WITNESS WHEREOF, this Mortgage has been duly
executed and delivered by the Mortgagor as of the date first
above written.
TEREX CORPORATION
By:____________________________
Name:
Title:
Attest:________________________
Name:
Title:
STATE OF __________________
COUNTY OF _________________
Personally appeared before me, the undersigned authority in
and for the said county and state, on this ____ day of ________,
1995, within my jurisdiction, the within named
and
, duly identified before me, who acknowl-
edged that they are the and
, respectively, of
TEREX CORPORATION, a Delaware corporation, and that for and on
behalf of the said corporation and as its act and deed, they
executed the above and foregoing instrument, after first having
been duly authorized so to do.
___________________________
Notary Public
My Commission expires:
____________________
<PAGE>
[Mississippi]
SCHEDULE A
Description of the Property
All of the Mortgagor's rights as tenant under that
certain lease dated as of April 28, 1988, by and between J.C. Penny
Company, Inc. and Northwest Engineering Company (predecessor in
interest to the Mortgagor) for the premises described as follows:
Lots 18-27, Freeport Industrial Park, Unit 1, located in
Section 22, Township 1 South, Range 8 West, DeSoto County,
Mississippi, and more particularly described in Plat Book 11, page
43, in the office of the Chancery Clerk of DeSoto County,
Mississippi.
[South Carolina]
REAL ESTATE FEE & LEASEHOLD MORTGAGE, ASSIGNMENT OF RENTS,
SECURITY AGREEMENT, FINANCING STATEMENT AND FIXTURE FILING
in the amount of
$250,000,000.00
FROM
PPM CRANES, INC., a Delaware corporation,
having an office at:
c/o Terex Corporation
500 Post Road East
Westport, Connecticut 06880
(the "Mortgagor")
TO
UNITED STATES TRUST COMPANY OF NEW YORK,
as collateral agent,
having an office at:
114 West 47th Street
New York, New York 10036
(the "Mortgagee")
This instrument was prepared by and,
after recording, please return to:
Michael A. Woronoff, Esq.
Skadden, Arps, Slate, Meagher & Flom
300 South Grand Avenue
Los Angeles, California 90071
<PAGE>
REAL ESTATE FEE & LEASEHOLD MORTGAGE, ASSIGNMENT OF RENTS,
SECURITY AGREEMENT, FINANCING STATEMENT AND FIXTURE FILING
THIS REAL ESTATE FEE & LEASEHOLD MORTGAGE, ASSIGNMENT OF RENTS,
SECURITY AGREEMENT, FINANCING STATEMENT AND FIXTURE FILING (hereafter, as
amended, modified, replaced, consolidated and extended, this "Mortgage") is
made as of the 9th day of May, 1995 from PPM CRANES, INC., a Delaware
corporation (the "Mortgagor"), a subsidiary of TEREX CORPORATION, a Dela-
ware corporation ("Terex"), with a mailing address of 500 Post Road East,
Westport, Connecticut 06880, to UNITED STATES TRUST COMPANY OF NEW YORK, a
New York corporation (the "Mortgagee"), as collateral agent, with a mailing
address of 114 West 47th Street, New York, New York 10036.
R E C I T A L S:
1. The Mortgagor is the owner of a fee simple interest in Tract
I of and a leasehold interest in Tract II of the Real Property (as herein-
after defined).
2. Pursuant to a certain Indenture (the "Indenture") dated as of
even date herewith between Terex and the Mortgagee as trustee thereunder
(in such capacity, the "Indenture Trustee") for the benefit of the Holders
of the Notes (as defined below), Terex has obtained financing in the amount
of $250,000,000 (the "Loan") with a maturity date of May 15, 2002. All
capitalized terms used but not otherwise defined herein shall have the
meaning ascribed to them in the Indenture.
3. Mortgagor, as a subsidiary of Terex, will receive substantial
benefits from the Loan, and pursuant to Sections 10.7 and 10.8 of the
Indenture, has guaranteed the obligations of Terex under the Indenture and
the Notes.
4. To secure Mortgagor's obligations under the Guaranty and the
repayment of the Notes and performance of all terms and conditions of the
Indenture, the Mortgagor has agreed to create a first mortgage lien on the
Mortgaged Property herein described, in favor of the Mortgagee.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants herein contained, and (A) in order to secure (i) payment
of the indebtedness under the Indenture, as the same may be amended,
modified, restated, substituted and extended by the terms hereof,
aggregating $250,000,000 in principal amount (the various promissory notes
and securities evidencing said indebtedness and all supplements,
substitutions, extensions and renewals thereof are hereinafter referred to
collectively as the "Notes"), (ii) payment of the interest on such
indebtedness according to the terms of the Indenture and the Notes, (iii)
payment of all other sums payable to the Mortgagee pursuant to the terms of
this Mortgage, and (iv) payment of all other sums owed by the Mortgagor or
Terex to the Mortgagee, the Indenture Trustee or the Holders in accordance
with the terms of the Indenture or pursuant to the Notes, the Security
Documents or the Guaranty (the payment obligations described in the
foregoing clauses (i), (ii), (iii) and (iv) are hereinafter referred to
collectively as the "Indebtedness"); and (B) in order to secure the perfor-
mance of every obligation contained in the Indenture, the Notes, this
Mortgage, the Security Documents, the Guaranty and all other instruments
now or hereafter evidencing or securing any portion of the Indebtedness
(hereinafter referred to collectively as the "Obligations"), the Mortgagor
by these presents does hereby mortgage, warrant, grant a security interest
in, pledge, assign and transfer to the Mortgagee, and each of its
successors and assigns forever under and subject to the terms and condi-
tions hereof, all of the Mortgagor's estate, right, title and interest in
and to the following, whether now owned or held or hereafter acquired
(hereinafter collectively referred to as the "Mortgaged Property" or the
"Collateral"):
A. Mortgagor's fee and leasehold interest in that certain real
property (the "Real Property") more particularly described in Schedule A
attached hereto and made a part hereof by this reference; and
B. All of the buildings, structures and improvements (here-
inafter, collectively, together with all building equipment, the "Improve-
ments") now or hereafter located on the Real Property and all of its right,
title and interest, if any, in and to the streets and roads abutting the
Real Property to the center lines thereof, and strips and gores within or
adjoining the Real Property, the air space and right to use said air space
above the Real Property, all rights of ingress and egress by motor vehicles
to parking facilities on or within the Real Property, all easements now or
hereafter affecting the Real Property or the Improvements, all royalties
and all rights appertaining to the use and enjoyment of the Real Property
or the Improvements, including, without limitation, alley, drainage, crop,
timber, agricultural, horticultural, mineral, water, oil and gas rights;
and
C. All fixtures (the "Fixtures"), and all appurtenances and
additions thereto and substitutions or replacements thereof, now or
hereafter attached to the Real Property and/or the Improvements. Without
limiting the foregoing, to the extent permitted under applicable law, this
Mortgage shall be deemed to be a "security agreement" under the Uniform
Commercial Code of the State wherein the Real Property and improvements are
located (the "UCC"), and the Mortgagor hereby grants to the Mortgagee a
"security interest" (as defined in the UCC) in all of its present and
future Fixtures and the Mortgagee shall have, in addition to all rights and
remedies provided herein, and in any other agreements, commitments and
undertakings made by the Mortgagor to the Mortgagee, all of the rights and
remedies of a "secured party" under the UCC; and
D. To the extent the same does not constitute Fixtures, all
equipment (as such term is defined in Article 9 of the UCC) now owned or
hereafter acquired and owned by the Mortgagor, which is used at or in
connection with the Improvements or the Real Property and is located
thereon or therein (including, without limitation, all machinery, produc-
tion equipment, furnishings, electronic data-processing and other office
equipment to the extent located on or in the Mortgaged Property), together
with all attachments, components, parts, equipment and accessories
installed thereon or affixed thereto and any and all extensions, additions,
improvements, betterments, renewals, substitutions and replacements to, for
or of any of the foregoing (collectively, the "Equipment"); and
E. All leases, lettings and licenses of the Real Property, the
Improvements and any other property or rights encumbered or conveyed
hereby, or any part thereof, now or hereafter entered into (each a "Lease,"
and collectively, the "Leases") and all right, title and interest of the
Mortgagor thereunder, including, without limitation, cash and securities
deposited thereunder, the right to receive and collect the rents, issues
and profits payable thereunder and the right to enforce, whether by action
at law or in equity or by other means, all provisions, covenants and
agreements thereof, including, without limitation, the right (i) to enter
upon and take possession of the Mortgaged Premises (as hereinafter defined)
for the purpose of collecting the said rents, issues and profits, (ii) to
dispossess by the usual summary proceedings (or any other proceedings of
the Mortgagee's selection) any tenant defaulting in the payment thereof to
the Mortgagee, (iii) to let the Mortgaged Premises, or any part thereof,
and (iv) subject to Mortgagor's license as hereinafter set forth, to apply
said rents, issues and profits, after payment of all necessary charges and
expenses, on account of the Indebtedness; and
F. Any and all permits, certificates, approvals and autho-
rizations, however characterized, related to the Real Property or the
Improvements, issued or in any way furnished, whether necessary or not for
the operation and use of the Real Property or the Improvements, including,
without limitation, operating licenses, franchise agreements, contracts,
contract rights, public utility deposits, building permits, certificates of
occupancy, environmental certificates, industrial permits and licenses and
certificates of operation; and
G. All unearned premiums, accrued, accruing or to accrue under
insurance policies related to the Real Property or the Improvements now or
hereafter obtained by the Mortgagor and all proceeds of the conversion,
voluntary or involuntary, of the Real Property, the Improvements and/or any
other property or rights encumbered or conveyed hereby, or any part
thereof, into cash or liquidated claims, including, without limitation,
proceeds of hazard and title insurance and all awards and compensation
heretofore and hereafter made to the present and all subsequent owners of
the Real Property, the Improvements and/or any other property or rights
encumbered or conveyed hereby by any governmental or other lawful authority
for the taking by eminent domain, condemnation or otherwise, of all or any
part of the Real Property, the Improvements and/or any other property or
rights encumbered or conveyed hereby or any easement therein, including,
but not limited to, awards for any change of grade of streets; and
H. All extensions, improvements, betterments, renewals, substi-
tutions and replacements of and all additions and appurtenances to the Real
Property, the Improvements and/or any other property or rights encumbered
or conveyed hereby, hereafter acquired by or released to the Mortgagor or
constructed, assembled or placed by the Mortgagor on the Real Property, the
Improvements and any other property or rights encumbered or conveyed
hereby, and all conversions of the security constituted thereby which,
immediately upon such acquisition, release, construction, assembling,
placement or conversion, as the case may be, and in each such case without
any further mortgage, conveyance, assignment or other act by the Mortgagor,
shall become subject to the lien of this Mortgage as fully and completely,
and with the same effect, as though now owned by the Mortgagor and
specifically described herein; and
I. All proceeds (as defined in the UCC) of the conversion,
voluntary or involuntary, of any of the foregoing into cash or liquidated
claims, including, without limitation, proceeds of insurance and condemna-
tion or other awards or payments with respect thereto, including interest
thereon.
TO HAVE AND TO HOLD the Mortgaged Property, with all powers of
sale and right of entry and possession (to the extent permitted by
applicable law), with all privileges and appurtenances to the same
belonging, with the right of possession thereof, unto the Mortgagee and its
successors and assigns, forever, and the Mortgagor hereby binds itself and
its successors and assigns to warrant and forever (but only until such time
as the Indebtedness has been paid in full and the Obligations have been
fully satisfied) defend title to the Mortgaged Property unto the Mortgagee
and its successors and assigns against the claim or claims of all parties
claiming or to claim the same, or any part thereof;
FOR THE PURPOSE OF SECURING THE OBLIGATIONS.
PROVIDED, HOWEVER, that if the Mortgagor shall pay or cause to be
paid indefeasibly in full all of the Indebtedness and if the Mortgagor
shall have kept, performed, observed and satisfied all of the Obligations,
then the Mortgagee shall deliver to the persons legally entitled thereto
all such documents, in recordable form, as shall be necessary to release
the Mortgaged Property from the lien of this Mortgage and to release to the
Mortgagor all deposits held by or on behalf of the Mortgagee, but otherwise
this Mortgage shall remain in full force and effect.
AND the Mortgagor represents, warrants, covenants and agrees as
follows:
ARTICLE I
Representations and Warranties of the Mortgagor
Section 1.1 Title to the Mortgaged Property.
(i) The right, title and interest of the Mortgagor constitutes a good,
marketable and insurable (a) fee simple estate in Tract I of the Mortgaged
Property, and (b) leasehold estate in Tract II of the Mortgaged Property,
subject to no Liens, except for Liens permitted pursuant to Section 4.12 of
the Indenture (collectively, the "Permitted Liens"). (ii) This Mortgage
creates and constitutes a valid and enforceable lien on the Mortgaged
Property, and, to the extent any of the Mortgaged Property shall consist of
personalty (when taken together with any fixture filings and financing
statements delivered in connection herewith and filed in accordance with
the UCC), a perfected security interest in such Mortgaged Property, subject
only to the Permitted Liens. (iii) The Mortgagor has full power and lawful
authority to encumber the Mortgaged Property in the manner and form set
forth hereunder. (iv) The Mortgagor owns all Fixtures and Equipment now or
hereafter comprising part of the Mortgaged Property, subject only to the
matters set forth in this Section. (v) This Mortgage is and will remain a
valid, enforceable and continuing first priority Lien on the Mortgaged
Property subject only to the Permitted Liens. (vi) The Mortgagor will pre-
serve such title as set forth herein and in the Indenture, and will forever
(but only until such time as the Indebtedness has been paid in full and the
Obligations have been fully satisfied) warrant and defend the validity and
priority of the lien hereof against the claims of all persons and parties
whatsoever.
Section 1.2 Mortgage Authorized. The execution and delivery of
this Mortgage, the Guaranty, the Indenture and each other document or
instrument executed or delivered by Mortgagor in connection with any of the
foregoing or the Notes have been duly authorized by all necessary corporate
action of the Mortgagor and there is no provision in the articles or
certificate of incorporation or by-laws of the Mortgagor requiring further
consent for such action by any other entity or person. The Mortgagor is
duly organized, validly existing and in good standing under the laws of the
state of its formation, and has (i) all necessary licenses, authorizations,
registrations, permits and/or approvals and (ii) full power and authority
to own or lease its properties and carry on its business as presently con-
ducted, and the execution and delivery by it of, and performance of the
Obligations under this Mortgage, the Guaranty, the Indenture and each other
document or instrument executed or delivered by Mortgagor in connection
with any of the foregoing or the Notes will not result in the Mortgagor
being in default under any provision of its articles or certificate of
incorporation or by-laws or of any mortgage, lease, credit or other agree-
ment to which it is a party or which affects it or the Mortgaged Property,
or any part thereof.
Section 1.3 Operation of the Mortgaged Property. (i) The
Mortgagor has all certificates, licenses, authorizations, registrations,
permits and/or approvals and all required environmental permits necessary
for the operation of the Mortgaged Property or any part thereof, the lack
of which would have a Material Adverse Effect (as defined below), all of
which as of the date hereof are in full force and effect and are not, to
the knowledge of the Mortgagor, subject to any revocation, amendment,
release, suspension, forfeiture or the like. (ii) The Mortgaged Property
is served by all easements and utility lines and connections reasonably
required or necessary for the current use thereof. (iii) The Mortgaged
Property has adequate access to public roadways. As used in this Mortgage,
"Material Adverse Effect" shall mean a material adverse effect, singly or
in the aggregate, on (i) the properties, business, prospects, operations,
earnings, assets, liabilities or condition (financial or otherwise) of
Mortgagor or Terex, taken as a whole, (ii) the ability of Mortgagor to
perform its obligations under this Mortgage, the Guaranty or the Indenture,
(iii) the perfection or priority of the Lien of this Mortgage, or (iv) the
value or utility of the Mortgaged Property, taken as a whole.
ARTICLE II
Covenants of the Mortgagor
Section 2.1 Payment of Indebtedness and Performance of
Covenants. The Mortgagor shall (a) duly and punctually pay or cause to be
paid each payment of the principal of and interest on the Indebtedness and
any prepayments, late charges, premiums and fees provided for in the Inden-
ture and all other payment Obligations secured by this Mortgage at the time
and in the manner provided in this Mortgage, the Guaranty, the Indenture
and each other document or instrument executed or delivered by Mortgagor in
connection with any of the foregoing or the Notes, and (b) duly and
punctually perform and observe all of the terms, provisions, conditions,
covenants and agreements on the Mortgagor's part to be performed or
observed as provided in the Notes, this Mortgage, the Guaranty, the
Indenture and each other document or instrument executed or delivered by
Mortgagor in connection with any of the foregoing.
Section 2.2 Maintenance of the Mortgaged Property. (i) The
Mortgagor shall maintain the Mortgaged Property in a commercially
reasonable manner for the operation thereof and in accordance with the
requirements of the Indenture, and shall comply (and shall use commercially
reasonable efforts to cause any tenants to comply) with all federal, state
and local laws, statutes, regulations, ordinances, rules, codes, rulings,
judgments, decrees, orders, injunctions and other requirements of every
government or public agency having or claiming jurisdiction over the Mort-
gaged Property (and all permits, certificates, consents, licenses,
variances, orders, exemptions, approvals and authorizations issued thereby)
as the same relate to the Mortgaged Property and the use and occupancy
thereof and all covenants, conditions, restrictions, declarations and ease-
ments that affect or are binding upon the Mortgaged Property (each, a
"Requirement"). The Mortgagor shall permit the Mortgagee to enter upon the
Mortgaged Property and inspect the same at all reasonable hours and with
reasonable prior notice. The Mortgagor shall not, without the prior
written consent of the Mortgagee, threaten, commit, permit or suffer to
occur any alterations or changes to the Mortgaged Property or any part
thereof other than alterations or changes that do not materially adversely
affect the value or utility of the Mortgaged Property; provided, however,
that Fixtures owned by the Mortgagor may be removed from the Improvements
if such Fixtures are obsolete or if the Mortgagor concurrently therewith
replaces the same with items which do not reduce the value or utility of
the Mortgaged Property or the Improvements, free of any lien, charge or
claim superior to the lien and/or security interest created thereby.
(ii) Nothing in this Section 2.2 shall require
the Mortgagor to comply with any Requirement so long as (a) the
failure so to do shall not otherwise apart from the provisions of
this Section 2.2 (i) be an Event of Default under this Mortgage,
(b) the failure so to do shall not result in the voiding,
rescission or invalidation of the certificate of occupancy or any
other material license, certificate, permit or registration in
respect of the Mortgaged Property essential to the conduct of the
Mortgagor's business at the Mortgaged Property, (c) the failure
so to do shall not prevent, hinder or materially interfere with
the lawful use and occupancy of the Mortgaged Property or any
material portion thereof for the use and occupancy which the
Mortgagor reasonably determines is most advantageous to its busi-
ness, (d) the failure so to do shall not void or invalidate or
make unavailable any insurance required by this Mortgage to be
maintained by the Mortgagor in respect of the Mortgaged Property
and (e) the Mortgagor in good faith and at its own expense shall
contest the Requirement or the validity thereof by appropriate
legal proceedings, which proceedings must operate to prevent (l)
the occurrence of any of the events described in the preceding
clauses (a) through (d) of this paragraph (ii) and (2) the
collection or other realization of any material sums due or
payable as a consequence of the Requirement, the sale of any lien
arising in respect of the Requirement, and/or the sale or
forfeiture of the Mortgaged Property, any part thereof or
interest therein, or the sale of any lien connected therewith;
provided that during such contest the Mortgagor shall, at the
option of the Mortgagee, either establish adequate reserves in
accordance with generally accepted accounting principles or
provide security reasonably satisfactory to the Mortgagee (in
amount and form) assuring the discharge of the Mortgagor's
obligations hereunder and of any interest, charge, fine, penalty,
fee or expense arising from or incurred as a result of such con-
test, and, for purposes herein, the Mortgagee agrees that the
deposit of cash or an irrevocable letter of credit drawn on a
bank reasonably acceptable to Mortgagee shall be a satisfactory
form of security; and provided, further, that if at any time
compliance with any obligation imposed upon the Mortgagor by the
Requirement shall become necessary to prevent (l) the occurrence
of any of the events described in clauses (a) through (d) of this
paragraph (ii) or (2) the delivery of a deed conveying the
Mortgaged Property or any portion thereof or interest therein
because of noncompliance, or the sale of a lien in connection
therewith, or (3) the imposition of any material penalty, fine,
charge, fee, cost or expense on the Mortgagee, then the Mortgagor
shall comply with the Requirement in sufficient time to prevent
the occurrence of any such events, the delivery of such deed or
the sale of such lien, or the imposition of such material
penalty, fine, charge, fee, cost or expense on the Mortgagee.
Section 2.3 Insurance; Coverage. (i) The Mortgagor shall keep
the Mortgaged Property insured against (a) loss and damage by fire,
casualty and such other hazards as may be reasonably specified by the Mort-
gagee, including, without limitation, those hazards which are covered by
the standard extended coverage all-risk insurance policy, (b) damage by
vandalism and/or malicious mischief, (c) explosion insurance in respect of
any boilers or similar apparatus located on the Mortgaged Property and (d)
such other hazards as may be reasonably specified by the Mortgagee. Such
insurance shall be on forms and by companies reasonably satisfactory to the
Mortgagee. The amounts and coverage limits of each policy of insurance
required pursuant to this Section 2.3 shall be sufficient to prevent the
Mortgagor or the Mortgagee from becoming a co-insurer of any partial loss
under the applicable policies and otherwise satisfactory to the Mortgagee,
but in no event less than the actual replacement value of such Mortgaged
Property as determined by the Mortgagor in accordance with generally
accepted insurance practice and approved by the Mortgagee, or at the
Mortgagee's option, which shall be exercised not more frequently than
annually, as determined at the Mortgagor's expense by the insurer or an
expert appraiser approved by the Mortgagee. Notwithstanding anything to
the contrary contained herein, Mortgagor shall be permitted to maintain
self-insurance for all insurance required to be maintained hereby, provided
that such self-insurance is consistent with Mortgagor's prior practice and
has been heretofore adequately disclosed to Mortgagee.
(ii) The Mortgagor shall maintain in full force
liability insurance against claims of bodily injury, death or
property damage occurring on, in or about the Mortgaged Property,
with policy limits and deductibles in such amounts as from time
to time would be maintained by a prudent operator of property
similar in use and configuration to the Mortgaged Property and
located in the locality where the Mortgaged Property is located
(which policy limits and deductibles shall be reasonably satis-
factory to the Mortgagee), which policies of insurance shall name
the Mortgagee as an additional insured. All insurance policies
and endorsements required pursuant to this Section 2.3 shall be
fully paid for, nonassessable and contain such provisions (in-
cluding, without limitation, inflation guard or replacement cost
endorsements) and expiration dates and shall be in such form and
amounts and issued by such insurance companies with a rating of
"A VIII" or better as established by Best's Rating Guide (or an
equivalent rating with such other publication of a similar nature
as shall be in current use and as approved by the Mortgagee), or
such other companies, as shall be approved by the Mortgagee.
(iii) The Mortgagor shall additionally keep the
Mortgaged Property insured against loss by flood if the Mortgaged
Property is located in an area identified by the Secretary of
Housing and Urban Development as an area having special flood
hazards and which has been so identified under the Flood Insur-
ance Act of 1968 and the Flood Disaster Protection Act of 1973,
as the same may have been or may hereafter be amended or modified
(and any successor acts thereto) in amounts reasonably acceptable
to the Mortgagee, but in no event more than what is available
under such laws.
(iv) In all events and without limitation on the
foregoing, the Mortgagor will deliver the policy or policies (or
true copies or certificates thereof) of all such insurance re-
quired under this Mortgage to the Mortgagee, which policy or
policies shall be endorsed to name the Mortgagee as a mortgagee-
loss payee thereunder, with loss payable to the Mortgagee without
contribution or assessment under a New York Standard Mortgagee
clause or similar clause, and shall provide the Mortgagee with no
less than thirty (30) days' notice from the insurer prior to the
expiration, cancellation or termination (for any reason whatsoev-
er) of any such policy.
(v) Insurance required hereunder may be carried
by the Mortgagor pursuant to blanket policies, provided that all
other requirements herein set forth are satisfied and that the
underlying policy in respect of the Mortgaged Property is deliv-
ered to the Mortgagee as herein required. In the event that the
Mortgagor fails to keep the Mortgaged Property insured as
required hereunder, the Mortgagee may, but shall not be obligated
to, obtain insurance and pay the premiums therefor and the Mort-
gagor shall, on demand, reimburse the Mortgagee for all sums,
advances and expenses incurred in connection therewith and such
sums, advances and expenses shall be deemed a part of the
Indebtedness secured hereby and shall bear interest at the
Default Rate (as defined in Section 2.13 of this Mortgage) until
reimbursed.
Section 2.4 Insurance; Proceeds. The Mortgagor shall give the
Mortgagee prompt notice of any material loss covered by insurance and the
Mortgagee shall have the right to join the Mortgagor in adjusting any loss
during the continuance of an Event of Default. The proceeds of insurance
paid on account of any damage or destruction to the Mortgaged Property or
any part thereof shall be paid over to the Mortgagee to be applied as
hereinafter provided. Notwithstanding anything to the contrary contained
herein or in any provision of applicable law, the proceeds of insurance
policies coming into the possession of the Mortgagee shall not be deemed
trust funds.
Section 2.5 Restoration of the Mortgaged Property. In the event
of any material damage or destruction of the Mortgaged Property, or any
part thereof, as a result of casualty, condemnation, taking or other cause,
the Mortgagor shall give prompt written notice thereof to the Mortgagee.
In the event that the Mortgagee, in accordance with Section 2.6 hereof,
makes available to the Mortgagor the insurance proceeds received by it, if
any (or in the event of condemnation or taking, the award, if any, arising
out of such condemnation or taking), the Mortgagor shall with reasonable
promptness commence and diligently continue to perform the repair,
restoration and rebuilding of the Mortgaged Property (hereinafter, the
"Work") so as to restore the Mortgaged Property in full compliance with all
legal requirements and so that the Mortgaged Property shall, to the extent
reasonably practicable, be at least equal in value and general utility as
it was immediately prior to the damage or destruction. If the Work to be
done is materially structural (as reasonably determined by the Mortgagee)
or if the cost of the Work, as estimated by the Mortgagee, shall exceed
$___________________ (hereinafter, collectively, "Major Work"), the Mort-
gagor shall, prior to the commencement of the Major Work, furnish to the
Mortgagee for its approval not to be unreasonably withheld or delayed: (i)
complete plans and specifications for the Major Work, with reasonably
satisfactory evidence of the approval thereof (a) by all governmental
authorities whose approval is required for any or all of the Major Work,
(b) by all parties to or having an interest in the leases, if any, of any
portion of the Mortgaged Property whose approval is required, and (c) by an
architect or reputable contractor or construction manager or engineer
satisfactory to the Mortgagee (hereinafter, the "Architect") and which
shall be accompanied by the Architect's signed estimate, bearing the
Architect's seal, of the Architect's good faith estimate of the entire cost
of completing the Major Work; (ii) certified or photostatic copies of all
permits and approvals required by law in connection with the commencement
and/or the conduct of the Work; and (iii) such other documents, instruments
and certificates as Mortgagee may reasonably request. The Mortgagor shall
not be entitled to receive any of the insurance proceeds until the
Mortgagor shall have complied with the applicable requirements referred to
in this Section 2.5. After commencing any Major Work the Mortgagor shall
perform such Major Work diligently and in good faith in accordance with the
plans and specifications referred to in this Section 2.5.
Section 2.6 Restoration; Advances. Insurance proceeds received
by the Mortgagee (or, in the case of condemnation or taking, the award
therefor) less the cost, if any, to the Mortgagee of recovery of the same
and of paying out such proceeds (including reasonable attorneys' fees and
expenses and administrative costs), shall be applied by the Mortgagee to
reduce the Indebtedness; provided, however, that so long as no Event of
Default hereunder has occurred and is continuing, the Mortgagor shall have
the right to cause Mortgagee to apply such net insurance proceeds to the
payment of the cost of the Work in accordance with the terms of this
Section 2.6. Notwithstanding anything to the contrary contained herein,
and so long as no Event of Default hereunder has occurred and is
continuing, Mortgagor shall have the right, upon written notice to
Mortgagee, to not perform the Work, in which event the net amount of any
insurance proceeds received by Mortgagor or Mortgagee (or, in the case of
condemnation or taking, the award therefor) shall be either (i) applied to
repay the Indebtedness, or (ii) invested in assets related to the business
of the Mortgagor, Terex or any of its other Restricted Subsidiaries. If
Mortgagor elects (to the extent such an election is permitted hereby) to
perform or cause the Work to be performed, and the Work is not Major Work,
insurance proceeds will be paid in a lump sum to the Mortgagor. If
Mortgagor elects (to the extent such an election is permitted hereby) to
perform or cause the Work to be performed, and the Work is Major Work, the
proceeds shall be paid out from time to time, but not more often than
monthly, to the Mortgagor as said Major Work progresses, but subject to the
following conditions:
(i) an Architect shall be in charge of such Major
Work;
(ii) each request for payment shall be made on at
least seven (7) days' prior written notice to the Mortgagee and
shall be accompanied by (a) a certificate of the chief financial
officer or other authorized officer of the Mortgagor specifying
the party to whom (and for the account of which) such payment is
to be made, (b) copies of lien releases (in form and substance
customary and appropriate for the jurisdiction in which the
Mortgaged Property is located) from each party to whom payment is
to be made, and (c) a certificate of an Architect if an Architect
is required under Section 2.5 above, otherwise a certificate of
the chief financial officer or other authorized officer of the
Mortgagor stating (x) that all of the Work completed has been
done substantially in compliance with the approved plans and
specifications, if any, required under said Section 2.5, and in
accordance with all provisions of law; (y) the sum requested is
justly required to reimburse the Mortgagor for payments by the
Mortgagor to, or is justly due to, the contractor, subcon-
tractors, materialmen, laborers, engineers, architects or other
persons rendering services or materials for the Work (giving a
brief description of any such services and materials), and that
when added to all sums, if any, previously paid out by the Mort-
gagee does not exceed the cost of the Work done to the date of
such certificate and (z) that the amount of such proceeds re-
maining in the hands of the Mortgagee will be sufficient on
completion of the Work to pay for the same in full (giving in
such reasonable detail as the Mortgagee may require an estimate
of the cost of such completion) or that, if the proceeds are
inadequate, that a sufficient reserve has been created in
accordance with generally accepted accounting principles to
provide for the payment of such deficiency;
(iii) each request for payment shall be accom-
panied by sworn statements and partial or final waivers of liens,
as may be appropriate, or if unavailable, lien bonds, satisfacto-
ry to the Mortgagee covering that part of the Work previously
paid for, if any, and by a search prepared by a title insurance
company or a licensed abstractor reasonably satisfactory to the
Mortgagee or by other evidence satisfactory to the Mortgagee,
that there has not been filed with respect to the Mortgaged
Property any mechanic's lien or other lien or instrument for the
retention of title in respect of any part of the Work not dis-
charged of record and that there exist no encumbrances on or
affecting the Mortgaged Property (or any part thereof) other than
Permitted Liens;
(iv) no Event of Default shall have occurred and
be continuing; and
(v) the request for any payment after the Work
has been completed shall be accompanied by certified copies of
all certificates, permits, licenses, waivers and/or other docu-
ments required by law which are customarily issued in the state
and municipality in which the Mortgaged Property is located (or
pursuant to any agreement binding upon the Mortgagor or affecting
the Mortgaged Property or any part thereof) to render occupancy
or use of the Mortgaged Property legal.
Upon completion of any Work and payment in full therefor, and
provided that no Event of Default has occurred and is continuing, the Mort-
gagee shall deliver any excess proceeds to the Mortgagor; provided,
however, that nothing herein contained shall prevent the Mortgagee from
applying at any time the whole or any part of such proceeds to the curing
of any Event of Default.
Section 2.7 Restoration by the Mortgagee. Without limitation on
the foregoing, in the event the Mortgagee, in accordance with the
provisions of Section 2.6 hereof, is making available to the Mortgagor
insurance proceeds (if any) recovered by the Mortgagee, and if there is an
Event of Default which is continuing, then in addition to all other rights
herein set forth and notwithstanding anything to the contrary contained
herein, the Mortgagee, or any lawfully appointed receiver of the Mortgaged
Property, may at its option after giving the Mortgagor ten (10) days'
written notice of such Event of Default, perform or cause to be performed
such repair, restoration and rebuilding, and may take such other steps as
it deems reasonably advisable to perform such repair, restoration and
rebuilding, and upon twenty-four (24) hours' prior written notice to the
Mortgagor, the Mortgagee may enter upon the Mortgaged Property to the
extent reasonably necessary or appropriate for any of the foregoing
purposes, and the Mortgagor hereby waives, for the Mortgagor and all others
holding under the Mortgagor, any claim against the Mortgagee and/or such
receiver arising out of anything done by the Mortgagee or such receiver
pursuant hereto, and the Mortgagee may, at its option, apply insurance
proceeds, if any (without the need by the Mortgagee to fulfill any other
requirements of this Mortgage), to reimburse the Mortgagee and/or such
receiver for all amounts expended or incurred by either of them in connec-
tion with the performance of such Work, and any excess costs shall be paid
by the Mortgagor to the Mortgagee upon demand, and such payment of excess
costs shall be deemed part of the Indebtedness secured hereby and shall
bear interest at the Default Rate until paid.
Section 2.8 Intentionally Deleted.
Section 2.9 Taxes and Other Charges.
(i) The Mortgagor shall pay and discharge by the
last day payable without penalty or premium all taxes of every
kind and nature, water rates, sewer rents and assessments,
levies, permits, inspection and license fees and all other
charges imposed upon or assessed against the Mortgaged Property
or any part thereof or upon the revenues, rents, issues, income
and profits of the Mortgaged Property or arising in respect of
the occupancy, use or possession thereof (excluding any taxes in
the nature of income taxes). To the extent any such items are
payable in installments, the Mortgagor may elect to pay any such
item in installments, but each payment shall be made before any
penalty accrues. The Mortgagor shall exhibit to the Mortgagee
within a reasonable period of time after request and after the
same are required to be paid as specified herein, validated
receipts or other evidence reasonably satisfactory to the Mort-
gagee showing the payment of such taxes, assessments, water
rates, sewer rents, levies, fees and/or other charges. Should
the Mortgagor default in the payment of any of the foregoing
taxes, assessments, water rates, sewer rents, levies, fees or
other charges, the Mortgagee may, but shall not be obligated to,
pay the same or any part thereof and the Mortgagor shall reim-
burse the Mortgagee for all amounts so paid and such amounts
shall be deemed a part of the Indebtedness secured hereby and
shall bear interest at the Default Rate until reimbursed.
(ii) Nothing in this Section 2.9 shall require
the payment or discharge of any obligation imposed upon the
Mortgagor by subsection (i) of this Section 2.9 so long as the
Mortgagor shall in good faith and at its own expense contest the
same or the validity thereof by appropriate legal proceedings
which proceedings must operate to prevent the collection thereof
or other realization thereon, the sale of the lien thereof and
the sale or forfeiture of the Mortgaged Property or any part
thereof, to satisfy the same; provided that during such contest
the Mortgagor shall, at the option of the Mortgagee, establish
reserves in accordance with generally accepted accounting
principles or deposit cash or an irrevocable letter of credit
drawn on a bank reasonably acceptable to the Mortgagee, assuring
the discharge of the Mortgagor's obligation hereunder and of any
additional interest charge, penalty or expense arising from or
incurred as a result of such contest; and provided, further, that
if at any time payment of any obligation imposed upon the
Mortgagor by subsection (i) of this Section 2.9 shall become
necessary to prevent the delivery of a tax deed or similar
instrument conveying the Mortgaged Property or any portion
thereof or the sale of the tax lien therefor because of non-pay-
ment, or the imposition of any penalty, which is not reserved or
secured against, or cost on the Mortgagee not paid by the
Mortgagor, then the Mortgagor shall pay the same in sufficient
time to prevent the delivery of such tax deed or the sale of such
lien, or the imposition of such penalty or cost on the Mortgagee.
(iii) The Mortgagor shall pay when due all (a)
premiums for fire, hazard and other insurance required to be
maintained by the Mortgagor on the Mortgaged Property pursuant to
the terms of Section 2.3 hereof, (b) title insurance premiums, if
any, relating to the insurance to be obtained on the Mortgaged
Property in connection with this Mortgage, and (c) any and all
other costs, expenses and charges expressly required to be paid
hereunder.
Section 2.10 Mechanics' and Other Liens.
(i) To the extent that the following are not
Permitted Liens, within sixty (60) days from the date of the
filing of any such Lien, the Mortgagor shall pay, bond or dis-
charge of record, from time to time, forthwith, all Liens on the
Mortgaged Property or any part thereof, and, in general, the
Mortgagor forthwith shall do, at the cost of the Mortgagor and
without expense to the Mortgagee, everything necessary to fully
preserve the first priority Lien of this Mortgage. In the event
that the Mortgagor fails in a timely manner to make payment in
full of, bond or discharge, any such Liens, as required under the
preceding sentence, the Mortgagee may, but shall not be obligated
to, make payment, bond, or discharge such Liens, in order fully
to preserve the Lien of this Mortgage and the collateral value of
the Mortgaged Property, and the Mortgagor shall reimburse the
Mortgagee for all sums so expended and such sums shall be deemed
a part of the Indebtedness secured hereby and shall bear interest
at the Default Rate until reimbursed.
(ii) Nothing in this Section 2.10 shall require
the payment or discharge of any obligation imposed upon the
Mortgagor by subsection (i) of this Section 2.10 so long as the
Mortgagor shall bond or discharge any Lien on the Mortgaged
Property arising from such obligation or in good faith and at its
own expense contest the same or the validity thereof by appro-
priate legal proceedings which proceedings must operate to
prevent the collection thereof or other realization thereon, the
sale of the Lien thereof and the sale or forfeiture of the Mort-
gaged Property or any part thereof, to satisfy the same; provided
that during such contest the Mortgagor shall, at the option of
the Mortgagee, either (at the option of the Mortgagor) establish
an adequate reserve in accordance with generally acceptable
accounting principles or provide security satisfactory to the
Mortgagee, assuring the discharge of the Mortgagor's obligation
hereunder and of any additional interest charge, penalty or
expense arising from or incurred as a result of such contest,
which security can take the form of cash or an irrevocable letter
of credit drawn on a bank reasonably acceptable to the Mortgagee;
and provided, further, that if at any time payment of any obli-
gation imposed upon the Mortgagor by subsection (i) of this
Section 2.10 shall become necessary (a) to prevent the sale or
forfeiture of the Mortgaged Property or any portion thereof
because of non-payment, or (b) to protect the Lien of this Mort-
gage, then the Mortgagor shall pay the same in sufficient time to
prevent the sale or forfeiture of the Mortgaged Property or to
protect the Lien of this Mortgage, as the case may be.
Section 2.11 Condemnation Awards. The Mortgagor, immediately
upon obtaining knowledge in any manner of the institution of any
proceedings for the condemnation of the Mortgaged Property or any portion
thereof which could have a Material Adverse Effect, will notify the
Mortgagee of such proceedings. The Mortgagee may participate in any such
proceedings, and the Mortgagor from time to time will deliver to the
Mortgagee all instruments requested by it to permit such participation.
The Mortgagor and the Mortgagee shall both act reasonably and expeditiously
in connection with such proceedings. All awards and compensation payable
to the Mortgagor as a result of any condemnation or other taking or
purchase in lieu thereof of the Mortgaged Property or any part thereof are
hereby assigned to and shall be paid to the Mortgagee, and shall be treated
in accordance with the provisions of Sections 2.5 and 2.6 hereof. The
Mortgagor hereby authorizes the Mortgagee to collect and receive such
awards and compensation, to give proper receipts and acceptances therefor
and to apply the same in accordance with the provisions of Sections 2.5 and
2.6 of this Mortgage. The Mortgagor, upon request by the Mortgagee, shall
make, execute and deliver any and all instruments requested for the purpose
of confirming the assignment of the aforesaid awards and compensation to
the Mortgagee free and clear of any Liens, charges or encumbrances of any
kind or nature whatsoever.
Notwithstanding anything to the contrary in this Section 2.11,
the Mortgagor shall continue to pay the Indebtedness and perform the
Obligations at the time and in the manner provided for in the Notes, the
Security Documents and the Indenture. If the Mortgaged Property or any
portion thereof is sold, through foreclosure or otherwise, prior to the re-
ceipt by the Mortgagee of such payment, the Mortgagee shall have the right,
whether or not a deficiency judgment shall have been sought, recovered or
denied, to receive said payment, or a portion thereof sufficient to pay the
Indebtedness, whichever is less. The Mortgagor shall file and prosecute
its claim or claims for any such payment in good faith and with due
diligence and cause the same to be collected and paid over to the
Mortgagee, in the name of the Mortgagor or otherwise, to collect and give
receipt for any such payment and to file and prosecute such claim or
claims, and although it is hereby expressly agreed that the same shall not
be necessary in any event, the Mortgagor shall, upon demand of the Mort-
gagee, make, execute and deliver any and all assignments and other instru-
ments sufficient for the purpose of assigning any such payment to the
Mortgagee, free and clear of any encumbrances of any kind or nature whatso-
ever.
Section 2.12 Costs of Defending and Upholding the Lien. If any
action or proceeding is commenced to which action or proceeding the
Mortgagee is made a party or in which it becomes necessary to defend or
uphold the first priority Lien of this Mortgage, the Mortgagor shall reim-
burse the Mortgagee for all reasonable expenses (including, without limita-
tion, reasonable attorneys' fees and expenses) incurred by the Mortgagee in
any such action or proceeding and such expenses shall be deemed a part of
the Indebtedness secured hereby and shall bear interest at the Default Rate
until reimbursed. To the extent the subject of the action is covered by
title insurance, the Mortgagee may be defended by the title insurance
counsel reasonably satisfactory to it; if otherwise covered by insurance,
the Mortgagee may be defended by counsel for the insurance company reason-
ably satisfactory to the Mortgagee. Notwithstanding the foregoing, in an
action not covered by insurance, the Mortgagor may defend with counsel
reasonably satisfactory to the Mortgagee.
Section 2.13 Additional Advances and Disbursements. The
Mortgagor shall pay by the last day payable without premium or penalty all
payments and charges on all liens, encumbrances, ground and other leases
and security interests which affect or may affect or attach or may attach
to the Mortgaged Property, or any part thereof, and in default thereof, the
Mortgagee shall have the right, but shall not be obligated, to pay upon
notice to the Mortgagor, if practicable in order fully to preserve the
first priority Lien of this Mortgage and the collateral value of the Mort-
gaged Property, such payments and charges and the Mortgagor shall reimburse
the Mortgagee for any amounts so paid. In addition, upon the occurrence of
any material default of the Mortgagor in the performance of any other
terms, covenants, conditions or obligations by it to be performed hereunder
or under any such Lien, encumbrance, lease or security interest and after
the expiration of all applicable notice and cure periods, if any, the
Mortgagee shall have the right, but shall not be obligated, to cure such
default in the name and on behalf of the Mortgagor. All sums advanced and
reasonable expenses incurred at any time by the Mortgagee pursuant to this
Section 2.13 or as otherwise provided under the terms and provisions of
this Mortgage or under applicable law shall bear interest from the date
that such sum is advanced or expenses incurred, to and including the date
of reimbursement, computed at an interest rate per annum (the "Default
Rate") at all times equal to the highest default rate provided in the
Indenture, but in no event to exceed the maximum rate allowed by law. All
interest payable hereunder shall be computed on the basis of a 360-day year
over the actual number of days elapsed. Any such amounts advanced or in-
curred by the Mortgagee, together with the interest thereon, shall be
payable on demand, shall, until paid, be secured by this Mortgage as a Lien
on the Mortgaged Property and shall be deemed a part of the Indebtedness.
Section 2.14 Costs of Enforcement. The Mortgagor agrees to bear
and pay all expenses (including, without limitation, reasonable attorneys'
fees and expenses) of or incidental to (i) the enforcement of any provision
hereof, (ii) the enforcement of this Mortgage, the Notes, the Security
Documents, the Indenture and for the curing thereof, (iii) subject to
Section 2.12 hereof, defending the rights and claims of the Mortgagee in
respect of this Mortgage, the Notes, the Indenture and/or the Security
Documents, by litigation or otherwise, and (iv) the appointment of a
receiver or receivers as hereinafter contemplated. All rights and remedies
of the Mortgagee shall be cumulative and may be exercised singly or concur-
rently. Notwithstanding anything herein contained to the contrary, the
Mortgagor: (i) HEREBY WAIVES TRIAL BY JURY; and, to the fullest extent
allowed by law, (ii) shall not (a) at any time insist upon, or plead, or in
any manner whatever claim or take any benefit or advantage of any stay or
extension or moratorium law, any exemption from execution or sale of the
Mortgaged Property or any part thereof, wherever enacted, now or at any
time hereafter in force, which may affect the covenants and terms of
performance of this Mortgage, nor (b) after any such sale or sales, claim
or exercise any right under any statute heretofore or hereafter enacted to
redeem the property so sold or any part thereof; (iii) hereby expressly
waives all benefit or advantage of any such law or laws; and (iv) covenants
not to hinder, delay or impede the execution of any power herein granted or
delegated to the Mortgagee, but to suffer and permit the execution of every
power as though no such law or laws had been made or enacted. The Mort-
gagor, for itself and all who may claim under it, waives, to the extent
that it lawfully may, all right to have the Mortgaged Property or any part
thereof marshalled upon any foreclosure hereof. The appraisement of the
Mortgaged Property is hereby expressly waived or not waived at the option
of the Mortgagee, its successors or assigns, such option to be exercised
prior to or at the time judgment is rendered in any foreclosure hereof.
Section 2.15 Filing Charges, Recording Fees, Taxes, etc. The
Mortgagor shall pay any and all taxes, charges, filing, registration and
recording fees, excises and levies imposed upon the Mortgagee by reason of
its interest in the Mortgaged Property and this Mortgage or any mortgage
supplemental hereto, any security instrument with respect to any interest
of the Mortgagor in and to any fixture or personal property at the
Mortgaged Property or any instrument of further assurance, other than
income, franchise, succession, inheritance, business and similar taxes,
and shall pay all other taxes, if any, required to be paid on the debt
evidenced by the Notes. In the event the Mortgagor fails to make such
payment within ten (10) days after written notice thereof to the Mortgagor,
then the Mortgagee shall have the right, in its sole discretion, to elect
either to (i) declare the entire Indebtedness immediately due and payable
or (ii) to pay the amount due, and the Mortgagor shall reimburse the
Mortgagee for said amount, together with interest thereon computed at the
Default Rate.
Section 2.16 Restrictive Covenants and Leasing Requirements.
Promptly following the execution hereof, Mortgagor shall deliver a notice,
in form and substance reasonably satisfactory to Mortgagee, to all existing
tenants or other occupants of the Mortgaged Property, which notice shall
indicate that this Mortgage has been executed and, subject to the terms
hereof, all Leases have been assigned to Mortgagee. Mortgagor shall not
hereafter execute or permit to be executed any lease or other occupancy
agreement, whether singly or in a series of transactions, for all or
substantially all of the Mortgaged Property, without first delivering to
Mortgagee a subordination and attornment agreement to and for the benefit
of Mortgagee in form and substance reasonably satisfactory to Mortgagee.
Notwithstanding the foregoing, the Mortgagor shall be permitted, without
the delivery of a separate subordination and attornment agreement, to lease
up to one-half of the Mortgaged Property, provided (i) such lease is to a
bona fide third-party tenant on commercially reasonable terms, (ii) Mort-
gagor gives notice to the Mortgagee of such lease, or any such amendment,
modification or extension thereof with a copy thereof, and (iii) Mortgagor
gives prior written notice of this Mortgage to the tenant or other occupant
under any such lease, amendment, modification or extension.
Section 2.17 Assignment of Rents. The Mortgagor hereby
absolutely, presently and unconditionally assigns to the Mortgagee, as fur-
ther security for the payment of the Indebtedness and performance of the
Obligations, all of its interest in the rents, issues and profits of the
Mortgaged Property, together with its interest in all Leases of all or any
portion thereof and other documents evidencing such rents, issues and
profits now or hereafter in effect and its interest in any and all deposits
held as security under any such Leases, and shall deliver to the Mortgagee
a true and correct copy of an executed counterpart of each such Lease or
other material documents to which it is a party and which affects the Mort-
gaged Property. Nothing contained in the foregoing sentence shall be
construed to bind the Mortgagee to the performance of any of the covenants,
conditions or provisions contained in any such Lease or other document or
otherwise to impose any obligation on the Mortgagee, including, without
limitation, any liability under the covenants contained in any such Lease.
To the fullest extent permitted by applicable laws, the Mortgagor hereby
grants to the Mortgagee the present right (i) to collect and receive any
and all rents, issues and profits and to enter upon and take possession of
the Mortgaged Property for the purpose of collecting the said rents, issues
and profits, (ii) to dispossess by the usual summary proceedings (or any
other proceedings of the Mortgagee's selection) any tenant defaulting in
the payment thereof to the Mortgagee, (iii) to let the Mortgaged Property,
or any part thereof, and (iv) to apply said rents, issues and profits,
after payment of all necessary charges and expenses (including, without
limitation, costs of required maintenance and operation of the Mortgaged
Property, costs of collection, default associated charges, past due
interest and late charges and similar charges and expenses) , on account of
the Indebtedness. This Mortgage constitutes and evidences the irrevocable
consent of the Mortgagor to the entry upon and taking possession of the
Mortgaged Property by the Mortgagee pursuant to such grant, whether
foreclosure has been instituted or not and without applying for a receiver;
provided, however, that so long as no Event of Default shall have occurred
and be continuing, the Mortgagor shall have a revocable license to collect
and receive said rents, issues and profits and to otherwise manage the
Mortgaged Property, including, without limitation, a revocable license to
exercise the rights granted to Mortgagee pursuant to subsections (i), (ii),
(iii) and (iv) above. If an Event of Default shall have occurred and be
continuing, any rental or other income from the Mortgaged Property received
by the Mortgagor shall be deemed to be received by the Mortgagor in trust
for the Mortgagee and shall be paid over to the Mortgagee immediately upon
receipt by the Mortgagor. This license of the Mortgagor to collect and re-
ceive said rents, issues and profits shall be automatically revoked without
the requirement of any action by the Mortgagee upon the occurrence and
during the continuance of an Event of Default. Upon the occurrence and
during the continuance of an Event of Default, the Mortgagor hereby ap-
points the Mortgagee as its attorney-in-fact, coupled with an interest, to
receive and collect all rent, additional rent and other sums due under the
terms of each Lease to which the Mortgagor is a party and to direct any
such tenant, by written notice or by mail or in person to the Mortgagee.
If an Event of Default shall have occurred and be continuing, Mortgagee
may, without thereby becoming or being deemed a mortgagee in possession or
incurring any liability under any Lease, notify any lessee, tenant, conces-
sionaire, licensee or other occupant of all or any part of the Mortgaged
Property to pay all rental or other income payable by it, him or her to the
Mortgagee and all such rental and other income shall thereafter be paid di-
rectly to the Mortgagee until the Mortgagee agrees otherwise. If an Event
of Default has occurred and is continuing, to facilitate the Mortgagee's
collection of rental and other income, the Mortgagor hereby irrevocably
authorizes and empowers the Mortgagee to endorse on behalf of the Mortgagor
and in the Mortgagor's name all checks and other instruments received by
the Mortgagee as payment of rental or other income. The Mortgagee shall
apply to the Indebtedness the net amount (after deducting all costs and
expenses, including attorneys' fees and expenses, incident to the collec-
tion thereof, and after deducting all costs and expenses of operation,
maintenance and repairs of the Mortgaged Property) of any such rental or
other income received by it.
Section 2.18 Transfer Restrictions. Except as either permitted
or not prohibited by the provisions of Section 4.10 of the Indenture, the
Mortgagor may not, without the prior written consent of the Mortgagee,
further mortgage, encumber, hypothecate, sell, transfer, convey, assign or
sublet all or any part of the Mortgaged Property or the leases and rents
affecting the Mortgaged Property or any other interest in the Mortgaged
Property or such leases and rents or suffer any of the foregoing to occur
involuntarily or by operation of law or otherwise. In the event of a sale,
transfer or other conveyance of any of the Mortgaged Property permitted by
this section, Mortgagee shall, subject to the terms of Section 10.3 of the
Indenture, at the sole cost and expense of Mortgagor, execute such
documents as Mortgagor shall reasonably request to evidence the release of
the Lien of this Mortgage with respect to such Mortgaged Property.
Section 2.19 Indemnity. The Mortgagor agrees that it shall
indemnify, defend and hold harmless the Mortgagee from and against all
loss, liability, obligation, claim, damage, penalty, cause of action, cost
and expense, including, without limitation, any assessments, levies, impo-
sitions, judgments, reasonable attorneys' fees and disbursements, cost of
appeal bonds and printing costs, imposed upon or incurred by or asserted
against the Mortgagee by reason of (a) ownership of this Mortgage (other
than taxes, if any, in the nature of income taxes imposed on the Mortgagee
as the result of its ownership of this Mortgage); (b) any accident, injury
to or death of persons or loss of or damage to property occurring on or
about the Mortgaged Property (except to the extent the same shall be caused
by the Mortgagee's own gross negligence or willful misconduct); (c) any
use, non-use or condition of the Mortgaged Property (except to the extent
the same shall be caused by the Mortgagee's own gross negligence or willful
misconduct); (d) performance of any labor or services or the furnishing of
any materials or other property in respect of the Mortgaged Property or any
part thereof for maintenance or otherwise; (e) the imposition of any
mortgage, real estate or governmental tax incurred as a result of this
Mortgage or the Notes, other than income, franchise, succession, inheri-
tance, business and similar taxes payable by the Mortgagee, or (f) any
violation or alleged violation by the Mortgagor of any law. Any amounts
payable under this Section 2.19 shall be immediately due and payable
without demand, shall be deemed a part of the Indebtedness secured hereby,
and until paid shall bear interest at the Default Rate. If any action is
brought against the Mortgagee by reason of any of the foregoing occur-
rences, the Mortgagor will have the right to defend and resist such action,
suit or proceeding, at the Mortgagor's sole cost and expense by counsel
reasonably approved by the Mortgagee. The Mortgagor's obligations under
this Section 2.19 shall survive any change in law, the payment in full of
the Indebtedness, any discharge, release or satisfaction of this Mortgage
and/or the delivery of one or more deeds in lieu of foreclosure with
respect to this Mortgage.
Section 2.20 Security Interest in Fixtures.
(i) As provided in the granting clauses herein-
above, this Mortgage shall constitute a security agreement and
shall create and evidence a security interest in all Fixtures in
which a security interest or lien may be granted or a common law
pledge created pursuant to the UCC as in effect in the state in
which the Mortgaged Property is located or under common law in
such state, which security interest is hereby granted to
Mortgagee as "secured party" (as such term is defined in the
UCC), securing the Indebtedness and the Obligations of the
Mortgagor hereunder and upon recordation in the real property
records of the County in which the Mortgaged Property is located,
shall constitute a "fixture filing" within the meaning of Article
9 of the UCC creating a perfected security interest in all fix-
tures now or hereafter located upon the Mortgaged Property. The
Mortgagor, immediately upon the execution and delivery of this
Mortgage, and thereafter from time to time, shall cause this
Mortgage, any security instrument evidencing or perfecting the
Lien hereof in the Fixtures, and each instrument of further
assurance, including, without limitation, UCC financing state-
ments and continuation statements, to be filed, registered or
recorded in such manner and in such places as may be required by
any present or future law in order to publish notice of and fully
to perfect, preserve and protect the lien hereof upon the Mort-
gaged Property. The Mortgagor hereby appoints and authorizes the
Mortgagee to act on behalf of the Mortgagor upon the Mortgagor's
failure to comply with the provisions of this Section 2.20.
(ii) To the extent the mortgage foreclosure laws
of the state in which the Mortgaged Property is located do not
provide for foreclosure against some or all of the Fixtures, upon
the occurrence of any Event of Default, in addition to the
remedies set forth in Article III hereof, the Mortgagee shall
have the power to foreclose the Mortgagor's right of redemption
in the Fixtures by sale of the Fixtures in accordance with the
UCC as enacted in the state in which the Mortgaged Property is
located or under other applicable law in such state. It shall
not be necessary that any Fixtures offered be physically present
at any such sale or constructively be in the possession of the
Mortgagee or the person conducting the sale. Upon the occurrence
and during the continuance of any Event of Default, the Mortgagee
may sell the Fixtures or any portion thereof at public or private
sale with notice to the Mortgagor as hereinafter provided. The
proceeds of any such sale, after deducting all expenses of the
Mortgagee in taking, storing, repairing and selling the Fixtures
or any part thereof (including, without limitation, attorneys'
fees and expenses) shall be applied in the manner set forth in
Section 3.2 hereof. At any sale, public or private, of the
Fixtures or any part thereof, the Mortgagee may purchase any or
all of the Fixtures offered at such sale.
(iii) The Mortgagee shall give Mortgagor notice
of any sale of the Fixtures or any portion thereof pursuant to
the provisions of this Section 2.20. Any such notice shall
conclusively be deemed to be effective if such notice is mailed
at least ten (10) business days prior to any sale, by first class
or certified mail, postage prepaid, to the Mortgagor at its
address determined in accordance with the provisions of Section
4.3 hereof.
Section 2.21 Compliance with Agreements. The Mortgagor shall
timely comply and perform all of the obligations imposed upon it by the
Notes, the Indenture and the Security Documents.
Section 2.22 Environmental. Except as could not, singly or in
the aggregate, have a Material Adverse Effect:
(i) Mortgagor (a) has obtained all Permits that
are required with respect to the operation of the Mortgaged
Property under the Environmental Laws (as defined below) and is
in compliance with all terms and conditions of such required
Permits, and (b) is in compliance with all Environmental Laws
(including, without limitation, compliance with standards,
schedules and timetables therein);
(ii) no portion of or interest in the Mortgaged
Property 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 Mortgagor has not received any notification of potential
or actual liability or request for information under CERCLA or
any comparable state or local law;
(iii) no underground storage tank or other under-
ground storage receptacle, or related piping, is located on the
Mortgaged Property;
(iv) there have been no releases (including,
without limitation, any past or present releasing, spilling,
leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, disposing or dumping, on-site or,
to the best of Mortgagor's knowledge after due inquiry, off-site)
of Hazardous Materials (as defined below) by Mortgagor or, to the
best of Mortgagor's knowledge after due inquiry, any predecessor
in interest, or any person or entity whose liability for any
release of Hazardous Materials, Mortgagor or any of its affili-
ates has retained or assumed either contractually or by operation
of law at, on, under, from or into any portion of the Mortgaged
Property;
(v) neither Mortgagor nor any person or entity
whose liability Mortgagor or any of its affiliates has retained
or assumed either contractually or 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, investi-
gation, 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;
(vi) there are no events, activities, practices,
incidents or actions or, to the best of Mortgagor's knowledge
after due inquiry, conditions, circumstances or plans that may
interfere with or prevent compliance by Mortgagor with any Envi-
ronmental Law, or that may give rise to any liability under any
Environmental Laws; and
(vii) in the ordinary course of its businesses,
Mortgagor conducts a periodic review of the effect of Environ-
mental Laws on the business, operations and properties of
Mortgagor in the course of which it identifies and evaluates
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 par-
ties). On the basis of such review, Mortgagor has reasonably
concluded that such associated costs and liabilities could not
reasonably be expected to, singly or in the aggregate, have a
Material Adverse Effect on Mortgagor, 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 envi-
ronment, 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 (collec-
tively referred to as "Hazardous Materials"), into the environment (in-
cluding, without limitation, ambient air, surface water, ground water, land
surface or subsurface strata), (2) the manufacture, processing, distribu-
tion, 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 there-
from.
ARTICLE III
Default and Remedies
Section 3.1 Events of Default. The following shall each
constitute an "Event of Default" under this Mortgage:
(i) the occurrence of any Event of Default under
the Notes, the Indenture, the Guaranty or any of the Security
Documents;
(ii) if the Mortgagor shall fail to make any
other payment required by this Mortgage within ten (10) days
after written notice thereof to the Mortgagor by the Mortgagee;
(iii) if any representation or warranty contained
herein shall be false or incorrect in any material respect when
made; or
(iv) if the Mortgagor fails to keep, observe
and/or perform any of the other covenants, conditions,
Obligations or agreements contained in this Mortgage, and such
default continues for a period of thirty (30) days after written
notice to the Mortgagor by the Mortgagee; provided, however, that
it shall not be an Event of Default hereunder if the default is
such that cannot reasonably be cured within 30 days and the
Mortgagor commences to cure the default within such thirty-day
period, diligently pursues a cure, and cures such default within
120 days from the date of the initial written notice of default
thereof to the Mortgagor by the Mortgagee.
Section 3.2 Remedies. Upon the occurrence and during the
continuance of any Event of Default, the Mortgagee may:
(i) in addition to any rights or remedies avail-
able to it hereunder, take such action as it deems advisable to
protect and enforce its rights against the Mortgagor and in and
to the Mortgaged Property, including, without limitation, the
following actions, each of which may be pursued concurrently or
otherwise, at such time and in such order as the Mortgagee may
determine, in its sole discretion, without impairing or otherwise
affecting any of the other rights and remedies of the Mortgagee:
(1) declare the entire unpaid Indebtedness to be immediately due
and payable; or (2) after accelerating the Indebtedness, to the
extent permitted by law, immediately enter into or upon the
Mortgaged Property, either personally or by its agents, nominees
or attorneys and dispossess the Mortgagor and its agents and ser-
vants there-from, and at once take possession of the Mortgaged
Property, and thereupon the Mortgagee may (a) use, operate,
manage, control, insure, maintain, repair, restore and otherwise
deal with all and every part of the Mortgaged Property and
conduct the business thereat; (b) complete any construction on
the Mortgaged Property in such manner and form as the Mortgagee
deems advisable; (c) make such alterations, additions, renewals,
replacements and improvements to or on the Improvements and the
balance of the Mortgaged Property necessary or advisable as
determined by the Mortgagee to continue to operate the business;
(d) exercise all rights and powers of the Mortgagor with respect
to the Mortgaged Property, whether in the name of the Mortgagor
or otherwise, including, without limitation, the right to make,
cancel, enforce or modify leases, obtain and evict tenants, and
sue for, collect and receive all earnings, revenues, rents,
issues, profits and other income of the Mortgaged Property and
every part thereof; and (e) apply the receipts from the Mortgaged
Property to the payment of the Indebtedness, after deducting
therefrom all expenses (including reasonable attorneys' fees and
disbursements) incurred in connection with the aforesaid
operations and all amounts necessary to pay the taxes, as-
sessments, insurance and other charges in connection with the
Mortgaged Property, as well as just and reasonable compensation
for the services of the Mortgagee, its counsel, agents and
employees; or (3) institute proceedings for the complete
foreclosure of this Mortgage in which case the Mortgaged Property
may be sold for cash or credit in one or more parcels; or (4)
with or without entry and, to the extent permitted, and pursuant
to the procedures provided by applicable law, institute
proceedings for the foreclosure of this Mortgage for the portion
of the Indebtedness then due and payable, subject to the Lien of
this Mortgage continuing unimpaired and without loss of priority
so as to secure the balance of the Indebtedness not then due; or
(5) institute an action, suit or proceeding in equity for the
specific performance of any covenants, condition or agreement
contained herein; or (6) recover judgment on the Notes or any
guaranty either before, during or after or in lieu of any
proceedings for the enforcement of this Mortgage; or (7) apply
for the appointment of a trustee, receiver, liquidator or
conservator of the Mortgaged Property, without regard for the
adequacy of the security for the Indebtedness and without regard
for the solvency of the Mortgagor, any guarantor or of any
person, firm or other entity liable for the payment of the
Indebtedness or performance of the Obligations to which
appointment the Mortgagor does hereby consent; or (8) to the
extent permitted by applicable law, to proceed under the POWER OF
SALE granted herein and sell the Mortgaged Property or any part
thereof to the extent permitted and pursuant to the procedures
provided by the laws of the State in which the Mortgaged Property
is located, and all estate, right, title and interest, claim and
demand therein, and right of redemption thereof, at one or more
sales, as an entirety or in parcels, and at such time and place,
upon such terms and after such notice thereof as may be required
by applicable law or (9) pursue such other remedies as the
Mortgagee may have under applicable law.
(ii) In addition to any other remedies available
to the Mortgagee hereunder or at law or in equity, the Mortgagor
hereby confers unto the Mortgagee a power of sale for the Mort-
gaged Property exercisable upon an Event of Default under this
Mortgage and agrees that the Mortgagee, at its option, may
proceed under this power of sale pursuant to the applicable
procedures provided therefor by the laws of the State in which
the Mortgaged Property is located or foreclose this Mortgage as
provided by such laws. The Mortgagor represents and warrants
that the Mortgaged Property is not the Mortgagor's homestead and
that the Indebtedness is not an extension of credit made pri-
marily for agricultural purposes.
Notwithstanding anything contained in this Mortgage to the
contrary, any notices of sale given in accordance with the applicable
requirements provided therefor by the laws of the State in which the
Mortgaged Property is located shall constitute sufficient notice of sale.
The conduct of a sale pursuant to a power of sale shall be sufficient
hereunder if conducted in accordance with such requirements in effect at
the time of such sale, notwithstanding any other provision contained in
this Mortgage to the contrary. The proceeds of any sale of the Mortgaged
Property pursuant to the power of sale herein granted shall be applied in
accordance with such requirements in effect at the time of such sale.
(iii) The proceeds of any sale made under or by
virtue of this Article III, together with any other sums which
then may be held by the Mortgagee under this Mortgage, whether
under the provisions of this Article III or otherwise, shall be
applied:
First: To the payment of the costs and expenses of any
such sale, or the costs and expenses of entering upon, taking
possession of, removing from, holding, operating and/or managing
the Mortgaged Property or any part thereof, as the case may be,
and of all expenses, liabilities and advances made or incurred by
the Mortgagee under this Mortgage, together with interest at the
Default Rate as provided herein on all advances made by the
Mortgagee and all taxes or assessments, except any taxes,
assessments or other charges subject to which the Mortgaged
Property shall have been sold.
Second: In accordance with the provisions of Section
6.10 of the Indenture.
The Mortgagee and any receiver of the Mortgaged Property or any part
thereof shall be liable to account for only those rents, issues and profits
actually received by it.
(iv) The Mortgagee may adjourn from time to time
any sale by it to be made under or by virtue of this Mortgage by
announcement at the time and place appointed for such sale or for
such adjourned sale or sales; and except as otherwise provided by
any applicable provision of law, the Mortgagee, without further
notice or publication, may make such sale at the time and place
to which the same shall be so adjourned.
(v) Upon the completion of any sale or sales made
by the Mortgagee under or by virtue of this Article III, the
Mortgagee, or an officer of any court empowered to do so, shall
execute and deliver to the accepted purchaser or purchasers a
good and sufficient instrument, or good and sufficient instru-
ments, granting, conveying, assigning and transferring all
estate, right, title and interest in and to the property and
rights sold. The Mortgagee is hereby irrevocably appointed the
true and lawful attorney-in-fact of the Mortgagor (coupled with
an interest), in its name and stead, to make all necessary
conveyances, assignments, transfers and deliveries of the Mort-
gaged Property and rights so sold and for that purpose the Mort-
gagee may execute all necessary instruments of conveyance,
assignment, transfer and delivery, and may substitute one or more
persons with like power, the Mortgagor hereby ratifying and
confirming all that said attorney-in-fact or such substitute or
substitutes shall lawfully do by virtue hereof. Nevertheless,
the Mortgagor, if so requested by the Mortgagee, shall ratify and
confirm any such sale or sales by executing and delivering to the
Mortgagee or to such purchaser or purchasers all such instruments
as may be advisable, in the judgment of the Mortgagee, for the
purpose, and as may be designated in such request. Any such sale
or sales made under or by virtue of this Article III, whether
made under the POWER OF SALE herein granted or under or by virtue
of judicial proceedings or of a judgment or decree of foreclosure
and sale, shall operate to divest all of the estate, right,
title, interest, claim and demand whatsoever, whether at law or
in equity, of the Mortgagor in and to the properties and rights
so sold, and shall be a perpetual bar both at law and in equity
against the Mortgagor and against any and all persons claiming or
who may claim the same or any part thereof from, through or under
the Mortgagor.
(vi) In the event of any sale made under or by
virtue of this Article III (whether made under the POWER OF SALE
provided for herein or under or by virtue of judicial proceedings
or of a judgment or decree of foreclosure and sale), the entire
Indebtedness, if not previously due and payable, immediately
thereupon shall, anything in any Note, the Indenture, any of the
Security Documents or in this Mortgage to the contrary notwith-
standing, become due and payable.
(vii) Upon any sale made under or by virtue of
this Article III (whether made under the POWER OF SALE provided
for herein or under or by virtue of judicial proceedings or of a
judgment or decree of foreclosure and sale), the Mortgagee may
bid for and acquire the Mortgaged Property or any part thereof or
interest therein and in lieu of paying cash therefor may make
settlement for the purchase price by crediting upon the Indebted-
ness of the Mortgagor secured by this Mortgage the net sales
price after deducting therefrom the expenses of the sale and the
costs of the action (including attorneys' fees and expenses) and
any other sums which the Mortgagee is authorized to deduct under
this Mortgage.
(viii) No recovery of any judgment by the Mort-
gagee and no levy of an execution under any judgment upon the
Mortgaged Property or any part thereof or upon any other property
of the Mortgagor shall effect in any manner or to any extent, the
lien of this Mortgage upon the Mortgaged Property or any part
thereof, or any liens, rights, powers or remedies of the
Mortgagee hereunder, but such Liens, rights, powers and remedies
of the Mortgagee shall continue unimpaired as before.
Section 3.3 Payment of Indebtedness After Default. Upon the
occurrence of any Event of Default and the acceleration of the maturity of
the Indebtedness as provided herein, if, at any time prior to foreclosure
sale, the Mortgagor or any other person tenders payment of the amount
necessary to satisfy the Indebtedness, the same shall constitute an evasion
of the payment terms hereof and/or the Indenture or the Security Documents
or the Notes and shall be deemed to be a voluntary prepayment hereunder, in
which case such payment must include the premium and/or fee required under
the prepayment provision, if any, contained herein or in the Notes, the
Security Documents and/or the Indenture. This provision shall be of no
force or effect if at the time that such tender of payment is made, the
Mortgagor has the right under this Mortgage, the Security Documents, the
Indenture or the Notes to prepay the Indebtedness without penalty or
premium.
Section 3.4 Intentionally Omitted.
Section 3.5 Mortgagor's Actions After Default. Effective after
the happening of any Event of Default and immediately upon the commencement
of any action, suit or other legal proceedings by the Mortgagee to obtain
judgment for the Indebtedness, or of any other nature in aid of the
enforcement of the Notes, the Indenture, the Guaranty, the Security Docu-
ments or this Mortgage, the Mortgagor hereby (i) waives the issuance and
service of process in any such action, suit or proceeding, provided,
however, that notice of such process is given to Mortgagor in accordance
with Section 4.3 hereof, (ii) waives the right to trial by jury and (iii)
if required by the Mortgagee, consents to the appointment of a receiver or
receivers with respect to the Mortgaged Property and of all the earnings,
revenues, rents, issues, profits and income thereof.
Section 3.6 Control by Mortgagee After Default. Upon and
following the appointment of any receiver, liquidator or trustee of the
Mortgagor, or of any of its property, or of the Mortgaged Property or any
part thereof, the Mortgagee shall be entitled to possession and control of
all property now and hereafter covered by this Mortgage, and shall not be
deemed to be a mortgagee-in-possession as a result thereof.
ARTICLE IV
Miscellaneous
Section 4.1 Credits Waived. The Mortgagor will not claim or
demand or be entitled to any credit or credits against the Indebtedness for
so much of the taxes assessed against the Mortgaged Property or any part
thereof, as is equal to the tax rate applied to the amount due on this
Mortgage or any part thereof, and no deductions shall otherwise be made or
claimed from the taxable value of the Mortgaged Property or any part
thereof by reason of this Mortgage or the payment of the Indebtedness and
the performance of the Obligations secured hereby.
Section 4.2 No Releases. The Mortgagor agrees, that in the
event the Mortgaged Property or any part thereof or interest therein is
sold pursuant to the prior written consent of the Mortgagee as provided
herein, and the Mortgagee enters into any agreement with the then owner of
the Mortgaged Property extending the time of payment of the Indebtedness or
performance of the Obligations, or otherwise modifying the terms hereof,
the Mortgagor shall continue to be liable to pay the Indebtedness and
perform the Obligations according to the tenor of any such agreement unless
expressly released and discharged in writing by the Mortgagee.
Section 4.3 Notices. All notices, requests, demands and other
communications required or permitted to be given to or made upon any party
hereto shall be in writing and shall be personally delivered or sent by
registered or certified mail, postage prepaid, return receipt requested, or
by prepaid telex or telegram (with messenger delivery specified in the case
of a telegram), or by telecopier, or overnight air courier guaranteeing
next day delivery and shall be deemed to be delivered for purposes of this
Mortgage when delivered in person, upon acknowledged receipt if delivered
by telecopy or telex, or five (5) business days after depositing it in the
United States mail, registered or certified, with postage prepaid and
properly addressed, and the next business day after timely delivery to the
courier, if sent by overnight air courier guaranteeing next day delivery.
Unless otherwise specified in a notice sent or delivered in accordance with
the foregoing provisions of this Section 4.3, notices, demands,
instructions and other communications in writing shall be given to or made
upon the respective parties at their respective addresses (or to their
respective telex or telecopier numbers) indicated below:
If to Mortgagor:
PPM Cranes, Inc.
c/o Terex Corporation
500 Post Road East
Westport, Connecticut 06880
Attention: Marvin Rosenberg, Esq.
If to the Mortgagee:
United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Attn: Corporate Trust Department
Section 4.4 Binding Obligations. The provisions and covenants
of this Mortgage shall run with the land, shall be binding upon the
Mortgagor and shall inure to the benefit of the Mortgagee, subsequent
holders of this Mortgage, and the respective successors and assigns of the
foregoing. For the purpose of this Mortgage, the term "Mortgagor" shall
include and refer to the Mortgagor named herein, any subsequent owners of
the Mortgaged Property (or any part thereof or interest therein), and their
respective heirs, executors, legal representatives, successors and assigns.
If there is more than one Mortgagor, all of their undertakings hereunder
shall be deemed to be joint and several.
Section 4.5 Legal Construction. The creation of this Mortgage,
the perfection of the lien or security interest thereof in the Mortgaged
Property, and the rights and remedies of the Mortgagee with respect to the
Mortgaged Property, as provided herein and by the laws of the state wherein
the Mortgaged Property is located, shall be governed by and construed in
accordance with the internal laws of the state wherein the Mortgaged
Property is located without regard to principles of conflict of law.
Otherwise, to the extent permitted by applicable law, this Mortgage, the
Notes, the Security Documents, the Indenture and all other obligations of
the Mortgagor (including, without limitation, the liability of the
Mortgagor for any deficiency following a foreclosure of all or any part of
the Mortgaged Property) shall be governed by and construed in accordance
with the internal laws of the State of New York without regard to
principles of conflicts of laws, such state being the state where such
documents were executed and delivered. Nothing in this Mortgage, the
Notes, the Indenture or in any other agreement between the Mortgagor and
the Mortgagee shall require the Mortgagor to pay, or the Mortgagee to
accept, interest in an amount which would subject the Mortgagee to any
penalty or forfeiture under applicable law. All agreements between the
Mortgagor and the Mortgagee, whether now existing or hereafter arising and
whether oral or written, are hereby expressly limited so that in no
contingency or event whatsoever shall the amount paid or agreed to be paid
by the Mortgagor for the use, forbearance or detention of the money to be
loaned under the Indenture, the Security Documents, the Notes or any
related document, or for the payment or performance of any covenant or
obligation contained herein, in the Indenture, the Security Documents or in
the Notes exceed the maximum amount permissible under applicable Federal or
state usury laws. If under any circumstances whatsoever fulfillment of any
such provision, at the time performance of such provision shall be due,
shall involve exceeding the limit of validity prescribed by law, then the
obligation to be fulfilled shall be reduced to the limit of such validity.
If under any circumstances the Mortgagor shall have paid an amount deemed
interest by applicable law, which would exceed the highest lawful rate,
such amount shall be applied to the reduction of the principal amount owing
in respect of the Indebtedness and not to the payment of interest, or if
such excessive interest exceeds such unpaid balance of principal and any
other amounts due hereunder or under the Notes, the Indenture or any of the
Security Documents, the excess shall be refunded to the Mortgagor. All
sums paid or agreed to be paid for the use, forbearance or detention of the
principal under any extension of credit by the Mortgagee shall, to the
extent permitted by applicable law, and to the extent necessary to preclude
exceeding the limit of validity prescribed by law, be amortized, prorated,
allocated and spread from the date of this Mortgage until payment in full
of such sums so that the actual rate of interest on account of such princi-
pal amounts is uniform throughout the term hereof.
Section 4.6 Captions. The captions of the Sections of this
Mortgage are for the purpose of convenience only and are not intended to be
a part of this Mortgage and shall not be deemed to modify, explain, enlarge
or restrict any of the provisions hereof.
Section 4.7 Further Assurances. The Mortgagor shall do,
execute, acknowledge and deliver, at the sole cost and expense of the
Mortgagor, such further acts, deeds, documents, instruments, conveyances,
mortgages, assignments, estoppel certificates, financing statements,
fixture filings, continuation statements, notices of assignment, transfers
and assurances as the Mortgagee may reasonably require from time to time in
order to assure, convey, grant, assign, transfer and confirm unto the Mort-
gagee the rights now or hereafter intended to be granted to the Mortgagee
under this Mortgage, any other instrument executed in connection with this
Mortgage or any other instrument under which the Mortgagor may be or may
hereafter become bound to convey, mortgage or assign to the Mortgagee for
carrying out the intention of facilitating the performance of the terms of
this Mortgage. The Mortgagor hereby appoints the Mortgagee its attorney-
in-fact to execute, acknowledge and deliver for and in the name of the
Mortgagor any and all of the instruments mentioned in this Section 4.7 and
this power, being coupled with an interest, shall be irrevocable as long as
any part of the Indebtedness remains unpaid or any Obligations remain
unperformed, provided, however, that the Mortgagee shall not exercise its
powers as attorney-in-fact without giving Mortgagor five (5) days' prior
written notice of its intention to do so.
Section 4.8 Severability. Any provision of this Mortgage which
is prohibited or unenforceable in any jurisdiction or prohibited or
unenforceable as to any person or entity shall, as to such jurisdiction,
person or entity or circumstance be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provi-
sions hereof or affecting the validity or enforceability of such provisions
in any other jurisdiction or as to any other person or entity or circum-
stance.
Section 4.9 General Conditions.
(i) All covenants hereof shall be construed as
affording to the Mortgagee rights additional to and not exclusive
of the rights conferred under the provisions of any other appli-
cable law. To the extent any specific provision of this Mortgage
and the provisions of any applicable law conveying any beneficial
rights to either party directly conflict, the terms of this
Mortgage shall control.
(ii) This Mortgage cannot be altered, amended,
modified or discharged orally and no executory agreement shall be
effective to modify or discharge it in whole or in part, unless
it is in writing and signed by the party against whom enforcement
of the modification, alteration, amendment or discharge is
sought.
(iii) No remedy herein conferred upon or reserved
to the Mortgagee is intended to be exclusive of any other remedy
or remedies, and each and every such remedy shall be cumulative,
and shall be in addition to every other remedy given hereunder or
now or hereafter existing at law or in equity or by statute. No
delay or omission of the Mortgagee in exercising any right or
power accruing upon any Event of Default shall impair any such
right or power, or shall be construed to be a waiver of any such
Event of Default, or any acquiescence therein. Acceptance of any
payment (other than a monetary payment in cure of a monetary
default) after the occurrence of an Event of Default shall not be
deemed a waiver of or a cure of such Event of Default and every
power and remedy given by this Mortgage to the Mortgagee may be
exercised from time to time as often as may be deemed expedient
by the Mortgagee. Nothing in this Mortgage or in the Notes shall
limit or diminish the obligation of the Mortgagor to pay the
Indebtedness in the manner and at the time and place therein
respectively expressed.
(iv) No waiver by the Mortgagee or the Mortgagor
shall be effective unless it is in writing and then only to the
extent specifically stated. Without limiting the generality of
the foregoing, any payment made by the Mortgagee for insurance
premiums, taxes, assessments, water rates, sewer rentals, levies,
fees or any other charges affecting the Mortgaged Property shall
not constitute a waiver of the Mortgagor's default in making such
payments and shall not obligate the Mortgagee to make any further
payments.
(v) The Mortgagee shall have the right to appear
in and defend any action or proceeding, in the name and on behalf
of the Mortgagor which the Mortgagee in its discretion determines
may adversely affect the Mortgaged Property or this Mortgage,
provided, however, that the Mortgagor shall have the right to
defend any such action with counsel reasonably acceptable to the
Mortgagee. In the event that any such action or proceeding is
one covered by title insurance, defense thereof may be made by
counsel to the title company; if the proceeding is one covered by
insurance, defense thereof may be made by counsel to the
insurance company; notwithstanding the foregoing, if the action
is one not covered by insurance, the Mortgagor shall defend such
action with counsel reasonably satisfactory to the Mortgagee.
The Mortgagee shall also have the right, upon reasonable prior
notice to Mortgagor (except in the case of an emergency or other
imminent danger to the Mortgaged Property or Mortgagee's interest
therein, in which event no prior notice shall be required), to
institute any action or proceeding which the Mortgagee in its
reasonable discretion determines should be brought to protect its
interest in the Mortgaged Property or its rights hereunder. All
costs and expenses incurred by the Mortgagee in connection with
any such action or proceedings, including, without limitation,
attorneys' fees and expenses shall be paid by the Mortgagor and
shall be secured by this Mortgage.
(vi) In the event of the passage after the date
of this Mortgage of any law of any governmental authority having
jurisdiction hereof or of the Mortgaged Property, deducting from
the value of land for the purpose of taxation, affecting any lien
thereon or changing in any way the laws for the taxation of
mortgages or debts secured by mortgages for federal, state or
local purposes, or the manner of the collection of any such
taxes, so as to affect this Mortgage, the Mortgagor shall prompt-
ly pay to the Mortgagee, on demand, all taxes, costs and charges
for which the Mortgagee is or may be liable as a result thereof;
provided that if said payment shall be prohibited by law, render
the Notes usurious or subject the Mortgagee to any penalty or
forfeiture, then and in such event the Indebtedness shall, at the
option of the Mortgagee, be immediately due and payable.
(vii) The Mortgagor hereby appoints the Mortgagee
as its attorney-in-fact in connection with the personal property
and fixtures covered by this Mortgage, where permitted by law, to
file on its behalf any financing statements or other statements
in connection therewith with the appropriate public office signed
by the Mortgagee, as secured party. This power being coupled
with an interest, shall be irrevocable so long as any part of the
Indebtedness remains unpaid.
Section 4.10 Multistate Real Estate Transaction. The Mortgagor
acknowledges that this Mortgage is one of a number of other mortgages,
deeds of trust and assignments of leases and rents and other security
documents (hereinafter collectively the "Other Security Documents") which
secure the payment of the Indebtedness and performance of the Obligations
in whole or in part. The Mortgagor agrees that the lien of this Mortgage
shall, subject to the terms hereof, be absolute and unconditional and shall
not in any manner be affected or impaired by any acts or omissions whatso-
ever of the Mortgagee and, without limiting the generality of the
foregoing, the lien hereof shall not be impaired by any acceptance by the
Mortgagee of any security for or guarantors upon any of the Indebtedness or
by any failure, neglect or omission on the part of the Mortgagee to realize
upon or protect any of the Indebtedness or any collateral or security
therefor. The lien hereof shall not in any manner be impaired or affected
by any release (except as to the property released), sale, pledge, surren-
der, compromise, settlement, renewal, extension, indulgence, alteration,
changing, modification or any disposition of any of the Indebtedness or of
any of the collateral or security therefor. The Mortgagee may exercise any
of the rights and remedies under the Other Security Documents without first
exercising or enforcing any of its rights and remedies hereunder, or may
foreclose, exercise any power of sale, or exercise any other right avail-
able under this Mortgage without first exercising or enforcing any of its
rights and remedies under any or all of the Other Security Documents.
Such exercise of the Mortgagee's rights and remedies under any or all of
the Other Security Documents shall not in any manner impair the
Indebtedness or lien of this Mortgage, and any exercise of the rights or
remedies of the Mortgagee hereunder shall not impair the lien of any of the
Other Security Documents or any of the Mortgagee's rights and remedies
thereunder. The Mortgagor specifically consents and agrees that the Mort-
gagee may exercise its rights and remedies hereunder and under the Other
Security Documents separately or concurrently and in any order that the
Mortgagee may deem appropriate.
Section 4.11 Agreement Paramount. If and to the extent that any
of the provisions of this Mortgage conflict or are otherwise inconsistent
with any of the provisions of the Indenture, the provisions of the
Indenture shall prevail. Notwithstanding the foregoing, the failure of the
Indenture to speak to or address a provision expressly set forth in this
Mortgage shall not be deemed to be such an inconsistency or conflict.
IN WITNESS WHEREOF, this Mortgage has been duly executed and
delivered by the Mortgagor as of the date first above written.
PPM CRANES, INC.
Witnesses:
______________________________ By:_____________________________
Name:
______________________________ Title:
Attest:__________________________
Name:
Title:
<PAGE>
STATE OF ________________________ )
COUNTY OF ______________________ )
PERSONALLY appeared before me the undersigned
witness and made oath that s/he saw the within named PPM
Cranes, Inc., by _____________________, its
_______________________, sign, seal and, as its act and
deed, deliver the within-written document for the uses and
purposes therein mentioned and that s/he, with the other
witness whose signature appears above witnessed the
execution thereof.
SWORN to before me this ____________ )
day of ______________________, 1995. )
)
______________________________(L.S. ) ______________________________
Notary Public for __________________ ) Witness
My Commission expires:_____________ )
TRADEMARK SECURITY AGREEMENT
TRADEMARK SECURITY AGREEMENT ("Agreement"), dated as of May 9,
1995, is entered into between TEREX CORPORATION, a Delaware corporation,
located at 500 Post Road East, Westport, Connecticut 06880 (the "Grantor")
and UNITED STATES TRUST COMPANY OF NEW YORK, a New York corporation, as
collateral agent, located at 114 West 47th Street, New York, New York 10036
(together with its successors and assigns the "Collateral Agent"). Capi-
talized terms not otherwise defined herein have the meanings set forth in
the Security and Pledge Agreement, dated as of May 9, 1995 between Grantor
and the Collateral Agent (the "Security Agreement").
WHEREAS, pursuant to the Security Agreement, Grantor is granting
a security interest to the Collateral Agent for the benefit of itself and
the other Secured Parties in certain collateral, including the Trademarks
(as defined herein).
NOW, THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Grantor and the Collateral Agent hereby agree as fol-
lows:
1. Grant of Security Interest
(a) As security for the prompt and complete payment and
performance in full of the Secured Obligations, Grantor 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 upon all of the Grantor's right, title, and
interest in the Trademarks, whether now owned or existing or hereafter
acquired or arising, and wherever located.
(b) For purposes of this Agreement, "Trademarks" shall
mean all of the Grantor's right, title, and interest in and to all United
States trademarks, trade names, corporate names, company names, business
names, fictitious business names, trade styles, service marks, certifica-
tion 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
U.S. Trademark and Servicemark registrations and applications referred to
in Schedule A hereto, all extensions or renewals of any of the foregoing;
all of the goodwill of the business connected with the use of and symbol-
ized 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.
(c) The security interest granted hereby is granted in con-
junction with the security interest granted to the Collateral Agent under
the Security Agreement. The rights and remedies of the Collateral Agent on
behalf of itself and the other Secured Parties with respect to the security
interest granted hereby are in addition to those set forth in the Security
Agreement and the other Transaction Security Documents and those which are
now or hereafter available to Collateral Agent on behalf of itself and the
other Secured Parties as a matter of law or equity. Each right, power, and
remedy of the Collateral Agent provided for herein, in the Security Agree-
ment, in the other Transaction Security Documents or now or hereafter
existing at law or in equity shall be cumulative and concurrent and shall
be in addition to every right, power, or remedy provided for herein, and
the exercise by Collateral Agent on behalf of itself and the other Secured
Parties of any one or more of the rights, powers or remedies provided for
in this Agreement, in the Security Agreement, in the other Transaction
Security Documents or now or hereafter existing at law or in equity shall
not preclude the simultaneous or later exercise by any person, including
Collateral Agent, of any or all other rights, powers or remedies.
2. Modification of Agreement
(a) Schedule A hereto contains a true and accurate list of
all of Grantor's U.S. Trademark registrations and applications.
(b) This Agreement or any provision hereof may not be
changed, waived, or terminated except in accordance with the amendment
provisions of the Security Agreement. Notwithstanding the foregoing,
Grantor authorizes the Collateral Agent, upon notice to Grantor, to modify
this Agreement in the name of and on behalf of the Grantor without
obtaining the Grantor's signature to such modification, to the extent that
such modification constitutes an amendment of Schedule A to add any right,
title, or interest in any Trademark owned or subsequently acquired by
Grantor, and Grantor additionally agrees to execute any additional
agreement or amendment hereto as may be required by the Collateral Agent
from time to time to subject any such owned or subsequently acquired right,
title or interest in any Trademark to the liens and perfection created or
contemplated hereby or by the Security Agreement.
3. Termination of Agreement
When the Secured Obligations have been indefeasibly paid and per-
formed in full, this Agreement shall terminate and the Collateral Agent, at
the request and sole expense of the Grantor, will execute and deliver to
the Grantor the proper instruments acknowledging termination of this
Agreement and will duly, without recourse, representation or warranty of
any kind whatsoever, release such of the Trademarks not therefore disposed
of, applied or released from the security interest created hereby.
4. Governing Law
THIS 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.
5. Successors and Assigns
This Agreement shall be binding upon and inure to the benefit of
the Grantor, the Collateral Agent, the other Secured Parties, all future
holders of the Secured Obligations and their respective successors and as-
signs, except that the Grantor may not assign or transfer any of its rights
or obligations under this Security Agreement without the prior written
consent of the Collateral Agent.
6. Counterparts
This 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.
<PAGE>
IN WITNESS WHEREOF, the Grantor and the Collateral Agent have
caused this Agreement to be duly executed and delivered as of the date
first above written.
TEREX CORPORATION
("Grantor")
By:
Name:
Title:
UNITED STATES TRUST COMPANY OF
NEW YORK, as Collateral Agent
("Collateral Agent")
By:
Name:
Title:
<PAGE>
TRADEMARK SECURITY AGREEMENT
SCHEDULE A
I. U.S. REGISTERED TRADEMARKS
Date
Mark Class(es) Reg # Issued
II. U.S. TRADEMARK APPLICATIONS
Date
Mark Class(es) Filing # Filed
<PAGE>
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On May 9, 1995, before me, the undersigned, a
notary public in and for said state and county, personal-
ly appeared __________________, personally known to me
(or proved to me on the basis of satisfactory evidence),
to be the person who executed the within instrument as
the ___________________ , on behalf of TEREX CORPORATION,
a Delaware corporation, the corporation therein named,
and acknowledged to me that the corporation executed the
within instrument pursuant to its bylaws or a resolution
of its board of directors.
WITNESS MY HAND AND OFFICIAL SEAL.
(NOTARIAL STAMP OR SEAL)
___________________________
Notary Public
My Commission Expires:
______________________
<PAGE>
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On May 9, 1995, before me, the undersigned, a
notary public in and for said state and county, personal-
ly appeared __________________, personally known to me
(or proved to me on the basis of satisfactory evidence),
to be the person who executed the within instrument as
the ___________________ , on behalf of UNITED STATES
TRUST COMPANY OF NEW YORK, a New York corporation, in its
capacity as Collateral Agent, the corporation therein
named, and acknowledged to me that the corporation exe-
cuted the within instrument pursuant to its bylaws or a
resolution of its board of directors.
WITNESS MY HAND AND OFFICIAL SEAL.
(NOTARIAL STAMP OR SEAL)
___________________________
Notary Public
My Commission Expires:
______________________
TRADEMARK SECURITY AGREEMENT
TRADEMARK SECURITY AGREEMENT ("Agreement"), dated as of
May 9, 1995, is entered into between LEGRIS INDUSTRIES, INC., a
Delaware corporation, located at Highway 501 East, Building #15,
Conway, South Carolina (the "Grantor") and UNITED STATES TRUST
COMPANY OF NEW YORK, a New York corporation, as collateral agent,
located at 114 West 47th Street, New York, New York 10036 (to-
gether with its successors and assigns the "Collateral Agent").
Capitalized terms not otherwise defined herein have the meanings
set forth in the Security and Pledge Agreement, dated as of May
9, 1995 between Grantor, the other Companies named therein and
the Collateral Agent (the "Security Agreement").
WHEREAS, pursuant to the Security Agreement, Grantor is
granting a security interest to the Collateral Agent for the
benefit of itself and the other Secured Parties in certain col-
lateral, including the Trademarks (as defined herein).
NOW, THEREFORE, in consideration of the foregoing and
for other good and valuable consideration, the receipt and suffi-
ciency of which is hereby acknowledged, Grantor and the
Collateral Agent hereby agree as follows:
1. Grant of Security Interest
(a) As security for the prompt and complete pay-
ment and performance in full of the Secured Obligations, Grantor
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 upon all of the Grantor's right, title, and
interest in the Trademarks, whether now owned or existing or
hereafter acquired or arising, and wherever located.
(b) For purposes of this Agreement, "Trademarks"
shall mean all of the Grantor's right, title, and interest in and
to all United States 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 U.S.
Trademark and Servicemark registrations and applications referred
to in Schedule A hereto, 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.
(c) The security interest granted hereby is
granted in conjunction with the security interest granted to the
Collateral Agent under the Security Agreement. The rights and
remedies of the Collateral Agent on behalf of itself and the
other Secured Parties with respect to the security interest
granted hereby are in addition to those set forth in the Security
Agreement and the other Transaction Security Documents and those
which are now or hereafter available to Collateral Agent on
behalf of itself and the other Secured Parties as a matter of law
or equity. Each right, power, and remedy of the Collateral Agent
provided for herein, in the Security Agreement, in the other
Transaction Security Documents or now or hereafter existing at
law or in equity shall be cumulative and concurrent and shall be
in addition to every right, power, or remedy provided for herein,
and the exercise by Collateral Agent on behalf of itself and the
other Secured Parties of any one or more of the rights, powers or
remedies provided for in this Agreement, in the Security Agree-
ment, in the other Transaction Security Documents or now or
hereafter existing at law or in equity shall not preclude the
simultaneous or later exercise by any person, including Collat-
eral Agent, of any or all other rights, powers or remedies.
2. Modification of Agreement
(a) Schedule A hereto contains a true and accu-
rate list of all of Grantor's U.S. Trademark registrations and
applications.
(b) This Agreement or any provision hereof may
not be changed, waived, or terminated except in accordance with
the amendment provisions of the Security Agreement.
Notwithstanding the foregoing, Grantor authorizes the Collateral
Agent, upon notice to Grantor, to modify this Agreement in the
name of and on behalf of the Grantor without obtaining the
Grantor's signature to such modification, to the extent that such
modification constitutes an amendment of Schedule A to add any
right, title, or interest in any Trademark owned or subsequently
acquired by Grantor, and Grantor additionally agrees to execute
any additional agreement or amendment hereto as may be required
by the Collateral Agent from time to time to subject any such
owned or subsequently acquired right, title or interest in any
Trademark to the liens and perfection created or contemplated
hereby or by the Security Agreement.
3. Termination of Agreement
When the Secured Obligations have been indefeasibly
paid and performed in full, this Agreement shall terminate and
the Collateral Agent, at the request and sole expense of the
Grantor, will execute and deliver to the Grantor the proper
instruments acknowledging termination of this Agreement and will
duly, without recourse, representation or warranty of any kind
whatsoever, release such of the Trademarks not therefore disposed
of, applied or released from the security interest created
hereby.
4. Governing Law
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCOR-
DANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK.
5. Successors and Assigns
This Agreement shall be binding upon and inure to the
benefit of the Grantor, the Collateral Agent, the other Secured
Parties, all future holders of the Secured Obligations and their
respective successors and assigns, except that the Grantor may
not assign or transfer any of its rights or obligations under
this Security Agreement without the prior written consent of the
Collateral Agent.
6. Counterparts
This 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.
<PAGE>
IN WITNESS WHEREOF, the Grantor and the Collateral
Agent have caused this Agreement to be duly executed and deliv-
ered as of the date first above written.
LEGRIS INDUSTRIES, INC.
("Grantor")
By:__________________________
Name:
Title:
UNITED STATES TRUST COMPANY OF
NEW YORK, as Collateral Agent
("Collateral Agent")
By: _________________________
Name:
Title:
<PAGE>
TRADEMARK SECURITY AGREEMENT
SCHEDULE A
I. U.S. REGISTERED TRADEMARKS
Date
Mark Class(es) Reg # Issued
II. U.S. TRADEMARK APPLICATIONS
Date
Mark Class(es) Filing # Filed
<PAGE>
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On May 9, 1995, before me, the undersigned, a
notary public in and for said state and county, personal-
ly appeared __________________, personally known to me
(or proved to me on the basis of satisfactory evidence),
to be the person who executed the within instrument as
the ___________________ , on behalf of LEGRIS INDUSTRIES,
INC., a Delaware corporation, the corporation therein
named, and acknowledged to me that the corporation exe-
cuted the within instrument pursuant to its bylaws or a
resolution of its board of directors.
WITNESS MY HAND AND OFFICIAL SEAL.
(NOTARIAL STAMP OR SEAL)
___________________________
Notary Public
My Commission Expires:
______________________
<PAGE>
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On May 9, 1995, before me, the undersigned, a
notary public in and for said state and county, personal-
ly appeared __________________, personally known to me
(or proved to me on the basis of satisfactory evidence),
to be the person who executed the within instrument as
the ___________________ , on behalf of UNITED STATES
TRUST COMPANY OF NEW YORK, a New York corporation, in its
capacity as Collateral Agent, the corporation therein
named, and acknowledged to me that the corporation exe-
cuted the within instrument pursuant to its bylaws or a
resolution of its board of directors.
WITNESS MY HAND AND OFFICIAL SEAL.
(NOTARIAL STAMP OR SEAL)
___________________________
Notary Public
My Commission Expires:
______________________
TRADEMARK SECURITY AGREEMENT
TRADEMARK SECURITY AGREEMENT ("Agreement"), dated as of May 9,
1995, is entered into between CLARK MATERIAL HANDLING COMPANY, a Kentucky
corporation, located at 333 West Vine, Lexington, Kentucky 40507 (the
"Grantor") and UNITED STATES TRUST COMPANY OF NEW YORK, a New York
corporation, as collateral agent, located at 114 West 47th Street, New
York, New York 10036 (together with its successors and assigns the "Col-
lateral Agent"). Capitalized terms not otherwise defined herein have the
meanings set forth in the Security and Pledge Agreement, dated as of May 9,
1995 between Grantor, the other Companies named therein and the Collateral
Agent (the "Security Agreement").
WHEREAS, pursuant to the Security Agreement, Grantor is granting
a security interest to the Collateral Agent for the benefit of itself and
the other Secured Parties in certain collateral, including the Trademarks
(as defined herein).
NOW, THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Grantor and the Collateral Agent hereby agree as fol-
lows:
1. Grant of Security Interest
(a) As security for the prompt and complete payment and
performance in full of the Secured Obligations, Grantor 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 upon all of the Grantor's right, title, and
interest in the Trademarks, whether now owned or existing or hereafter
acquired or arising, and wherever located.
(b) For purposes of this Agreement, "Trademarks" shall
mean all of the Grantor's right, title, and interest in and to all United
States trademarks, trade names, corporate names, company names, business
names, fictitious business names, trade styles, service marks, certifica-
tion 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
U.S. Trademark and Servicemark registrations and applications referred to
in Schedule A hereto, all extensions or renewals of any of the foregoing;
all of the goodwill of the business connected with the use of and symbol-
ized 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.
(c) The security interest granted hereby is granted in con-
junction with the security interest granted to the Collateral Agent under
the Security Agreement. The rights and remedies of the Collateral Agent on
behalf of itself and the other Secured Parties with respect to the security
interest granted hereby are in addition to those set forth in the Security
Agreement and the other Transaction Security Documents and those which are
now or hereafter available to Collateral Agent on behalf of itself and the
other Secured Parties as a matter of law or equity. Each right, power, and
remedy of the Collateral Agent provided for herein, in the Security Agree-
ment, in the other Transaction Security Documents or now or hereafter
existing at law or in equity shall be cumulative and concurrent and shall
be in addition to every right, power, or remedy provided for herein, and
the exercise by Collateral Agent on behalf of itself and the other Secured
Parties of any one or more of the rights, powers or remedies provided for
in this Agreement, in the Security Agreement, in the other Transaction
Security Documents or now or hereafter existing at law or in equity shall
not preclude the simultaneous or later exercise by any person, including
Collateral Agent, of any or all other rights, powers or remedies.
2. Modification of Agreement
(a) Schedule A hereto contains a true and accurate list of
all of Grantor's U.S. Trademark registrations and applications.
(b) This Agreement or any provision hereof may not be
changed, waived, or terminated except in accordance with the amendment
provisions of the Security Agreement. Notwithstanding the foregoing,
Grantor authorizes the Collateral Agent, upon notice to Grantor, to modify
this Agreement in the name of and on behalf of the Grantor without
obtaining the Grantor's signature to such modification, to the extent that
such modification constitutes an amendment of Schedule A to add any right,
title, or interest in any Trademark owned or subsequently acquired by
Grantor, and Grantor additionally agrees to execute any additional
agreement or amendment hereto as may be required by the Collateral Agent
from time to time to subject any such owned or subsequently acquired right,
title or interest in any Trademark to the liens and perfection created or
contemplated hereby or by the Security Agreement.
3. Termination of Agreement
When the Secured Obligations have been indefeasibly paid and per-
formed in full, this Agreement shall terminate and the Collateral Agent, at
the request and sole expense of the Grantor, will execute and deliver to
the Grantor the proper instruments acknowledging termination of this
Agreement and will duly, without recourse, representation or warranty of
any kind whatsoever, release such of the Trademarks not therefore disposed
of, applied or released from the security interest created hereby.
4. Governing Law
THIS 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.
5. Successors and Assigns
This Agreement shall be binding upon and inure to the benefit of
the Grantor, the Collateral Agent, the other Secured Parties, all future
holders of the Secured Obligations and their respective successors and as-
signs, except that the Grantor may not assign or transfer any of its rights
or obligations under this Security Agreement without the prior written
consent of the Collateral Agent.
6. Counterparts
This 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.
<PAGE>
IN WITNESS WHEREOF, the Grantor and the Collateral Agent have
caused this Agreement to be duly executed and delivered as of the date
first above written.
CLARK MATERIAL HANDLING COMPANY
("Grantor")
By:
Name:
Title:
UNITED STATES TRUST COMPANY OF
NEW YORK, as Collateral Agent
("Collateral Agent")
By:
Name:
Title:
<PAGE>
TRADEMARK SECURITY AGREEMENT
SCHEDULE A
I. U.S. REGISTERED TRADEMARKS
Date
Mark Class(es) Reg # Issued
II. U.S. TRADEMARK APPLICATIONS
Date
Mark Class(es) Filing # Filed
<PAGE>
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On May 9, 1995, before me, the undersigned, a
notary public in and for said state and county, personal-
ly appeared __________________, personally known to me
(or proved to me on the basis of satisfactory evidence),
to be the person who executed the within instrument as
the ___________________ , on behalf of CLARK MATERIAL -
HANDLING COMPANY, a Kentucky corporation, the corporation
therein named, and acknowledged to me that the corpora-
tion executed the within instrument pursuant to its
bylaws or a resolution of its board of directors.
WITNESS MY HAND AND OFFICIAL SEAL.
(NOTARIAL STAMP OR SEAL)
___________________________
Notary Public
My Commission Expires:
______________________
<PAGE>
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On May 9, 1995, before me, the undersigned, a
notary public in and for said state and county, personal-
ly appeared __________________, personally known to me
(or proved to me on the basis of satisfactory evidence),
to be the person who executed the within instrument as
the ___________________ , on behalf of UNITED STATES
TRUST COMPANY OF NEW YORK, a New York corporation, in its
capacity as Collateral Agent, the corporation therein
named, and acknowledged to me that the corporation exe-
cuted the within instrument pursuant to its bylaws or a
resolution of its board of directors.
WITNESS MY HAND AND OFFICIAL SEAL.
(NOTARIAL STAMP OR SEAL)
___________________________
Notary Public
My Commission Expires:
______________________
PATENT SECURITY AGREEMENT
PATENT SECURITY AGREEMENT ("Agreement"), dated as of May 9, 1995,
is entered into between TEREX CORPORATION, a Delaware corporation, located
at 500 Post Road East, Westport, Connecticut 06880 (the "Grantor") and
UNITED STATES TRUST COMPANY OF NEW YORK, a New York corporation, as col-
lateral agent, located at 114 West 47th Street, New York, New York 10036
(together with its successors and assigns the "Collateral Agent"). Capi-
talized terms not otherwise defined herein have the meanings set forth in
the Security and Pledge Agreement, dated as of May 9, 1995 between Grantor
and the Collateral Agent (the "Security Agreement").
WHEREAS, pursuant to the Security Agreement, Grantor is granting
a security interest to the Collateral Agent for the benefit of itself and
the other Secured Parties in certain collateral, including the Patents (as
defined herein).
NOW, THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Grantor and the Collateral Agent hereby agree as fol-
lows:
1. Grant of Security Interest
(a) As security for the prompt and complete payment and
performance in full of the Secured Obligations, Grantor 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 upon all of the Grantor's right, title, and
interest in the Patents, whether now owned or existing or hereafter
acquired or arising, and wherever located.
(b) For purposes of this Agreement, "Patents" shall mean
all of the Grantor's right, title, and interest in and to all United States
patents and applications for letters patent throughout the world,
including, but not limited to, each patent and patent application referred
to in Schedule A hereto, 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, but not limited to, license,
royalties, income, payments, claims, damages, and proceeds of suit.
(c) The security interest granted hereby is granted in con-
junction with the security interest granted to the Collateral Agent under
the Security Agreement. The rights and remedies of the Collateral Agent on
behalf of itself and the other Secured Parties with respect to the security
interest granted hereby are in addition to those set forth in the Security
Agreement and the other Transaction Security Documents and those which are
now or hereafter available to Collateral Agent on behalf of itself and the
other Secured Parties as a matter of law or equity. Each right, power, and
remedy of the Collateral Agent provided for herein, in the Security Agree-
ment, in the other Transaction Security Documents, or now or hereafter
existing at law or in equity shall be cumulative and concurrent and shall
be in addition to every right, power, or remedy provided for herein, and
the exercise by Collateral Agent on behalf of itself and the other Secured
Parties of any one or more of the rights, powers or remedies provided for
in this Agreement, in the Security Agreement, in the other Transaction
Security Documents or now or hereafter existing at law or in equity shall
not preclude the simultaneous or later exercise by any person, including
Collateral Agent, of any or all other rights, powers or remedies.
2. Modification of Agreement
(a) Schedule A hereto contains a true and accurate list of
all of Grantor's U.S. Patent registrations and applications.
(b) This Agreement or any provision hereof may not be
changed, waived, or terminated except in accordance with the amendment
provisions of the Security Agreement. Notwithstanding the foregoing,
Grantor authorizes the Collateral Agent, upon notice to Grantor, to modify
this Agreement in the name of and on behalf of the Grantor without
obtaining the Grantor's signature to such modification, to the extent that
such modification constitutes an amendment of Schedule A to add any right,
title, or interest in any Patent owned or subsequently acquired by Grantor,
and Grantor additionally agrees to execute any additional agreement or
amendment hereto as may be required by the Collateral Agent from time to
time to subject any such owned or subsequently acquired right, title or
interest in any Patent to the liens and perfection created or contemplated
hereby or by the Security Agreement.
3. Termination of Agreement
When the Secured Obligations have been indefeasibly paid and per-
formed in full, this Agreement shall terminate and the Collateral Agent, at
the request and sole expense of the Grantor, will execute and deliver to
the Grantor the proper instruments acknowledging termination of this
Agreement and will duly, without recourse, representation or warranty of
any kind whatsoever, release such of the Patents not therefore disposed of,
applied or released from the security interest created hereby.
4. Governing Law
THIS 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.
5. Successors and Assigns
This Agreement shall be binding upon and inure to the benefit of
the Grantor, the Collateral Agent, the other Secured Parties, all future
holders of the Secured Obligations and their respective successors and as-
signs, except that the Grantor may not assign or transfer any of its rights
or obligations under this Security Agreement without the prior written
consent of the Collateral Agent.
6. Counterparts
This 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.
<PAGE>
IN WITNESS WHEREOF, the Grantor and the Collateral Agent have
caused this Agreement to be duly executed and delivered as of the date
first above written.
TEREX CORPORATION
("Grantor")
By:_________________________________
Name:
Title:
UNITED STATES TRUST COMPANY OF
NEW YORK, as Collateral Agent
("Collateral Agent")
By:___________________________________
Name:
Title:
<PAGE>
PATENT SECURITY AGREEMENT
SCHEDULE A
I. U.S. PATENTS
Date
Title Inventor Patent Issued
II. U.S. PATENT APPLICATIONS
Date
Title Inventor Patent Filed
<PAGE>
STATE OF New York )
) ss:
COUNTY OF New York )
On May __, 1995, before me, the undersigned, a notary public in
and for said state and county, personally appeared __________________, per-
sonally known to me (or proved to me on the basis of satisfactory evi-
dence), to be the person who executed the within instrument as the
___________________ , on behalf of TEREX CORPORATION, a Delaware corpora-
tion, the corporation therein named, and acknowledged to me that the
corporation executed the within instrument pursuant to its bylaws or a
resolution of its board of directors.
WITNESS MY HAND AND OFFICIAL SEAL.
(NOTARIAL STAMP OR SEAL)
___________________________
Notary Public
My Commission Expires:
______________________
<PAGE>
STATE OF New York )
) ss:
COUNTY OF New York )
On May __, 1995, before me, the undersigned, a notary public in
and for said state and county, personally appeared __________________, per-
sonally known to me (or proved to me on the basis of satisfactory evi-
dence), to be the person who executed the within instrument as the
___________________ , on behalf of UNITED STATES TRUST COMPANY OF NEW YORK,
a New York corporation, in its capacity as Collateral Agent, the corpora-
tion therein named, and acknowledged to me that the corporation executed
the within instrument pursuant to its bylaws or a resolution of its board
of directors.
WITNESS MY HAND AND OFFICIAL SEAL.
(NOTARIAL STAMP OR SEAL)
___________________________
Notary Public
My Commission Expires:
______________________
PATENT SECURITY AGREEMENT
PATENT SECURITY AGREEMENT ("Agreement"), dated as of
May 9, 1995, is entered into between LEGRIS INDUSTRIES, INC., a
Delaware corporation, located at Highway 501 East, Building #15,
Conway, South Carolina (the "Grantor") and UNITED STATES TRUST
COMPANY OF NEW YORK, a New York corporation, as collateral agent,
located at 114 West 47th Street, New York, New York 10036 (to-
gether with its successors and assigns the "Collateral Agent").
Capitalized terms not otherwise defined herein have the meanings
set forth in the Subsidiary Security and Pledge Agreement, dated
as of May 9, 1995 between Grantor, the other Companies named
therein and the Collateral Agent (the "Security Agreement").
WHEREAS, pursuant to the Security Agreement, Grantor is
granting a security interest to the Collateral Agent for the
benefit of itself and the other Secured Parties in certain col-
lateral, including the Patents (as defined herein).
NOW, THEREFORE, in consideration of the foregoing and
for other good and valuable consideration, the receipt and suffi-
ciency of which is hereby acknowledged, Grantor and the
Collateral Agent hereby agree as follows:
1. Grant of Security Interest
(a) As security for the prompt and complete pay-
ment and performance in full of the Secured Obligations, Grantor
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 upon all of the Grantor's right, title, and
interest in the Patents, whether now owned or existing or hereaf-
ter acquired or arising, and wherever located.
(b) For purposes of this Agreement, "Patents"
shall mean all of the Grantor's right, title, and interest in and
to all United States patents and applications for letters patent
throughout the world, including, but not limited to, each patent
and patent application referred to in Schedule A hereto, 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, but not limited to, license,
royalties, income, payments, claims, damages, and proceeds of
suit.
(c) The security interest granted hereby is
granted in conjunction with the security interest granted to the
Collateral Agent under the Security Agreement. The rights and
remedies of the Collateral Agent on behalf of itself and the
other Secured Parties with respect to the security interest
granted hereby are in addition to those set forth in the Security
Agreement and the other Transaction Security Documents and those
which are now or hereafter available to Collateral Agent on
behalf of itself and the other Secured Parties as a matter of law
or equity. Each right, power, and remedy of the Collateral Agent
provided for herein, in the Security Agreement, in the other
Transaction Security Documents, or now or hereafter existing at
law or in equity shall be cumulative and concurrent and shall be
in addition to every right, power, or remedy provided for herein,
and the exercise by Collateral Agent on behalf of itself and the
other Secured Parties of any one or more of the rights, powers or
remedies provided for in this Agreement, in the Security Agree-
ment, in the other Transaction Security Documents or now or
hereafter existing at law or in equity shall not preclude the
simultaneous or later exercise by any person, including Collat-
eral Agent, of any or all other rights, powers or remedies.
2. Modification of Agreement
(a) Schedule A hereto contains a true and accu-
rate list of all of Grantor's U.S. Patent registrations and
applications.
(b) This Agreement or any provision hereof may
not be changed, waived, or terminated except in accordance with
the amendment provisions of the Security Agreement.
Notwithstanding the foregoing, Grantor authorizes the Collateral
Agent, upon notice to Grantor, to modify this Agreement in the
name of and on behalf of the Grantor without obtaining the
Grantor's signature to such modification, to the extent that such
modification constitutes an amendment of Schedule A to add any
right, title, or interest in any Patent owned or subsequently
acquired by Grantor, and Grantor additionally agrees to execute
any additional agreement or amendment hereto as may be required
by the Collateral Agent from time to time to subject any such
owned or subsequently acquired right, title or interest in any
Patent to the liens and perfection created or contemplated hereby
or by the Security Agreement.
3. Termination of Agreement
When the Secured Obligations have been indefeasibly
paid and performed in full, this Agreement shall terminate and
the Collateral Agent, at the request and sole expense of the
Grantor, will execute and deliver to the Grantor the proper
instruments acknowledging termination of this Agreement and will
duly, without recourse, representation or warranty of any kind
whatsoever, release such of the Patents not therefore disposed
of, applied or released from the security interest created
hereby.
4. Governing Law
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCOR-
DANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK.
5. Successors and Assigns
This Agreement shall be binding upon and inure to the
benefit of the Grantor, the Collateral Agent, the other Secured
Parties, all future holders of the Secured Obligations and their
respective successors and assigns, except that the Grantor may
not assign or transfer any of its rights or obligations under
this Security Agreement without the prior written consent of the
Collateral Agent.
6. Counterparts
This 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.
<PAGE>
IN WITNESS WHEREOF, the Grantor and the Collateral
Agent have caused this Agreement to be duly executed and deliv-
ered as of the date first above written.
LEGRIS INDUSTRIES, INC.
("Grantor")
By:__________________________
Name:
Title:
UNITED STATES TRUST COMPANY OF
NEW YORK, as Collateral Agent
("Collateral Agent")
By:__________________________
Name:
Title:
<PAGE>
PATENT SECURITY AGREEMENT
SCHEDULE A
I. U.S. PATENTS
Date
Title Inventor Patent Issued
II. U.S. PATENT APPLICATIONS
Date
Title Inventor Patent Filed
<PAGE>
STATE OF New York )
) ss:
COUNTY OF New York )
On May __, 1995, before me, the undersigned, a
notary public in and for said state and county, personal-
ly appeared __________________, personally known to me
(or proved to me on the basis of satisfactory evidence),
to be the person who executed the within instrument as
the ___________________ , on behalf of LEGRIS INDUSTRIES,
INC., a Delaware corporation, the corporation therein
named, and acknowledged to me that the corporation exe-
cuted the within instrument pursuant to its bylaws or a
resolution of its board of directors.
WITNESS MY HAND AND OFFICIAL SEAL.
(NOTARIAL STAMP OR SEAL)
___________________________
Notary Public
My Commission Expires:
______________________
<PAGE>
STATE OF New York )
) ss:
COUNTY OF New York )
On May __, 1995, before me, the undersigned, a
notary public in and for said state and county, personal-
ly appeared __________________, personally known to me
(or proved to me on the basis of satisfactory evidence),
to be the person who executed the within instrument as
the ___________________ , on behalf of UNITED STATES
TRUST COMPANY OF NEW YORK, a New York corporation, in its
capacity as Collateral Agent, the corporation therein
named, and acknowledged to me that the corporation exe-
cuted the within instrument pursuant to its bylaws or a
resolution of its board of directors.
WITNESS MY HAND AND OFFICIAL SEAL.
(NOTARIAL STAMP OR SEAL)
___________________________
Notary Public
My Commission Expires:
______________________
PATENT SECURITY AGREEMENT
PATENT SECURITY AGREEMENT ("Agreement"), dated as of May 9, 1995,
is entered into between PPM CRANES, INC., a Delaware corporation, located
at Highway 501 East, Building #15, Conway, South Carolina (the "Grantor")
and UNITED STATES TRUST COMPANY OF NEW YORK, a New York corporation, as
collateral agent, located at 114 West 47th Street, New York, New York 10036
(together with its successors and assigns the "Collateral Agent"). Capi-
talized terms not otherwise defined herein have the meanings set forth in
the Subsidiary Security and Pledge Agreement, dated as of May 9, 1995
between Grantor, the other Companies named therein and the Collateral Agent
(the "Security Agreement").
WHEREAS, pursuant to the Security Agreement, Grantor is granting
a security interest to the Collateral Agent for the benefit of itself and
the other Secured Parties in certain collateral, including the Patents (as
defined herein).
NOW, THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Grantor and the Collateral Agent hereby agree as fol-
lows:
1. Grant of Security Interest
(a) As security for the prompt and complete payment and
performance in full of the Secured Obligations, Grantor 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 upon all of the Grantor's right, title, and
interest in the Patents, whether now owned or existing or hereafter
acquired or arising, and wherever located.
(b) For purposes of this Agreement, "Patents" shall mean
all of the Grantor's right, title, and interest in and to all United States
patents and applications for letters patent throughout the world,
including, but not limited to, each patent and patent application referred
to in Schedule A hereto, 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, but not limited to, license,
royalties, income, payments, claims, damages, and proceeds of suit.
(c) The security interest granted hereby is granted in con-
junction with the security interest granted to the Collateral Agent under
the Security Agreement. The rights and remedies of the Collateral Agent on
behalf of itself and the other Secured Parties with respect to the security
interest granted hereby are in addition to those set forth in the Security
Agreement and the other Transaction Security Documents and those which are
now or hereafter available to Collateral Agent on behalf of itself and the
other Secured Parties as a matter of law or equity. Each right, power, and
remedy of the Collateral Agent provided for herein, in the Security Agree-
ment, in the other Transaction Security Documents, or now or hereafter
existing at law or in equity shall be cumulative and concurrent and shall
be in addition to every right, power, or remedy provided for herein, and
the exercise by Collateral Agent on behalf of itself and the other Secured
Parties of any one or more of the rights, powers or remedies provided for
in this Agreement, in the Security Agreement, in the other Transaction
Security Documents or now or hereafter existing at law or in equity shall
not preclude the simultaneous or later exercise by any person, including
Collateral Agent, of any or all other rights, powers or remedies.
2. Modification of Agreement
(a) Schedule A hereto contains a true and accurate list of
all of Grantor's U.S. Patent registrations and applications.
(b) This Agreement or any provision hereof may not be
changed, waived, or terminated except in accordance with the amendment
provisions of the Security Agreement. Notwithstanding the foregoing,
Grantor authorizes the Collateral Agent, upon notice to Grantor, to modify
this Agreement in the name of and on behalf of the Grantor without
obtaining the Grantor's signature to such modification, to the extent that
such modification constitutes an amendment of Schedule A to add any right,
title, or interest in any Patent owned or subsequently acquired by Grantor,
and Grantor additionally agrees to execute any additional agreement or
amendment hereto as may be required by the Collateral Agent from time to
time to subject any such owned or subsequently acquired right, title or
interest in any Patent to the liens and perfection created or contemplated
hereby or by the Security Agreement.
3. Termination of Agreement
When the Secured Obligations have been indefeasibly paid and per-
formed in full, this Agreement shall terminate and the Collateral Agent, at
the request and sole expense of the Grantor, will execute and deliver to
the Grantor the proper instruments acknowledging termination of this
Agreement and will duly, without recourse, representation or warranty of
any kind whatsoever, release such of the Patents not therefore disposed of,
applied or released from the security interest created hereby.
4. Governing Law
THIS 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.
5. Successors and Assigns
This Agreement shall be binding upon and inure to the benefit of
the Grantor, the Collateral Agent, the other Secured Parties, all future
holders of the Secured Obligations and their respective successors and as-
signs, except that the Grantor may not assign or transfer any of its rights
or obligations under this Security Agreement without the prior written
consent of the Collateral Agent.
6. Counterparts
This 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.
<PAGE>
IN WITNESS WHEREOF, the Grantor and the Collateral Agent have
caused this Agreement to be duly executed and delivered as of the date
first above written.
PPM CRANES, INC.
("Grantor")
By:
Name:
Title:
UNITED STATES TRUST COMPANY OF
NEW YORK, as Collateral Agent
("Collateral Agent")
By:
Name:
Title:
<PAGE>
PATENT SECURITY AGREEMENT
SCHEDULE A
I. U.S. PATENTS
Date
Title Inventor Patent Issued
II. U.S. PATENT APPLICATIONS
Date
Title Inventor Patent Filed
<PAGE>
STATE OF New York )
) ss:
COUNTY OF New York )
On May __, 1995, before me, the undersigned, a
notary public in and for said state and county, personal-
ly appeared __________________, personally known to me
(or proved to me on the basis of satisfactory evidence),
to be the person who executed the within instrument as
the ___________________ , on behalf of PPM CRANES, INC.,
a Delaware corporation, the corporation therein named,
and acknowledged to me that the corporation executed the
within instrument pursuant to its bylaws or a resolution
of its board of directors.
WITNESS MY HAND AND OFFICIAL SEAL.
(NOTARIAL STAMP OR SEAL)
___________________________
Notary Public
My Commission Expires:
______________________
<PAGE>
STATE OF New York )
) ss:
COUNTY OF New York )
On May __, 1995, before me, the undersigned, a
notary public in and for said state and county, personal-
ly appeared __________________, personally known to me
(or proved to me on the basis of satisfactory evidence),
to be the person who executed the within instrument as
the ___________________ , on behalf of UNITED STATES
TRUST COMPANY OF NEW YORK, a New York corporation, in its
capacity as Collateral Agent, the corporation therein
named, and acknowledged to me that the corporation exe-
cuted the within instrument pursuant to its bylaws or a
resolution of its board of directors.
WITNESS MY HAND AND OFFICIAL SEAL.
(NOTARIAL STAMP OR SEAL)
___________________________
Notary Public
My Commission Expires:
______________________
PATENT SECURITY AGREEMENT
PATENT SECURITY AGREEMENT ("Agreement"), dated as of May 9, 1995,
is entered into between KOEHRING CRANES, INC., a Delaware corporation,
located at 1575 Big Rock Road, Waterloo, Iowa 50707 (the "Grantor") and
UNITED STATES TRUST COMPANY OF NEW YORK, a New York corporation, as col-
lateral agent, located at 114 West 47th Street, New York, New York 10036
(together with its successors and assigns the "Collateral Agent"). Capi-
talized terms not otherwise defined herein have the meanings set forth in
the Subsidiary Security and Pledge Agreement, dated as of May 9, 1995
between Grantor, the other Companies named therein and the Collateral Agent
(the "Security Agreement").
WHEREAS, pursuant to the Security Agreement, Grantor is granting
a security interest to the Collateral Agent for the benefit of itself and
the other Secured Parties in certain collateral, including the Patents (as
defined herein).
NOW, THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Grantor and the Collateral Agent hereby agree as fol-
lows:
1. Grant of Security Interest
(a) As security for the prompt and complete payment and
performance in full of the Secured Obligations, Grantor 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 upon all of the Grantor's right, title, and
interest in the Patents, whether now owned or existing or hereafter
acquired or arising, and wherever located.
(b) For purposes of this Agreement, "Patents" shall mean
all of the Grantor's right, title, and interest in and to all United States
patents and applications for letters patent throughout the world,
including, but not limited to, each patent and patent application referred
to in Schedule A hereto, 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, but not limited to, license,
royalties, income, payments, claims, damages, and proceeds of suit.
(c) The security interest granted hereby is granted in con-
junction with the security interest granted to the Collateral Agent under
the Security Agreement. The rights and remedies of the Collateral Agent on
behalf of itself and the other Secured Parties with respect to the security
interest granted hereby are in addition to those set forth in the Security
Agreement and the other Transaction Security Documents and those which are
now or hereafter available to Collateral Agent on behalf of itself and the
other Secured Parties as a matter of law or equity. Each right, power, and
remedy of the Collateral Agent provided for herein, in the Security Agree-
ment, in the other Transaction Security Documents, or now or hereafter
existing at law or in equity shall be cumulative and concurrent and shall
be in addition to every right, power, or remedy provided for herein, and
the exercise by Collateral Agent on behalf of itself and the other Secured
Parties of any one or more of the rights, powers or remedies provided for
in this Agreement, in the Security Agreement, in the other Transaction
Security Documents or now or hereafter existing at law or in equity shall
not preclude the simultaneous or later exercise by any person, including
Collateral Agent, of any or all other rights, powers or remedies.
2. Modification of Agreement
(a) Schedule A hereto contains a true and accurate list of
all of Grantor's U.S. Patent registrations and applications.
(b) This Agreement or any provision hereof may not be
changed, waived, or terminated except in accordance with the amendment
provisions of the Security Agreement. Notwithstanding the foregoing,
Grantor authorizes the Collateral Agent, upon notice to Grantor, to modify
this Agreement in the name of and on behalf of the Grantor without
obtaining the Grantor's signature to such modification, to the extent that
such modification constitutes an amendment of Schedule A to add any right,
title, or interest in any Patent owned or subsequently acquired by Grantor,
and Grantor additionally agrees to execute any additional agreement or
amendment hereto as may be required by the Collateral Agent from time to
time to subject any such owned or subsequently acquired right, title or
interest in any Patent to the liens and perfection created or contemplated
hereby or by the Security Agreement.
3. Termination of Agreement
When the Secured Obligations have been indefeasibly paid and per-
formed in full, this Agreement shall terminate and the Collateral Agent, at
the request and sole expense of the Grantor, will execute and deliver to
the Grantor the proper instruments acknowledging termination of this
Agreement and will duly, without recourse, representation or warranty of
any kind whatsoever, release such of the Patents not therefore disposed of,
applied or released from the security interest created hereby.
4. Governing Law
THIS 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.
5. Successors and Assigns
This Agreement shall be binding upon and inure to the benefit of
the Grantor, the Collateral Agent, the other Secured Parties, all future
holders of the Secured Obligations and their respective successors and as-
signs, except that the Grantor may not assign or transfer any of its rights
or obligations under this Security Agreement without the prior written
consent of the Collateral Agent.
6. Counterparts
This 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.
<PAGE>
IN WITNESS WHEREOF, the Grantor and the Collateral Agent have
caused this Agreement to be duly executed and delivered as of the date
first above written.
KOEHRING CRANES, INC.
("Grantor")
By:__________________________________
Name:
Title:
UNITED STATES TRUST COMPANY OF
NEW YORK, as Collateral Agent
("Collateral Agent")
By:___________________________________
Name:
Title:
<PAGE>
PATENT SECURITY AGREEMENT
SCHEDULE A
I. U.S. PATENTS
Date
Title Inventor Patent Issued
II. U.S. PATENT APPLICATIONS
Date
Title Inventor Patent Filed
<PAGE>
STATE OF New York )
) ss:
COUNTY OF New York )
On May __, 1995, before me, the undersigned, a notary public in
and for said state and county, personally appeared __________________, per-
sonally known to me (or proved to me on the basis of satisfactory evi-
dence), to be the person who executed the within instrument as the
___________________ , on behalf of KOEHRING CRANES, INC., a Delaware corpo-
ration, the corporation therein named, and acknowledged to me that the
corporation executed the within instrument pursuant to its bylaws or a
resolution of its board of directors.
WITNESS MY HAND AND OFFICIAL SEAL.
(NOTARIAL STAMP OR SEAL)
___________________________
Notary Public
My Commission Expires:
______________________
<PAGE>
STATE OF New York )
) ss:
COUNTY OF New York )
On May __, 1995, before me, the undersigned, a notary public in
and for said state and county, personally appeared __________________, per-
sonally known to me (or proved to me on the basis of satisfactory evi-
dence), to be the person who executed the within instrument as the
___________________ , on behalf of UNITED STATES TRUST COMPANY OF NEW YORK,
a New York corporation, in its capacity as Collateral Agent, the corpora-
tion therein named, and acknowledged to me that the corporation executed
the within instrument pursuant to its bylaws or a resolution of its board
of directors.
WITNESS MY HAND AND OFFICIAL SEAL.
(NOTARIAL STAMP OR SEAL)
___________________________
Notary Public
My Commission Expires:
______________________
PATENT SECURITY AGREEMENT
PATENT SECURITY AGREEMENT ("Agreement"), dated as of
May 9, 1995, is entered into between CLARK MATERIAL HANDLING
COMPANY, a Kentucky corporation, located at 333 West Vine,
Lexington, Kentucky 40507 (the "Grantor") and UNITED STATES TRUST
COMPANY OF NEW YORK, a New York corporation, as collateral agent,
located at 114 West 47th Street, New York, New York 10036
(together with its successors and assigns the "Collateral
Agent"). Capitalized terms not otherwise defined herein have the
meanings set forth in the Subsidiary Security and Pledge
Agreement, dated as of May 9, 1995 between Grantor, the other
Companies named therein and the Collateral Agent (the "Security
Agreement").
WHEREAS, pursuant to the Security Agreement, Grantor is
granting a security interest to the Collateral Agent for the
benefit of itself and the other Secured Parties in certain
collateral, including the Patents (as defined herein).
NOW, THEREFORE, in consideration of the foregoing and
for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Grantor and the
Collateral Agent hereby agree as follows:
1. Grant of Security Interest
(a) As security for the prompt and complete
payment and performance in full of the Secured Obligations,
Grantor 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 upon all of the Grantor's right, title, and
interest in the Patents, whether now owned or existing or
hereafter acquired or arising, and wherever located.
(b) For purposes of this Agreement, "Patents"
shall mean all of the Grantor's right, title, and interest in and
to all United States patents and applications for letters patent
throughout the world, including, but not limited to, each patent
and patent application referred to in Schedule A hereto, 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, but not limited to, license,
royalties, income, payments, claims, damages, and proceeds of
suit.
(c) The security interest granted hereby is
granted in conjunction with the security interest granted to the
Collateral Agent under the Security Agreement. The rights and
remedies of the Collateral Agent on behalf of itself and the
other Secured Parties with respect to the security interest
granted hereby are in addition to those set forth in the Security
Agreement and the other Transaction Security Documents and those
which are now or hereafter available to Collateral Agent on
behalf of itself and the other Secured Parties as a matter of law
or equity. Each right, power, and remedy of the Collateral Agent
provided for herein, in the Security Agreement, in the other
Transaction Security Documents, or now or hereafter existing at
law or in equity shall be cumulative and concurrent and shall be
in addition to every right, power, or remedy provided for herein,
and the exercise by Collateral Agent on behalf of itself and the
other Secured Parties of any one or more of the rights, powers or
remedies provided for in this Agreement, in the Security
Agreement, in the other Transaction Security Documents or now or
hereafter existing at law or in equity shall not preclude the
simultaneous or later exercise by any person, including
Collateral Agent, of any or all other rights, powers or remedies.
2. Modification of Agreement
(a) Schedule A hereto contains a true and
accurate list of all of Grantor's U.S. Patent registrations and
applications.
(b) This Agreement or any provision hereof may
not be changed, waived, or terminated except in accordance with
the amendment provisions of the Security Agreement.
Notwithstanding the foregoing, Grantor authorizes the Collateral
Agent, upon notice to Grantor, to modify this Agreement in the
name of and on behalf of the Grantor without obtaining the
Grantor's signature to such modification, to the extent that such
modification constitutes an amendment of Schedule A to add any
right, title, or interest in any Patent owned or subsequently
acquired by Grantor, and Grantor additionally agrees to execute
any additional agreement or amendment hereto as may be required
by the Collateral Agent from time to time to subject any such
owned or subsequently acquired right, title or interest in any
Patent to the liens and perfection created or contemplated hereby
or by the Security Agreement.
3. Termination of Agreement
When the Secured Obligations have been indefeasibly
paid and performed in full, this Agreement shall terminate and
the Collateral Agent, at the request and sole expense of the
Grantor, will execute and deliver to the Grantor the proper
instruments acknowledging termination of this Agreement and will
duly, without recourse, representation or warranty of any kind
whatsoever, release such of the Patents not therefore disposed
of, applied or released from the security interest created
hereby.
4. Governing Law
THIS 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.
5. Successors and Assigns
This Agreement shall be binding upon and inure to the
benefit of the Grantor, the Collateral Agent, the other Secured
Parties, all future holders of the Secured Obligations and their
respective successors and assigns, except that the Grantor may
not assign or transfer any of its rights or obligations under
this Security Agreement without the prior written consent of the
Collateral Agent.
6. Counterparts
This 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.
<PAGE>
IN WITNESS WHEREOF, the Grantor and the Collateral
Agent have caused this Agreement to be duly executed and
delivered as of the date first above written.
CLARK MATERIAL HANDLING COMPANY
("Grantor")
By: _____________________________
Name:
Title:
UNITED STATES TRUST COMPANY OF
NEW YORK, as Collateral Agent
("Collateral Agent")
By: _____________________________
Name:
Title:
<PAGE>
PATENT SECURITY AGREEMENT
SCHEDULE A
I. U.S. PATENTS
Date
Title Inventor Patent Issued
II. U.S. PATENT APPLICATIONS
Date
Title Inventor Patent Filed
<PAGE>
STATE OF New York )
) ss:
COUNTY OF New York )
On May __, 1995, before me, the undersigned, a
notary public in and for said state and county, personally
appeared __________________, personally known to me (or
proved to me on the basis of satisfactory evidence), to be
the person who executed the within instrument as the
___________________ , on behalf of CLARK MATERIAL HANDLING
COMPANY, a Kentucky corporation, the corporation therein
named, and acknowledged to me that the corporation executed
the within instrument pursuant to its bylaws or a
resolution of its board of directors.
WITNESS MY HAND AND OFFICIAL SEAL.
(NOTARIAL STAMP OR SEAL)
___________________________
Notary Public
My Commission Expires:
______________________
<PAGE>
STATE OF New York )
) ss:
COUNTY OF New York )
On May __, 1995, before me, the undersigned, a
notary public in and for said state and county, personally
appeared __________________, personally known to me (or
proved to me on the basis of satisfactory evidence), to be
the person who executed the within instrument as the
___________________ , on behalf of UNITED STATES TRUST
COMPANY OF NEW YORK, a New York corporation, in its
capacity as Collateral Agent, the corporation therein
named, and acknowledged to me that the corporation executed
the within instrument pursuant to its bylaws or a
resolution of its board of directors.
WITNESS MY HAND AND OFFICIAL SEAL.
(NOTARIAL STAMP OR SEAL)
___________________________
Notary Public
My Commission Expires:
______________________
INTERCREDITOR AGREEMEENT
THIS INTERCREDITOR AGREEMENT ("Intercreditor Agreement")
dated as of May 9, 1995 is by and among (a) CONGRESS FINANCIAL
CORPORATION, a California corporation ("Congress") and FOOTHILL
CAPITAL CORPORATION, a California corporation ("Foothill";
Congress and Foothill are each referred to herein as a "Revolving
Loan Lender" and, individually and collectively, as "Revolving
Loan Lenders"), (b) Foothill, in its capacity as agent for
Revolving Loan Lenders (in such capacity, "Revolving Loan Agent",
and the Revolving Loan Agent and the Revolving Loan Lenders being
hereinafter referred to, individually and collectively, as the
"Revolving Loan Parties"), and (c) UNITED STATES TRUST COMPANY OF
NEW YORK, a New York corporation ("Collateral Agent"), in its
capacity as collateral agent pursuant to certain of the Note
Agreements (as hereinafter defined), acting for and on behalf of
itself, the Note Trustee (as hereinafter defined) and the holders
of the Senior Secured Notes (as hereinafter defined).
W I T N E S S E T H:
WHEREAS, Terex Corporation, a Delaware corporation
("Debtor"), has issued or is about to issue the Senior Secured
Notes pursuant to the Note Indenture; and
WHEREAS, the indebtedness of Debtor evidenced by the Senior
Secured Notes is or will be guaranteed by certain of the Obligors
(as hereinafter defined) and secured by the Note Collateral (as
hereinafter defined); and
WHEREAS, Collateral Agent has been authorized and directed
by the holders of the Senior Secured Notes to enter into this
Intercreditor Agreement pursuant to certain of the Note
Agreements; and
WHEREAS, Revolving Loan Parries have entered or are about to
enter into financing arrangements with Borrowers (as hereinafter
defined), pursuant to which Revolving Loan Parties will, upon
certain terms and conditions, make loans and provide other
financial accommodations to Borrowers, which will be guaranteed
by Debtor and certain of the Obligors and secured by the Mutual
Collateral (as hereinafter defined); and
WHEREAS, Secured Parties (as hereinafter defined) desire to
enter into this Intercreditor Agreement to (i) confirm the
relative priority of the security interests and rights with
respect thereto of each of the Secured Parties in the Mutual
Collateral, (ii) provide for the orderly sharing between Secured
Parties, in accordance with such priorities, of the proceeds of
the Mutual Collateral upon any foreclosure or other disposition
thereof, and (iii) deal with certain related matters.
NOW THEREFORE, in consideration of the mutual benefits
accruing hereunder to Revolving Loan Parties and the Collateral
Agent, on behalf of itself, the Note Trustee and the holders of
the Senior Secured Notes, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
1. DEFINITIONS
As used in this Intercreditor Agreement, the following terms
shall have the meanings ascribed to them below:
1.1 "Accounts" shall mean, collectively, all now owned and
hereafter acquired rights of the Company and the Foreign
Subsidiaries to payment (including, without limitation, inter-
company 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.
1.2 "Agreements" shall mean, collectively, the Revolving
Loan Agreements and the Note Agreements.
1.3 "Bankruptcy Case" shall have the meaning ascribed
thereto in Section 3.5 hereof.
1.4 "Borrowers" shall mean, individually and collectively,
Debtor, Clark Material Handling Company, a Kentucky corporation,
Koehring Cranes, Inc., a Delaware corporation, PPM Cranes, Inc.,
a Delaware corporation, and any other direct or indirect
subsidiary of Debtor included in the Company which may hereafter
be designated as a "Borrower" in the Revolving Loan Agreements,
and each of their respective successors and assigns, including,
without limitation, a receiver, trustee or debtor-in-possession
on behalf of such person or on behalf of any such successor or
assign.
1.5 "Collateral" shall mean, collectively, the Mutual
Collateral and the Note Collateral.
1.6 "Collateral Agent" shall mean United States Trust
Company of New York, a New York corporation, acting in its
capacity as Collateral Agent pursuant to certain of the Note
Agreements, and any successor or replacement collateral agent at
any time acting in such capacity for the benefit of the holders
of the Senior Secured Notes.
1.7 "Company" shall mean, individually and collectively,
Debtor and its presently existing and hereafter organized or
acquired direct and indirect subsidiaries (including, without
limitation, the other Borrowers, TCI and their respective direct
and indirect subsidiaries) and each of their respective
successors and assigns (including, without limitation, a
receiver, trustee or debtor-in-possession on behalf of such
person or on behalf of such successor or assignee), but the term
"Company," with respect to the Revolving Loan Debt, Revolving
Loan Parties or Mutual Collateral, shall not include any Foreign
Subsidiaries, except with respect to any Receivables now or
hereafter owed by any of the Foreign Subsidiaries to Borrowers.
1.8 "Company Accounts" shall mean, collectively, all of the
Company's Accounts, except for any Accounts arising from the
rendition to Debtor or any direct or indirect subsidiary of
Debtor 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 .
1.9 "Company Inventory" shall mean, collectively, all of
the Company's Inventory located in the United States of America,
Canada or Puerto Rico or in transit to the United States of
America, Canada or Puerto Rico.
1.10 "Default Date" shall mean the earlier of (a) the date
on which the Revolving Loan Agent receives written notice from
Collateral Agent of a Term Loan Event of Default and an
acceleration of payment of the Term Loan Debt or (b) after
occurrence of a Revolving Loan Event of Default, the date on
which Revolving Loan Agent declares Borrowers to be in default
and either accelerates payment of the Revolving Loan Debt or
commences foreclosure proceedings with respect to the Mutual
Collateral pursuant to the Revolving Loan Agreements.
1.11 "Eligible Accounts" shall mean, solely for purposes of
this Agreement and notwithstanding any other definition thereof
used in the Revolving Loan Agreements, outstanding Accounts that:
(i) are not unpaid more than ninety (90) days from the original
due date thereof or more than one hundred eighty (180) days after
the date of the original invoice therefor, (ii) do not arise from
sale 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 Debtor or any direct or
indirect subsidiary thereof 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 has not asserted a counterclaim, defense
or dispute and does not have, and does not engage in transactions
that give rise to, any right of setoff against such Accounts; and
(iv) such account debtor is not the Debtor or any direct or
indirect subsidiary of Debtor; provided, however, Eligible
Accounts shall not include any Accounts with respect to which
Revolving Loan Parties shall have actual knowledge that such
Accounts do not arise from the actual and bona fide sale and
delivery of goods and rendition of services by the Company and
the Foreign Subsidiaries.
1.12 "Eligible Inventory" shall mean, solely for purposes of
this Agreement and notwithstanding any other definition thereof
used in the Revolving Loan Agreements, all Inventory consisting
of (i) finished goods held for resale in the ordinary course of
business, (ii) work in process relating to goods to be held for
resale in the ordinary course of business, (iii) parts held for
resale or to be incorporated into any such finished goods, and
(iv) raw materials for such finished goods.
1.13 "Foreign Subsidiaries" shall mean, individually and
collectively, Terex Equipment Limited, Clark Material Handling
Company GmbH and P.P.M., SA and any other presently existing or
hereafter organized or acquired direct or indirect subsidiaries
of Borrowers not organized under the laws of the United States of
America or any state thereof, Canada or any province thereof or
Puerto Rico or any governmental unit thereof.
1.14 "Intellectual Property" shall mean, collectively, all
of the Company'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, blueprints, 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 and (e) all
extensions, reissues, continuations, continuations-in-part, and
divisions thereof.
1.15 "Inventory" shall mean, collectively, notwithstanding
the definition of "Eligible Inventory" hereunder, all of the
Company's and Foreign Subsidiaries' now owned and hereafter
acquired goods (including, without limitation, (a) goods in the
possession of the Company or of a bailee or other person for
sale, storage, transit, processing, use or otherwise and (b)
supplies, finished goods, parts and components) which are: (i)
held for sale or lease, (ii) furnished or to be furnished under
contracts of service, or (iii) raw materials, work in process and
materials used or consumed in its business.
1.16 "Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, security
interest, encumbrance (including, but not limited to, easements,
rights of way and the like), lien (statutory or other), security
agreement or transfer intended as security, including without
limitation, any conditional sale or other file retention
agreement and the interest of a lessor under a capital lease or
any financing lease having substantially the same economic effect
as any of the foregoing.
1.17 "Mutual Collateral" shall mean, collectively, the
Company Inventory, the Receivables and the other assets and
properties of the Company described on Exhibit A hereto. in which
the Revolving Loan Parries have been or in the future are granted
or hold a Lien to secure the Revolving Loan Debt.
1.18 "Non-Revolving Loan Collateral" shall mean all
Collateral other than Mutual Collateral.
1.19 "Note Agreements" shall mean, collectively, the Note
Indenture, the Senior Secured Notes and the guaranties, security
agreements, mortgages, deeds of trust, other collateral
assignment agreements and all other documents and instruments at
any time executed and/or delivered by the Company, any other
Obligors or any other Person, with, to or in favor of the
Collateral Agent, the Note Trustee and/or the holders of the
Senior Secured Notes in connection with or related to the Note
Indenture and the Senior Secured Notes, as all of the foregoing
may now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
1.20 "Note Collateral" shall mean all property and assets of
any type (real or personal, tangible or intangible) owned by any
Person in which a Lien may, from time to time, exist to secure
all or any portion of the Term Loan Debt.
1.21 "Note Indenture" shall mean the Indenture, dated as of
May 9, 1995, by and between Debtor and the Note Trustee, as the
same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
1.22 "Note Trustee" shall mean United States Trust Company
of New York, a New York corporation, acting in its capacity as
Trustee on behalf of the holders of the Senior Secured Notes
pursuant to the Note Indenture, and any successor or replacement
trustee at any time acting in such capacity for the benefit of
the holders of the Senior Secured Notes.
1.23 "Obligors" shall mean, individually and collectively,
all persons liable on or obligated in respect of either or both
the Term Loan Debt and the Revolving Loan Debt, other than
Debtor.
1.24 "Permitted Use Period" shall have the meaning ascribed
thereto in Section 2.9 hereof.
1.25 "Person" or "person" shall mean any individual, sole
proprietorship, partnership, corporation (including, without
imitation, any corporation which elects subchapter S status under
the Internal Revenue Code of 1986, as amended), limited liability
company, business trust, unincorporated association, joint stock
company, trust, joint venture, or other entity or any government
or any agency or instrumentality or political subdivision
thereof.
1.26 "Real Property" shall mean, collectively, all now owned
and hereafter acquired real property of the Company located in
the United States of America, Canada or Puerto Rico, including
leasehold interests, together with all buildings, structures, and
other improvements located thereon and all licenses, easements
and appurtenances relating thereto, wherever located.
1.27 "Receivables" shall mean, collectively, notwithstanding
the definition of "Eligible Accounts" hereunder, all of the
Company's now owned and hereafter acquired (a) Company Accounts,
(b) general intangibles for money due or to become due
(including, without limitation, inter-company obligations) which
arise from the sale, lease or other disposition of Company
Inventory or rendition of services, except to the extent that
such general intangibles arise from the rendition to Debtor or
any of its direct or indirect 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 Company Inventory or rendition of services, except
to the extent that such chattel paper or instruments arise from
the rendition to Debtor or any of its direct or indirect
subsidiaries of management services, accounting services,
administrative services or other services 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 Company Inventory (including,
without limitation, returned, repossessed and reclaimed
Inventory) which gave rise to any of the foregoing.
1.28 "Revolving Loan Agent" shall mean Foothill Capital
Corporation, a California corporation, in its capacity as agent
for Revolving Loan Lenders pursuant to certain of the Revolving
Loan Agreements, and any successor or replacement agent at any
rime acting in such capacity for the benefit of the Revolving
Loan Lenders.
1.29 "Revolving Loan Agreements" shall mean, collectively,
the Loan and Security Agreement, dated of even date herewith, by
and among Revolving Loan Parties and Borrowers and all other
agreements, documents and instruments at any rime executed and/or
delivered by Borrowers or any other person with, to or in favor
of Revolving Loan Parties in connection therewith or related
thereto, as all of the foregoing now exist or may hereafter be
amended, modified, supplemented, extended, renewed, restated or
replaced.
1.30 "Revolving Loan Debt" shall mean any and all
obligations, liabilities and indebtedness of every kind, nature
and description owing by Borrowers or any of the other Obligors
to Revolving Loan Parties or their participants, including
principal, interest charges, fees, premiums, indemnities and
expenses, however evidenced, whether as principal, surety,
endorser, guarantor or otherwise, arising under the Revolving
Loan Agreements or by operation of law in connection therewith,
whether now existing or hereafter arising, whether arising
before, during or after the initial or any renewal term of the
Revolving Loan Agreements or after the commencement of any case
with respect to Debtor or any of the Obligors under the U.S.
Bankruptcy Code or any similar statute (and including, without
limitation, any principal, interest, fees, costs, expenses and
other amounts, whether or not such amounts are allowable in whole
or in part in any such case or similar proceeding), whether
direct or indirect, absolute or contingent, joint or several, due
or not due, primary or secondary, liquidated or unliquidated,
secured or unsecured, and whether arising directly or otherwise
acquired by Revolving Loan Parties in connection therewith.
1.31 "Revolving Loan Event of Default" shall mean the
occurrence or existence of an Event of Default pursuant to and as
defined in the Revolving Loan Agreements.
1.32 "Revolving Loan Lenders" shall mean, individually and
collectively, Congress Financial Corporation, a California
corporation, and Foothill Capital Corporation, a California
corporation, and their respective successors and assigns, and
also including any other lender or group of lenders that at any
time refinances, replaces or provides substitute financing for
all or any portion of the Revolving Loan Debt at any time and
from rime to time and their successors and assigns.
1.33 "Revolving Loan Parties" shall mean, individually and
collectively, the Revolving Loan Lenders and the Revolving Loan
Agent.
1.34 "Revolving Loan Termination Date" shall mean the date
on which (a) all Revolving Loan Debt shall have been paid and
satisfied in full, except to the extent of any contingent
indemnities and other contingent obligations in favor of
Revolving Loan Parties by Borrowers which survive the termination
of the Revolving Loan Agreements and which are not then due and
payable or which are secured by cash collateral pursuant to the
Revolving Loan Agreements, and (b) all financing arrangements
pursuant to the Revolving Loan Agreements shall have expired or
been terminated in accordance with their terms.
1.35 "Secured Parties" shall mean, collectively, Revolving
Loan Parties and the Collateral Agent, acting on behalf of
itself, the Note Trustee and the holders of the Senior Secured
Notes and each of their respective successors and assigns, each
of such persons being sometimes referred to herein individually
as a "Secured Party."
1.36 "Senior Secured Notes" shall mean, individually and
collectively, the 13-1/4 Senior Secured Notes due 2002, issued by
Debtor pursuant to the Note Indenture, as the same now exist or
may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
1.37 "TCI" shall mean Terex Cranes, Inc., a Delaware
corporation.
1.38 "Term Loan Debt" shall mean all obligations,
liabilities and indebtedness of every kind, nature and
description owing by Debtor, or any of the Obligors or any other
Person to the Collateral Agent, the Note Trustee and/or any of
the holders of Senior Secured Notes, including principal,
interest, charges, fees, premiums, indemnities and expenses,
however evidenced, whether as principal, surety, endorser,
guarantor or otherwise, arising under the Note Agreements or by
operation of law in connection therewith, whether now existing or
hereafter arising, whether arising before, during or after the
initial or any renewal term of the Note Agreements or after the
commencement of any case with respect to the Company, or any of
the Obligors or any other Person under the U.S. Bankruptcy Code
or any similar statute (and including, without limitation, any
principal, interest, fees, costs, expenses and other amounts,
whether or not such amounts are allowable in whole or in part, in
any such case or similar proceeding), whether direct or indirect
absolute or contingent, joint or several, due or not due, primary
or secondary, liquidated or unliquidated, secured or unsecured,
and whether arising directly or otherwise acquired by Note
Trustee or any of the holders of Senior Secured Notes in
connection therewith.
1.39 "Term Loan Event of Default" shall mean the occurrence
or existence of any Event of Default pursuant to and as defined
in the Note Agreements.
1.40 "Use Notice" shall have the meaning ascribed thereto in
Section 2.9 hereof
1.41 All terms defined in the Uniform Commercial Code as in
effect in the State of New York, unless otherwise defined herein,
shall have the meanings set forth therein. All references to any
term in the plural shall include the singular and all references
to any term in the singular shall include the plural.
2. SECURITY INTERESTS; PRIORITIES; REMEDIES
2.1 Revolving Loan Parties hereby acknowledge that (a) the
Collateral Agent, acting
for and on behalf of itself, the Note Trustee and the holders of
Senior Secured Notes, has been granted Liens upon all of the
Collateral pursuant to the Note Agreements to secure the Term
Loan Debt and (b) Revolving Loan Parries have not been granted
Liens upon the Non-Revolving Loan Collateral. The Collateral
Agent hereby acknowledges on behalf of itself, the Note Trustee
and the holders of the Senior Secured Notes that Revolving Loan
Parties have been granted Liens upon the Mutual Collateral
pursuant to the Revolving Loan Agreements to secure the Revolving
Loan Debt.
2.2 Notwithstanding the order or time of attachment or the
order, rime or manner of perfection, or the order or rime of
filing or recordation of any document or instrument, or other
method of perfecting a security interest in favor of each Secured
Party in any Collateral, and notwithstanding any conflicting
terms or conditions which may be contained in any of the
Agreements, the Liens upon the Mutual Collateral of Revolving
Loan Parries to secure the Revolving Loan Debt have and shall
have priority over the Liens upon the Mutual Collateral securing
the Term Loan Debt, and the Liens securing the Term Loan Debt
upon the Mutual Collateral are and shall be, in all respects,
subject and subordinate to the Liens of Revolving Loan Parties
upon the Mutual Collateral to secure the Revolving Loan Debt
(except to the extent of (a) the principal amount of such
Revolving Loan Debt on or after the Default Date which is in
excess of the priority limitations (including the actual
knowledge requirements of such limitations) set forth in Section
2.12 hereof, and (b) the interest calculated on such excess and
the fees payable solely with respect to such excess pursuant to
the Revolving Loan Agreements).
2.3 The Lien priorities provided in Section 2.2 hereof
shall not be altered or otherwise affected by any amendment,
modification, supplement, extension, renewal, restatement,
replacement or refinancing of either the Revolving Loan Debt or
the Term Loan Debt, nor by any action or inaction which any of
Secured Parries may take or fail to take in respect of the
Collateral.
2.4 Each of the Secured Parties shall be solely responsible
for perfecting and maintaining the perfection of its Lien in and
to each item constituting the Collateral in which such Secured
Party has been granted a Lien. The foregoing provisions of this
Intercreditor Agreement are intended solely to govern the
respective Lien priorities as between the Secured Parties and
shall not impose on any of Secured Parties any obligations in
respect of the disposition of proceeds of foreclosure on any
Collateral which would conflict with prior perfected claims
therein in favor of any other person or any order or decree of
any court or other governmental authority or any applicable law
in connection therewith. Each of Revolving Loan Parties agrees
that it will not contest the validity, perfection, priority or
enforceability of the Liens of the Collateral Agent upon the
Collateral. The Collateral Agent, for itself and on behalf of
the Note Trustee and the holders of Senior Secured Notes, agrees
that it shall not have and none of Note Agent and the holders of
Senior Notes have, the right to contest the validity, perfection,
priority or enforceability of the Liens of the Revolving Loan
Parties upon the Mutual Collateral.
2.5 In the event that any Secured Party shall, in the
exercise of its respective rights under its Agreements, receive
possession or control of any books and records of the Company
which contain information identifying or pertaining to any of the
property of the Company in which any other Secured Party has been
granted a Lien, it shall notify such other Secured Party that it
has received such books and records and shall, as promptly as
practicable thereafter, make available to such other Secured
Party, at its request and at the sole expense of such requesting
Secured Party, such books and records for inspection and
duplication.
2.6 Subject to the terms and conditions set forth in this
Intercreditor Agreement as between the Revolving Loan Parties on
the one hand and the Collateral Agent, Note Trustee and holders
of Senior Secured Notes on the other hand, (a) Revolving Loan
Agent shall have the exclusive right to manage, perform and
enforce the terms of the Revolving Loan Agreements with respect
to the Mutual Collateral, to exercise and enforce all privileges
and rights thereunder according to its discretion and the
exercise of its business judgment, including, without limitation,
the exclusive right to take or retake control or possession of
the Mutual Collateral and to hold, prepare for sale, process,
still, lease, dispose of, or liquidate the Mutual Collateral and
(b) Collateral Agent shall have the exclusive right to manage,
perform and enforce the terms of the Note Agreements with respect
to the Non-Revolving Loan Collateral, to exercise and enforce all
privileges and rights thereunder with respect to the
Non-Revolving Loan Collateral according to its discretion and the
exercise of its business judgment, including, without limitation,
the exclusive right to take or retake control or possession of
the Non-Revolving Loan Collateral and to hold, prepare for sale,
process, sell, lease, dispose of, or liquidate the Non-Revolving
Loan Collateral.
2.7 After occurrence and during the continuance of a
Revolving Loan Event of Default, the Collateral Agent shall, in
connection with the sale or other disposition of Mutual
Collateral by or at the direction of the Revolving Loan Parties,
and at the Revolving Loan Parties' sole cost and expense,
immediately upon the request of the Revolving Loan Agent, release
or otherwise terminate its Liens on the Mutual Collateral to the
extent that such Mutual Collateral is sold or otherwise disposed
of by Revolving Loan Parties or (with the consent of Revolving
Loan Agent) Borrowers or any of the other Obligors, and (at the
Revolving Loan Parties' sole cost and expense) will immediately
deliver such release documents as the Revolving Loan Agent may
reasonably require in connection therewith. Revolving Loan
Parties shall not have any liability or obligation to Collateral
Agent, Note Trustee or the holders of the Senior Secured Notes
for (a) any obligations of Borrowers or any other Obligor arising
from any such disposition of Mutual Collateral or (b) proceeds of
Mutual Collateral received by Revolving Loan Parties or, on or
before the Default Date, cash proceeds of other Collateral
received by Revolving Loan Parties from Borrowers and applied to
the repayment of the Revolving Loan Debt, subject to relending.
2.8 Notwithstanding any rights or remedies available to any
of Secured Parties under any of the Agreements, applicable law or
otherwise, the Collateral Agent will not, prior to the Revolving
Loan Termination Date, (a) exercise any of its rights or remedies
against the Mutual Collateral, or (b) seek to foreclose or
realize upon judicially or non-judicially) its Lien on the Mutual
Collateral, or (except for Collateral Agent's right to defend the
validity of its Lien upon the Mutual Collateral, file a proof of
claim with respect to its Lien upon the Mutual Collateral and
defend the priority of its Lien against creditors (other than
Revolving Loan Parties) of the Debtor and the other Obligors, in
each case consistent with the terms of this Intercreditor
Agreement) assert any claims or interest therein (including,
without limitation, by setoff or notification of account
debtors), or (c) take any other action that would interfere or be
inconsistent in any manner with the rights of the Revolving Loan
Parties in the Mutual Collateral pursuant to this Intercreditor
Agreement.
2.9 Revolving Loan Agent may, at its option, prior to and
after the Default Date, at the sole cost and expense of Revolving
Loan Parties: (a) until the expiration of five (5) months after
the Default Date plus (unless otherwise ordered by a court of
competent jurisdiction vacating any stay upon the exercise by
Revolving Loan Agent of its default rights and remedies pursuant
to the Revolving Loan Agreements) an additional period equal to
the period of time in such five (5) month period of any stay upon
the exercise by Revolving Loan Agent of its default rights or
remedies pursuant to the Revolving Loan Agreements imposed by
application of any bankruptcy, insolvency, reorganization,
receivership or other similar law or by any court of competent
jurisdiction (collectively, the "Permitted Use Period"), enter
any or all of the Real Property during normal business hours or
at any other time upon twenty-four (24) hours prior written
notice by Revolving Loan Agent to the Collateral Agent in order
to inspect, protect remove or take any action with respect to the
Mutual Collateral or to enforce Revolving Loan Parties' rights
with respect thereto, including, but not limited to, the
examination, sale and removal of Mutual Collateral and the
examination and duplication of the Company's books and records
related to Mutual Collateral or to otherwise handle, deal with or
dispose of any Mutual Collateral, such rights to include, without
limiting the generality of the foregoing, the right to conduct
one or more public or private sales or auctions thereon; and (b)
until the expiration of the Permitted Use Period, use any of
Borrowers' equipment consisting of computers or other data
processing equipment relating to the storage or processing of
records, documents or files pertaining to the Mutual Collateral
and use any other of Borrowers' equipment to handle, deal with or
dispose of any Mutual Collateral pursuant to Revolving Loan
Parties' rights as set forth in the Revolving Loan Agreements,
the Uniform Commercial Code of any applicable jurisdiction and
other applicable law, provided that such use of Borrowers' Real
Property and equipment by Revolving Loan Agent pursuant to
clauses (a) and (b) of this Section 2.9 shall not damage such
Real Property or equipment and shall not reduce the value thereof
in any material respect; and (c) at any time, use any of the
Intellectual Property marked or stamped on any Mutual Collateral
or otherwise reasonably required to collect or realize on any
Mutual Collateral. Notwithstanding the immediately preceding
sentence of this Section 2.9, Collateral Agent shall have the
right to commence and continue foreclosure proceedings and
exercise its other rights and remedies prior to and after the
expiration of the Permitted Use Period with respect to the
Non-Revolving Loan Collateral pursuant to the Note Agreements and
applicable law, except that Collateral Agent shall not sell or
lease or acquiesce in the sale or lease of the Borrower's
equipment or Real Property before the expiration of the Permitted
Use Period or the sale or license of the Intellectual Property at
any time unless, as the case may be, the prospective purchaser,
lessee or licensee thereof agrees in writing that such purchaser,
lessee or licensee is bound by the provisions of this Section 2.9
with respect to the rights of Revolving Loan Agent. In the event
of the removal of any Mutual Collateral by Revolving Loan Agent
from any of the Real Property, such removal shall be conducted by
Revolving Loan Agent in an orderly manner and shall leave the
affected areas of the Real Property in the same physical
condition as existed immediately before the commencement of such
removal. Revolving Loan Agent shall pay to the Collateral Agent
reasonable rent on a per diem basis to the extent of and for the
use and occupancy by Revolving Loan Agent of Borrowers' equipment
and Real Property actually used or occupied, as the case may be,
by Revolving Loan Agent during all or any portion of the
Permitted Use Period, which rent shall be applied to or held as
collateral for the Term Loan Debt. After the Permitted Use
Period has expired, if the Revolving Loan Agent shall fail to
remove all or any portion of the Mutual Collateral, unless
otherwise agreed by Collateral Agent and Revolving Loan Agent,
Collateral Agent may (x) upon not less than ten (10) business
days prior written notice by Collateral Agent to Revolving Loan
Agent require Revolving Loan Agent to remove all remaining Mutual
Collateral from the applicable Real Property on or before the
date specified in such notice, at the sole cost and expense of
Revolving Loan Parties, and (y) if such Mutual Collateral is not
so removed by Revolving Loan Agent prior to the end of the period
specified in such notice, at the sole cost and expense of
Revolving Loan Agent, Collateral Agent may cause any remaining
Mutual Collateral to be removed to and stored at one or more
public warehouses, provided that such removal or storage by
Collateral Agent pursuant to clause (y) of this Section 2.9 shall
be performed with reasonable care in order to avoid damage to the
remaining Mutual Collateral.
2.10 None of the Secured Parties shall have any
responsibility or liability for the acts or omissions of any of
the other Secured Parties arising in connection with such other
Secured Party's use and/or occupancy of the Collateral.
2.11 Revolving Loan Parties shall have the right but not any
obligation, to cure any Term Loan Event of Default for the
account of the Company. In no event shall Revolving Loan
Parties, by virtue of the payment of amounts or performance of
any obligation required to be paid or performed by the Company,
be deemed to have assumed any obligation of the Company to the
Collateral Agent, Note Trustee, the holders of Senior Secured
Notes or any other person. The Collateral Agent shall have the
right but not any obligation, to cure any Revolving Loan Event of
Default for the account of the Company. In no event shall the
Collateral Agent by virtue of the payment of amounts or
performance of any obligation required to be paid or performed by
the Company, be deemed to have assumed any obligation of the
Company to Revolving Loan Parties.
2.12 Revolving Loan Parties shall not be entitled to the
priority benefits of Section 2.2 hereof to the extent that
Revolving Loan Parties shall with actual knowledge make loans to
Borrowers pursuant to the Revolving Loan Agreements which would
cause the aggregate principal amount of the outstanding Revolving
Loan Debt on or after the Default Date to exceed the sum of (a)
eighty-five (85%) percent of the aggregate outstanding amount of
Eligible Accounts and (b) fifty (50%) percent of the aggregate
cost of Eligible Inventory. The outstanding principal amount of
the loans made by Revolving Loan Parties to Borrowers before, on
and after the Default Date, which are not in excess of the
priority limitations (including the actual knowledge requirements
of such limitations) set forth in the immediately preceding
sentence, together with interest calculated with respect thereto
and expenses of Revolving Loan Parties and (except as set forth
in the next succeeding sentence) fees incurred pursuant to the
Revolving Loan Agreements, shall be entitled to the priority
benefits of Section 2.2 hereof. The outstanding principal amount
of the loans made by Revolving Loan Parties to Borrowers before,
on and after the Default Date which are in excess of the priority
limitations (including the actual knowledge requirements of such
limitations) set forth in the first sentence of this Section
2.12, together with interest calculated with respect to such
excess and fees payable solely with respect to such excess
pursuant to the Revolving Loan Agreements, shall not be entitled
to the priority benefits of Section 2.2 hereof.
2.13 Subject to the other provisions of this Intercreditor
Agreement, each of the Secured Parties having possession of
Mutual Collateral does so as bailee (under the Uniform Commercial
Code) for each other Secured Party which has a Lien on such
Mutual Collateral and, subject to any count direction by a court
of a competent jurisdiction, (a) if held or received by
Collateral Agent at any time on or before the Revolving Loan
Termination Date, it shall tum over to Revolving Loan Agent any
such Mutual Collateral, and (b) if held or received by any of
Revolving Loan Parties after the Revolving Loan Termination Date,
such Revolving Loan Party shall turn over to Collateral Agent any
such Mutual Collateral.
3. MISCELLANEOUS
3.1 Additional Representations.
(a) The Collateral Agent represents and warrants to
Revolving Loan Parties that:
(i) the execution, delivery and performance of
this Intercreditor Agreement by Collateral Agent is within its
powers in its capacity as Collateral Agent for the holders of
Senior Secured Notes, has been duly authorized by the Note
Trustee and the holders of the Senior Secured Notes, and does not
contravene any law, any provision of any of the Note Agreements
or any agreement to which the Collateral Agent is a party or by
which it is bound; and
(ii) this Intercreditor Agreement constitutes the
legal, valid and binding obligations of Collateral Agent is
enforceable in accordance with its terms and shall be binding
upon each of Collateral Trustee and Note Trustee, and the holders
of the Senior Secured Notes are and shall be subject to the terms
hereof, except to the extent that (x) the foregoing may be
limited by any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws from time to time in effect affecting
generally the enforcement of creditors' rights and remedies and
by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law)
and (y) the same may be subject to the discretion of the court
before which any proceeding with respect thereto may be brought.
(b) Each of the Revolving Loan Parties hereby
represents and warrants, but only severally as to itself and not
jointly, to Collateral Agent that:
(i) the execution, delivery and performance of
this Intercreditor Agreement by Revolving Loan Parties is within
the respective powers of Revolving Loan Parties, has been duly
authorized by Revolving Loan Parties and does not contravene any
law, any provision of the Revolving Loan Agreements or any
agreement to which any of Revolving Loan Parties is a party or by
which it is bound; and
(ii) this Intercreditor Agreement constitutes the
legal, valid and binding obligations of Revolving Loan Parties,
is enforceable in accordance with its terms and shall be binding
on Revolving Loan Parties, except to the extent that (x) the
foregoing may be limited by any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws from time
to time in effect affecting generally the enforcement of
creditors' rights and remedies and by general principles of
equity (regardless of whether such enforceability is considered
in a proceeding in equity or at law) and (y) the same may be
subject to the discretion of the court before which any
proceeding with respect thereto may be brought.
3.2 Amendments. Any waiver, permit, consent or approval by
any of Secured Parties of or under any provision, condition or
covenant to this Intercreditor Agreement must be in writing
signed by the Secured Party or Secured Parties to be bound
thereby and shall be effective only to the extent it is set forth
in such signed writing and as to the specific facts or
circumstances covered thereby. Any amendment of this
Intercreditor Agreement must be in writing and signed by each of
the Secured Parties to be bound thereby.
3.3 Successors and Assigns.
(a) This Intercreditor Agreement shall be binding upon
each of Secured Parties and its respective successors,
participants and assigns and shall inure to the benefit of each
of Secured Parties and its respective successors, participants
and assigns.
(b) Each of the Secured Parties reserves the right to
grant participations in, or otherwise sell, assign, transfer or
negotiate all or any part of, or any interest in, the Revolving
Loan Debt or Term Loan Debt, as the case may be, and the
Collateral securing same; provided, that, no Secured Party shall
be obligated to give any notices to or otherwise in any manner
deal directly with any participant in the Revolving Loan Debt or
Term Loan Debt, as the case may be, and no participant shall be
entitled to any rights or benefits under this Intercreditor
Agreement except through the Secured Party with which it is a
participant. In connection with any participation or other
transfer or assignment, a Secured Party may, subject to its
Agreements, disclose to such assignee, participant or other
transferee or assignee all documents and information which such
Secured Party now or hereafter may have relating to the Company
or the Collateral.
(c) In connection with any assignment or transfer of
any or all of the Revolving Loan Debt or Term Loan Debt, as the
case may be, or of any or all rights of any Secured Party in the
property of the Company (other than pursuant to a participation),
each of the Secured Parties agrees to, at the sole cost and
expense of the party requesting the same, (i) execute and deliver
an agreement containing terms substantially identical to those
contained herein in favor of any such assignee or transferee and
(ii) in addition, the Collateral Agent agrees to execute and
deliver an agreement containing terms substantially identical to
those contained herein in favor of any third person who also
executes such agreement and succeeds to or replaces any or all of
Revolving Loan Parties' financing of Borrowers on terms
substantially identical to Revolving Lenders' financing of
Borrowers, whether such successor financing or replacement occurs
by transfer, assignment, "takeout" or any other means or vehicle.
3.4 Insolvency. This Intercreditor Agreement shall be
applicable both before and after the filing of any petition by or
against the Company or by Debtor or any direct or indirect
subsidiaries of Debtor under the U.S. Bankruptcy Code and all
converted or succeeding cases in respect thereof, and all
references herein to such person shall be deemed to apply to a
trustee for such person and to such person as
debtor-in-possession. The relative rights of Revolving Loan
Parties, Collateral Agent and the holders of Senior Secured
Notes, respectively, in or to any distributions from or in
respect of any Collateral or proceeds of Collateral pursuant to
this Intercreditor Agreement shall continue after the filing
thereof on the same basis as prior to the date of such petition,
subject to any court order approving the financing of such person
or use of cash collateral.
3.5 Bankruptcy Financing. If the Company, the Debtor or
any direct or indirect subsidiary of the Debtor shall become
subject to a case under the U.S. Bankruptcy Code (a "Bankruptcy
Case") and if the Revolving Loan Parties desire to (A) permit the
use under Section 363 of the U.S. Bankruptcy Code of cash
collateral included in the Mutual Collateral or which constitutes
proceeds thereof or (B) provide financing to such person under
Section 364 of the U.S. Bankruptcy Code; Collateral Agent agrees,
for itself, the Note Trustee and the holders of the Senior
Secured Notes, as follows: (a) adequate notice (including any
emergency notice) to Collateral Agent shall have been provided
for such financing or use of such cash collateral if Collateral
Agent receives notice thereof, if any, substantially identical to
that required to be given with respect thereto in such Bankruptcy
Case to other creditors in such Bankruptcy Case prior to the
entry of the order approving such financing or use of such cash
collateral and (b) no objection will be raised by Collateral
Agent to any such financing or use of such cash collateral on the
ground of a failure to provide "adequate protection" for Note
Trustee's Lien on the Mutual Collateral, provided that: (i)
Collateral Agent retains its Lien on the Mutual Collateral
existing upon the commencement of such Bankruptcy Case with the
same priority therein as existed prior to the commencement of
such Bankruptcy Case, (ii) to the extent that the Revolving Loan
Parties' pre-petition Lien upon the Mutual Collateral is allowed
in the order of the U.S. Bankruptcy Court granting such financing
or use of cash collateral, the prepetition Lien of the Collateral
Agent upon the Mutual Collateral is also allowed in such order,
(iii) an order of such U.S. Bankruptcy Court has been entered
granting or such order grants the Collateral Agent on behalf of
the Note Trustee and the holders of the Senior Secured Notes, a
post-petition Lien on the Mutual Collateral with the same
priority therein as existed prior to the commencement of the
Bankruptcy Case, and (iv) such order or orders are not
inconsistent with the rights of Collateral Agent pursuant to this
Intercreditor Agreement and this Intercreditor Agreement shall
continue in effect as provided in Section 3.4 hereof.
3.6 Notices. All notices, requests and demands to or upon
the respective parties hereto shall be in writing and shall be
deemed duly given, made or received: if delivered by hand,
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 mailed by certified mail,
return receipt requested, five (5) days after mailing to the
parties at their addresses set forth below (or to such other
addresses as the parties may designate in accordance with the
provisions of this Section):
To Revolving Foothill Capital Corporation
Loan Parties: 11111 Santa Monica Boulevard
Los Angeles, California 90025-3333
Facsimile: 310-479-2690
Attention: Business Finance Division Manager
and a required copy to
Congress Financial Corporation
1133 Avenue of the Americas
New York, New York 10036
Facsimile: 212-545-4283
Attention: Mr. Mark Fagnani
To Collateral Agent: United States Trust Company of
New York
114 West 47th Street
New York, New York 10036
Facsimile: 212-852-1625
Attention: Corporate Trust Department
Either of the Secured Parties may change the address(es) to which
all notices, requests and other communications hereunder are to
be sent by giving written notice of such address change to the
other Secured Party in conformity with this Section 3.6, but such
change shall not be effective under notice of such change has
been received by the other Lenders.
3.7 Counterparts. This Intercreditor Agreement may be
executed in any number of counterparts, each of which shall be an
original with the same force and effect as if the signatures
thereto and hereto were upon the same instrument.
3.8 Governing Law. The validity, construction and effect
of this Intercreditor Agreement shall be governed by the internal
laws of the State of New York (without giving effect to
principles of conflicts of law).
3.9 Consent to Jurisdiction; Waiver of Jury Trial. EACH OF
THE PARTIES HERETO HEREBY IRREVOCABLY CONSENTS TO THE
NON-EXCLUSIVE JURISDICTION OF THE SUPREME COURT OF NEW YORK
COUNTY OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND WAIVES TRIAL BY
JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS
INTERCREDITOR AGREEMENT.
3.10 Complete Agreement. This written Intercreditor
Agreement is intended by the parties as a final expression of
their agreement and is intended as a complete statement of the
terms and conditions of their agreement.
3.11 No Third Parties Benefitted. This Intercreditor
Agreement is solely for the benefit of the Secured Parties and
their respective successors, participants and assigns, and no
other person (including, without limitation, the Company or any
creditor or creditors' representative of the Company, other than
the Secured Parties and their respective successors, participants
and assigns) shall have any right, benefit, priority or interest
under, or because of the existence of, this Intercreditor
Agreement. Without limiting the foregoing, (i) nothing in this
Intercreditor Agreement shall relieve any Borrower or other
Obliger of any of its obligations under any of the Agreements as
between such Borrower or other Obliger and a Secured Party which
is a party thereto, and (ii) no Secured Party shall be liable to
any other Secured Party by reason of its exercise or enforcement
of this Intercreditor Agreement or of its rights or remedies
under the Agreements, except for any exercise of rights or
remedies prohibited by this Intercreditor Agreement.
3.12 Disclosures; Non-Reliance. Each Secured Party has the
means to, and shall in the future remain, fully informed as to
the financial condition and other affairs of the Company and no
Secured Party shall have any obligation or duty to disclose any
such information to any other Secured Party. Except as expressly
set forth in this Intercreditor Agreement, the parties hereto
have not otherwise made to each other nor do they hereby make to
each other any warranties, express or implied, nor do they assume
any liability to each other with respect to: (a) the
enforceability, validity, value or collectability of any of the
Term Loan Debt or Revolving Loan Debt or any guarantee or
security which may have been granted to any of them in connection
therewith, (b) the Company's title to or right to transfer any of
the Collateral, or (c) any other matter except as expressly set
forth in this Intercreditor Agreement.
3.13 Term. This Intercreditor Agreement is a continuing
agreement and shall remain in full force and effect until the
Revolving Loan Termination Date.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this
Intercreditor Agreement to be duly executed as of the day and
year first above written.
FOOTHILL CAPITAL CORPORATION,
as agent for Revolving Loan
Lenders
By:___________________________
Title:________________________
CONGRESS FINANCIAL
CORPORATION,
as Revolving Loan Lender
By:___________________________
Title:________________________
FOOTHILL CAPITAL CORPORATION,
as Revolving Loan Lender
By:___________________________
Title:________________________
UNITED STATES TRUST COMPANY OF
NEW YORK, as Collateral Agent
By:___________________________
Title:________________________
<PAGE>
EXHIBIT A
TO
INTERCREDITOR AGREEMENT
Mutual Collateral
The term "Mutual Collateral" as used in the foregoing
Intercreditor Agreement shall mean and include all of the
following:
(a) Receivables;
(b) Company Inventory;
(c) all monies, securities, credit balances, cash
collateral, deposits, deposit accounts and other property of the
Company, to the extent constituting proceeds of Receivables or
Company Inventory or loans by Revolving Loan Parties to
Borrowers, now or hereafter held or received by or in transit to
Revolving Loan Parties or any depository bank or institution;
(d) all present and future liens, security interests,
rights, remedies, interests and documents of the Company in, to
and in respect of Receivables and Company Inventory, including,
without limitation, (i) rights and remedies under or relating to
guaranties, warranties, contracts of suretyship, letters of
credit and credit and other insurance related thereto, (ii)
rights of stoppage in amsit, replevin, repossession, reclamation
and other rights and remedies of the Company with respect to the
Receivables as an unpaid vendor, lienholder, or secured party,
and (iii) deposits by and property of account debtors or other
persons securing the obligations of account debtors obligated
with respect to the Receivables;
(e) all of the Company's present and future agreements
or arrangements with sales agents, sales representatives,
distributors, warehouses and subcontractors or the like with
respect to the sale, lease, disposition, storage, processing or
manufacture of Company Inventory or with respect to Receivables;
(f) all of the Company's present and future books of
account, purchase and sale agreements, invoices, ledger cards,
customer lists, bills of lading and other shipping evidence,
statements, correspondence, memoranda, credit files and other
data relating to the foregoing, 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 the Company with respect to the
foregoing maintained with or by any other person); and
(g) all proceeds and products of the foregoing in any
form, and 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.
<PAGE>
ACKNOWLEDGEMENT
The undersigned hereby acknowledges and agrees to the terms
and provisions of the foregoing Intercreditor Agreement. By its
signature below, the undersigned agrees that it will, together
with its successors and assigns, be bound by the provisions
hereof and of the foregoing Intercreditor Agreement; provided,
that, nothing in the foregoing Intercreditor Agreement shall
amend, modify, change or supersede the respective terms of any
Secured Party's Agreements with the undersigned. In the event of
any conflict or inconsistencies between the terms of the
foregoing Intercreditor Agreement and the Revolving Loan
Agreements or the Note Agreements, the terms of the Revolving
Loan Agreements or the Note Agreements, as the case may be, shall
govern as between the Secured Party involved and the undersigned.
The undersigned agrees that, subject to the provisions of
the foregoing Intercreditor Agreement, any Secured Party having
possession of any Mutual Collateral does so as bailee (under the
Uniform Commercial Code) for each other Secured Party which has a
Lien on such Mutual Collateral and, subject to any contrary
direction of a court of competent jurisdiction (a) if held or
received by Collateral Agent at any time on or before the
Revolving Loan Termination Date, it is hereby authorized to tum
over to Revolving Loan Agent any such Mutual Collateral, and (b)
if held or received by any of Revolving Loan Parties at any time
after the Revolving Loan Termination Date, such Revolving Loan
Party is hereby authorized to tum over to Collateral Agent any
such Mutual Collateral.
The undersigned acknowledges and agrees that: (i) although
it may sign this Acknowledgment, it is not a party to the
foregoing Intercreditor Agreement and does not and will not
receive any right, benefit priority or interest under or because
of the existence of the foregoing Intercreditor Agreement and
(ii) it will execute and deliver such additional documents and
take such additional action as may be necessary or desirable in
the reasonable opinion of any of the Secured Parties to
effectuate the provisions and purposes of the foregoing
Intercreditor Agreement.
TEREX CORPORATION
By:_______________________________
Title:____________________________
[SIGNATURES CONTINUE ON NEXT PAGE]
<PAGE>
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
CLARK MATERIAL HANDLING COMPANY
By:____________________________
Title:_________________________
KOEHRING CRANES, INC.
By:____________________________
Title:_________________________
PPM CRANES, INC.
By:____________________________
Title:_________________________
_________________________________________________
INTERCOMPANY SECURITY AND PLEDGE AGREEMENT
among
TEREX CRANES, INC.
PPM CRANES, INC.
and
TEREX CORPORATION
Dated as of May 9, 1995
_________________________________________________
<PAGE>
INTERCOMPANY SECURITY AND PLEDGE AGREEMENT
THIS INTERCOMPANY SECURITY AND PLEDGE AGREEMENT, dated
as of May 9, 1995 is entered into among TEREX CRANES, INC., a
Delaware corporation (together with its successors and assigns,
"Terex Cranes"), PPM CRANES, INC., a Delaware corporation
(together with its successors and assigns, "PPM CRANES") (each a
"Company" and, collectively, the "Companies"), and TEREX
CORPORATION, a Delaware corporation (together with its successors
and assigns, including, prior to the payment in full of the Terex
Obligations (as defined below), the Collateral Agent (as defined
below) for the benefit of the Terex Secured Parties (as defined
below), the "Secured Party").
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 Terex Security
Agreement 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 Agent" shall mean United States Trust
Company of New York, a New York corporation, in its capacity
as Collateral Agent under the Terex Security Documents.
"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).
"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, 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
the Subsidiary Security Agreement.
"Event of Default" shall mean, (a) with respect to PPM
Cranes, (i) any failure to pay on demand any amount under
the PPM Cranes Note, whether with respect to principal,
interest or otherwise or (ii) the occurrence of any event
described in Sections 6.1(10) or (11) of the Indenture with
respect to PPM Cranes and (b) with respect to Terex Cranes,
(i) any failure to pay on demand any amount under the Terex
Cranes Note, whether with respect to principal, interest or
otherwise or (ii) the occurrence of any event described in
Sections 6.1(10) or (11) of the Indenture with respect to
Terex Cranes.
"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.
"Intercompany Notes" shall mean the collective
reference to the Terex Crane Note and the PPM Cranes Note.
"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.
"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).
"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, all reissues, divi-
sions, 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; provided, however,
that the capital stock of PPM Far East Pte. Ltd., a
Singapore company, ("Far East") shall not constitute Pledged
Securities of the owner thereof until and unless Far East
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 reorga-
nization or other disposition of Pledged Securities.
"PPM Cranes Note" shall mean that certain Intercompany
Demand Note dated as of the date hereof in the principal
amount of $21,200,000 made by PPM Cranes in favor of Terex,
which note has been pledged by Terex to the Collateral Agent
pursuant to the terms of the Terex Security Agreement, as
the same may be amended, modified, supplemented or restated
from time to time.
"Proceeds" shall mean "proceeds" as such term is
defined in Section 9-306(1) of the UCC.
"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 Intercompany
Security and Pledge Agreement, as the same may be amended,
modified, supplemented or restated from time to time.
"Secured Obligations" shall mean (i) with respect to
Terex Cranes, all principal, interest and other amounts
outstanding, payable, due or arising from time to time under
the Terex Cranes Note, and all obligations of Terex Cranes
for the payment of fees, expenses, indemnities and other
amounts now existing or herein after arising under this
Security Agreement and (ii) with respect to PPM Cranes, all
principal, interest and other amounts outstanding, payable,
due or arising from time to time under the PPM Cranes Note,
and all obligations of PPM Cranes for the payment of fees,
expenses, indemnities and other amounts now existing or
herein after arising under this Security Agreement.
"Subject Chattel Paper" shall mean Chattel Paper
constituting Terex Collateral or 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 Instruments" shall mean Instruments
constituting Terex Collateral or 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 Terex (including
each of the Companies) and the Collateral Agent, as the same
may be amended, modified, supplemented or restated from time
to time.
"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 Cranes Note" shall mean that certain
Intercompany Demand Note dated as of the date hereof in the
principal amount of $13,360,000 made by Terex Cranes in
favor of Terex, which note has been pledged by Terex to the
Collateral Agent pursuant to the terms of the Terex Security
Agreement, as the same may be amended, modified,
supplemented or restated from time to time.
"Terex Obligations" shall mean "Secured Obligations" as
defined in the Terex Security Agreement.
"Terex Secured Parties" shall mean "Secured Parties" 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.
"Terex Security Documents" shall mean shall mean the
collective reference to the Terex Security Agreement and the
"Transaction Security Documents" as defined in the Terex
Security Agreement.
"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).
"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 na-
ture, all registrations and applications for any of the
foregoing, 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 propri-
etary 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, the right to sue for past in-
fringement 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.
"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 I 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 of its Secured
Obligations, each Company hereby assigns, pledges, transfers and
delivers to the Secured Party and grants to the Secured Party 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 Secured Party 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 prohibit the grant by such Company of such security
interests and Liens.
(b) Notwithstanding anything contained herein to
the contrary, the Secured Party hereby acknowledges that the Lien
of the Secured Party 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 Secured Party
(including the Collateral Agent as assignee of Terex) 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
represents and warrants to the Secured Party that each of its
representations and warranties contained in the Subsidiary
Security Agreement is true and correct.
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 Further Assurances. At any time and from time to
time, upon the reasonable request of the Secured Party, 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 Secured Party 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 Secured Party the Secured Party's
rights, powers and remedies hereunder, including, without
limitation, the filing of any financing statements, in form
reasonably acceptable to the Secured Party under the Uniform
Commercial Code in effect in any jurisdiction with respect to the
Liens granted hereby. Each Company also hereby authorizes the
Secured Party 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 Secured
Party for all filing fees and related reasonable out-of-pocket
expenses and will make or reimburse the Secured Party for making
all searches reasonably deemed necessary by the Secured Party to
establish and determine the priority of the security interests of
the Secured Party created hereunder or to determine the presence
or priority of other secured parties.
4.2 Change of Chief Executive Office. No Company will
move its chief executive office from that disclosed in Schedule
III to the Subsidiary Security Agreement (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 to
the Subsidiary Security Agreement 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 to the Subsidiary Security
Agreement, 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 Secured Party 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 Secured Party may reasonably re-
quest and (ii) with respect to such new location, it shall have
taken all action as the Secured Party may reasonably request to
maintain the security interest of the Secured Party 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.
4.3 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 to the Subsidiary Security Agreement (or, in the
case of Inventory held by a bailee, those locations under such
Company's name shown on Schedule IV to the Subsidiary Security
Agreement), 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 Secured Party not less than 30
days' prior written notice of its intention to do so, clearly de-
scribing such new location and providing such other information
in connection therewith as the Secured Party may reasonably
request and (ii) with respect to such new location, it shall have
taken all action as the Secured Party may reasonably request to
maintain the security interest of the Secured Party 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, any Company may keep Inventory and Equipment at
locations other than those set forth under such Company's name on
Schedules III and IV to the Subsidiary Security Agreement to the
extent permitted under the Subsidiary Security Agreement.
4.4 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 to the Subsidiary Security Agreement)), identity or corporate
structure unless (i) it shall have given to the Secured Party 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 Secured Party 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 Secured Party may reasonably request
to maintain the security interest of the Secured Party 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.
4.5 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 (as defined in the Subsidiary
Security Agreement)), such Company will forthwith pledge and
deposit such Pledged Securities with the Secured Party and
deliver to the Secured Party 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 Secured Party
to perfect its Lien therein.
4.6 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
Instruments) $2,000,000 in the aggregate shall at any time
comprise any portion of the Collateral, the Terex Collateral and
the Subsidiary Collateral, combined, any Company with an interest
therein shall within thirty days notify the Secured Party
thereof, and promptly deliver such Instrument or Instruments to
the Secured Party appropriately indorsed or assigned or to the
order of the Secured Party or in such other manner as shall be
satisfactory to the Secured Party.
4.7 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 Chattel Paper) $2,000,000 in the aggregate
shall at any time comprise any portion of the Collateral, the
Terex Collateral and the Subsidiary Collateral, combined, any
Company with an interest therein shall within thirty days notify
the Secured Party thereof, and promptly deliver such Chattel
Paper to the Secured Party.
4.8 Right of Inspection. The Secured Party 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 Secured Party and its
representatives may examine the same, take extracts therefrom and
make photocopies thereof, and each Company agrees to render to
the Secured Party, at such Company's cost and expense, such
clerical and other assistance as may be reasonably requested with
regard thereto. The Secured Party 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 Secured Party 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.
4.9 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).
4.10 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 Secured
Party's rights in the Collateral.
4.11 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 Secured Party 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.
4.12 Intellectual Property.
(a) Each Company shall promptly (but in no event
more than ninety days after any such Company obtains knowledge
thereof) report to the Secured Party (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 Secured Party, each Company
shall promptly execute and deliver any and all agreements,
instruments, documents, and papers as the Secured Party may
reasonably request to evidence the Secured Party's security
interest in such Intellectual Property Collateral.
(b) Each Company shall, promptly upon the
reasonable request of the Secured Party, execute and deliver to
the Secured Party any document required to acknowledge, confirm,
register, record or perfect the Secured Party's interest in any
part of the Intellectual Property Collateral.
4.13 Performance by Secured Party of Company's
Obligations; Reimbursement. If any Company fails to perform or
comply with any of its agreements contained herein, the Secured
Party may, without consent by such Company and upon such notice
to such Company as the Secured Party reasonably deems appropriate
under the circumstances, perform or comply or cause performance
or compliance therewith and the expenses of the Secured Party
incurred in connection with such performance or compliance shall
be payable by such Company to the Secured Party on demand and
such reimbursement obligation shall be secured hereby.
5. Appointment of Sub-Agents. The Secured Party
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 subagents or nominees for the purpose of
retaining physical possession of the Collateral, which may be
held (if applicable and in the discretion of the Secured Party)
in the name of the Secured Party, indorsed or assigned in blank
or in favor of the Secured Party or any nominee or nominees of
the Secured Party or a sub-agent appointed by the Secured Party.
All references to the Secured Party 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 (as defined in the Indenture) shall have occurred and be
continuing under Sections 6.1(1) or (2) of the Indenture or (ii)
an Event of Default (as defined in the Indenture) shall have
occurred and be continuing under any other provision of the
Indenture and the obligations of Terex under the Indenture and
the Securities 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 Secured Party 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 Secured Party 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 Secured Party,
each Company agrees to deliver to the Secured Party such further
evidence of such irrevocable proxy or such further irrevocable
proxies to vote the Pledged Securities as the Secured Party may
reasonably request.
7. Payments and Other Distributions. Unless an Event
of Default (as defined in the Indenture) 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 Secured Party, 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 Secured Party, shall constitute such a distribution), shall
be paid to the Secured Party, deposited by it in the Collateral
Account and retained by it as part of the Collateral. The Se-
cured Party 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 Secured
Party or which the Secured Party 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 Secured Party, segregated
from other monies and other property of such Company and shall
forthwith upon receipt by such Company be turned over to the
Secured Party in the same form received by such Company
(appropriately indorsed or assigned by such Company to the order
of the Secured Party or in such other manner as shall be reason-
ably satisfactory to the Secured Party).
8. Power of Attorney.
8.1 Secured Party's Appointment as Attorney-in-Fact.
(a) Each Company hereby irrevocably constitutes
and appoints the Secured Party 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 Secured Party'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 Secured Party the power
and right, on behalf of such Company, without assent by such
Company and upon such notice to such Company as the Secured Party
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 Secured Party or as the Secured
Party 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 Secured Party 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 com-
pletely as though the Secured Party were the absolute owner
thereof for all purposes, and to do, at the Secured Party's
option and such Company's expense, at any time, or from time
to time, all acts and things which the Secured Party deems
necessary to protect, preserve or realize upon the
Collateral and the Liens of the Secured Party 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 Secured Party shall
be acting in its own interest, and each Company acknowledges and
agrees that the Secured Party 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 Secured Party. The
powers conferred on the Secured Party hereunder are solely to
protect the interests of the Secured Party in the Collateral and
shall not impose any duty upon the Secured Party to exercise any
such powers. The Secured Party 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.
9. Remedies.
9.1 Rights and Remedies Generally. If an Event of
Default shall occur and be continuing, then and in every such
case, the Secured Party 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 Secured
Party as described in this Section.
9.2 Proceeds. 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 Secured Party,
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
Secured Party in the same form received by such Company
(appropriately indorsed or assigned by such Company to the order
of the Secured Party or in such other manner as shall be
satisfactory to the Secured Party) and (ii) any and all such
Proceeds and Distributions received by the Secured Party with
respect to any Company (whether from a Company or otherwise), or
any part thereof, may, in the sole discretion of the Secured
Party, be held by the Secured Party as Collateral hereunder
and/or then or at any time or from time to time thereafter, be
applied by the Secured Party against the Secured Obligations
(whether matured or unmatured) of such Company, in the order that
the Secured Party may elect.
9.3 Direct Companies to Dispose of Collateral. If an
Event of Default shall occur and be continuing:
(a) the Secured Party 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 Secured Party may
direct any Company to direct that all Proceeds of such Collateral
be paid directly to the Secured Party 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 Secured Party, 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 Secured Party, in the same form
received by such Company (appropriately indorsed or assigned by
such Company to the order of the Secured Party or in such other
manner as shall be satisfactory to the Secured Party); and
(b) any and all such Proceeds received by the
Secured Party with respect to any Company (whether from a Company
or otherwise) may, in the sole discretion of the Secured Party,
be held by the Secured Party as Collateral hereunder and/or then
or at any time or from time to time thereafter, be applied by the
Secured Party against the Secured Obligations (whether matured or
unmatured) of such Company in the order provided for herein.
9.4 Possession of Collateral.
(a) If an Event of Default shall occur and be
continuing, and subject to mandatory provisions of applicable
law, (i) the Secured Party 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 Secured Party at any place or places designated by the
Secured Party, whether at such Company's or the Secured Party'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 Secured Party 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 Secured Party shall be entitled to a decree
requiring specific performance by any Company of said obligation.
(b) When Collateral is in the Secured Party's
possession, (i) each Company shall pay (or reimburse the Secured
Party 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.
9.5 Disposition of the Collateral. If an Event of
Default shall occur and be continuing, the Secured Party 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 Secured Party at any location of any third party
conducting or otherwise involved in such sale or any office of
the 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 Secured Party 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 Secured Party or after any overhaul or repair
which the Secured Party 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
Secured Party'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 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.
9.6 Voting of Pledged Securities etc. If an Event of
Default (as defined in the Indenture) under Section 6.1(1) or (2)
shall have occurred and be continuing or if any other Event of
Default (as defined in the Indenture) shall occur and be
continuing and the obligations of Terex under the Indenture and
the Securities shall have been accelerated pursuant to Section
6.2 of the Indenture with respect to such other Event of Default,
(a) the Secured Party 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 Secured Party
may register all or any portion of the Pledged Securities in the
name of the Secured Party or its nominee, and the Secured Party
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
Secured Party 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 Secured Party 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.
9.7 Registration Rights; Private Sales.
(a) If the Secured Party 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 Secured
Party 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 Secured Party, 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 Secured Party, 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 Secured Party 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 Secured
Party 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 Secured Party 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 Secured Party, that the
Secured Party 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.
9.8 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 its Secured
Obligations.
9.9 Expenses; Attorneys' Fees. Each Company shall
reimburse the Secured Party 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 Secured Party 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.
9.10 Preventing Impairment of the Collateral.
Regardless of whether there shall have occurred any Event of
Default, the Secured Party may institute and maintain or cause in
the name of one or more Companies or of the Secured Party, or
both, to be instituted or maintained, such suits and proceedings
as the Secured Party 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.
9.11 Limitation on Duties Regarding Preservation of
Collateral.
(a) The Secured Party'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
Secured Party deals with similar property for its own account, it
being understood that neither the 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 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 Secured Party shall have no obligation to
take any steps to preserve rights against prior parties to any
Collateral.
(c) Neither the Secured Party 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
Secured Party and the other Secured Parties hereunder shall not
be conditioned or contingent upon the pursuit by the 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.
9.12 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 SECURED PARTY'S TAKING POSSESSION OR THE
SECURED PARTY'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 Secured Party'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 Secured Party's 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.
9.13 Discontinuance of Proceedings. In case the
Secured Party 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 Secured Party, then and in every
such case each Company, the Secured Party 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
Secured Party shall continue as if no such proceeding had been
instituted.
9.14 Intellectual Property License. Solely for the
purpose of enabling the Secured Party to exercise rights and
remedies under this Section 10 and at such time as the Secured
Party shall be lawfully entitled to exercise such rights and
remedies, each Company hereby grants to the Secured Party, to the
extent it has the right to do so, an irrevocable, non-exclusive
license (exercisable without payment of royalty or other compen-
sation 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.
10. 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
Secured Party 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 Secured Party from resorting to such additional
collateral or security without affecting the Secured Party's
rights hereunder. The Secured Party's acceptance of any such
additional collateral or security shall not prevent the Secured
Party from resorting to the Collateral without affecting the
Secured Party's rights in and to such additional collateral or
security.
11. Compensation and Indemnification.
11.1 Compensation. Each Company jointly and severally
agrees to pay to the Secured Party from time to time reasonable
compensation for its services. The Secured Party's compensation
shall not be limited by any law on compensation of a collateral
agent pursuant to a security agreement.
11.2 Indemnity, etc.
(a) Each Company jointly and severally agrees to
indemnify, reimburse and hold the Secured Party and each other
Person for whose benefit the Secured Party may be holding
collateral, 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 Secured Party 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 Secured Party's Liens on, and security interest
in, the Collateral and the acceptance or administration or
performance by the Secured Party 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 Secured Party'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
subsection (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.
11.3 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.
12. 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 AD-
DRESS, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH
MAILING. NOTHING SHALL AFFECT THE RIGHT OF THE SECURED PARTY 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.
13. Limitation of Liability. No claim may be made by
any Company or any other Person against the Secured Party or any
other Person for whose benefit the Secured Party may be holding
Collateral 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 Secured Party, each
such Person 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
this Security Agreement, the Secured Party 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.
14. 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 Secured Party shall not be
effective until received by the Secured Party. 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.
15. Successors and Assigns. This Security Agreement
shall be binding upon and inure to the benefit of each Company,
the other Persons for whose benefit the Secured Party may be
holding Collateral, 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 Secured Party and each other such Person.
16. Waivers and Amendments. None of the terms or
provisions of this Security Agreement may be waived, amended,
supplemented or otherwise modified except in a writing executed
by Secured Party (and prior to the payment in full of the Terex
Obligations, in accordance with Article 9 of the Indenture).
17. No Waiver; Remedies Cumulative. No failure or
delay on the part of the Secured Party in exercising any right,
power or privilege hereunder and no course of dealing between any
Company and the Secured Party 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 Secured Party of any right or remedy hereunder on
any one occasion shall not be construed as a bar to any right or
remedy which the Secured Party 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 Secured Party deems expedient and are
not exclusive of any rights or remedies which the Secured Party
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 Secured Party to any
other or further action in any circumstances without notice or
demand.
18. Termination; Release. When the Secured
obligations have been finally paid and performed in full in
accordance with the terms of the Intercompany Notes and the Terex
Security Agreement, this Security Agreement shall terminate, and
the Secured Party, 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 Secured Party and has not theretofore been disposed of,
applied or released.
19. 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.
20. 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.
21. Marshalling. The Secured Party shall not 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.
22. 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.
23. 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.
24. Powers Coupled with an Interest. All
authorizations and agencies herein contained with respect to the
Collateral are irrevocable and powers coupled with an interest.
25. Authority of Secured Party. (a) Each Company
acknowledges that the rights and responsibilities of the Secured
Party under this Security Agreement with respect to any action
taken by the Secured Party or the exercise or non-exercise by the
Secured Party of any option, right, request, judgment or other
right or remedy provided for herein or resulting or arising out
of this Security Agreement shall prior to the full and final
payment of the Terex Obligations, as between the Secured Party
and the other Persons for whose benefit the Secured Party may be
holding Collateral, 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 Secured Party and the
Companies, the Secured Party shall be conclusively presumed to be
acting as agent for such other Persons 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.
(b) Each Company acknowledges that each
Intercompany Note has been pledged by Terex to the Collateral
Agent to secure the Terex Obligations pursuant to the Terex
Security Agreements and that, in connection therewith, Terex has
assigned its rights hereunder to the Collateral Agent as
additional security therefor. Each Company further acknowledges
that prior to the full and final payment of the Terex Secured
obligations, the Collateral Agent shall be and remain, for all
purposes, the Secured Party hereunder, and shall (subject to the
terms of the Terex Security Agreement) have the sole right to
give consents, agree to amendments, waivers and modifications,
make demands and take other actions permitted of Terex or the
Secured Party hereunder and under the Intercompany Notes.
26. 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 Secured Party 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.
27. 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 or Terex 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 Terex Security Document, or any
document, instrument or agreement relating to the Secured
Obligations, the Terex 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 Docu-
ments or any assignment or transfer of any thereof; (d) any
furnishing of any additional security to the Secured Party or the
Terex Secured Parties or their assignees or any acceptance
thereof or any release of any security by the Secured Party or
the Terex 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 Terex Obligations; or (h)
any other circumstance which might otherwise constitute a defense
available to, or a discharge of, any Company.
<PAGE>
IN WITNESS WHEREOF, each Company and the Secured Party
have caused this Security Agreement to be duly executed and
delivered as of the date first above written.
TEREX CRANES, INC.
By:__________________________
Name:
Title:
TEREX CORPORATION
By:__________________________
Name:
Title:
PPM CRANES, INC.
By:__________________________
Name:
Title:
Address for Notices for each
Company and Terex:
c/o: Terex Corporation
500 Post Road East
Westport, Connecticut 06880
Telex:
Facsimile:
<PAGE>
ACKNOWLEDGED: UNITED STATES TRUST COMPANY
OF NEW YORK, as assignee of
Secured Party
By:__________________________
Name: John Juiliano
Title: Vice President
Address for Notices:
114 West 47th Street
New York, New York 10036
Att: Corporate Trust Division
and Agency
Telex:
Facsimile:
<PAGE>
Schedules
_________
Schedule I Working Capital Collateral
INTERCOMPANY DEMAND NOTE
US$56,861,000 May 9, 1995
FOR VALUE RECEIVED, P.P.M., S.A., a societe anonyme organized
under the laws of the Republic of France (together with its successors, the
"Borrower"), promises to pay to the order of TEREX CORPORATION, a Delaware
corporation ("Terex" and, together with its successors and assigns, the
"Company"), at the Company's offices at 500 Post Road East, Westport,
Connecticut 06880, United States of America, or such other address as the
holder hereof shall have designated to the Borrower, ON DEMAND, the
principal amount of FIFTY-SIX MILLION EIGHT HUNDRED SIXTY-ONE THOUSAND
UNITED STATES DOLLARS (US$56,861,000), together with all accrued and unpaid
interest hereon. Interest on the unpaid principal amount hereof shall be
accrued at a rate per annum equal to 9%. This Note may not be prepaid by
the Borrower prior to demand.
Capitalized terms used herein but not defined shall have the
meanings assigned to such terms in the Security and Pledge Agreement (as
hereinafter defined).
All payments of principal of and interest on this Intercompany
Demand Note shall be payable in lawful currency of the United States of
America, in immediately available funds.
This Intercompany Demand Note is the PPM France Note referred to
in that certain Security and Pledge Agreement, dated as of May 9, 1995
(together with all amendments, modifications, restatements and supplements
from time to time thereto, the "Security and Pledge Agreement"), between
Terex and United States Trust Company of New York as collateral agent (the
"Collateral Agent"), to which Security and Pledge Agreement reference is
hereby made for a statement of terms and provisions pursuant to which this
Intercompany Demand Note has been pledged to the Collateral Agent for the
benefit of the Secured Parties as security for the Secured Obligations.
Payment of this Intercompany Demand Note is secured by certain mortgages
and other security documents, and reference is hereby made thereto for a
description of the properties mortgaged, pledged and assigned, the nature
and extent of the collateral subject thereto and the rights of the parties
to such mortgages and other security documents in respect of such
collateral.
In addition to and not in limitation of the foregoing or the
provisions of any other agreement to which the Borrower, the Company or any
subsidiary of the Company may be a party, the Borrower further agrees,
subject only to any limitation imposed by applicable law, to pay all
expenses, including reasonable attorneys' fees and legal expenses, incurred
by the holder of this Intercompany Demand Note in endeavoring to collect
any amounts payable hereunder which are not paid when due, whether by
acceleration or otherwise.
No delay on the part of the Company or any other holder of this
Intercompany Demand Note in the exercise of any right, power or remedy
shall operate as a waiver thereof, nor shall any single or partial exercise
of any right, power or remedy preclude other or further exercise thereof,
or the exercise of any other right, power or remedy. No amendment,
modification or waiver of, or consent with respect to, any provision of
this Intercompany Demand Note shall in any event be effective unless the
same shall be in writing and signed and delivered by the Company or any
other holder hereof.
The Borrower acknowledges that this Intercompany Demand Note has
been pledged by Terex to the Collateral Agent to secure the Secured
Obligations pursuant to the Security and Pledge Agreement and that, in
connection therewith, Terex has assigned its rights hereunder to the
Collateral Agent as additional security therefor. The Borrower further
acknowledges that prior to the full and final payment of the Secured Obli-
gations, the Collateral Agent shall be and remain, for all purposes, the
holder hereof, and shall (subject to the terms of the Security and Pledge
Agreement) have the sole right to give consents, agree to amendments,
waivers and modifications, make demands and take other actions permitted of
the Company or the holder under this Intercompany Demand Note.
All parties hereto, whether as makers, endorsers, or otherwise,
severally waive presentment for payment, demand, protest, notice of
dishonor and notice of the existence, creation or nonpayment of all or any
of the loans or advances evidenced hereby.
THIS INTERCOMPANY DEMAND NOTE SHALL BE CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
Address: P.P.M., S.A.
By:_________________________
Name:
Title:
By:_________________________
Name:
Title:
Pay to the order of ____________________________
TEREX CORPORATION
By:_________________________
Name:
Title:
<PAGE>
INTERCOMPANY DEMAND NOTE
US$13,360,000 May 9, 1995
FOR VALUE RECEIVED, Terex Cranes, Inc., a Delaware corporation
(together with its successors, the "Borrower"), promises to pay to the
order of TEREX CORPORATION, a Delaware corporation ("Terex" and, together
with its successors and assigns, the "Company"), at the Company's offices
at 500 Post Road East, Westport, Connecticut 06880, United States of
America, or such other address as the holder hereof shall have designated
to the Borrower, ON DEMAND, the principal amount of THIRTEEN MILLION THREE
HUNDRED SIXTY THOUSAND UNITED STATES DOLLARS (US$13,360,000), together with
all accrued and unpaid interest hereon. Interest on the unpaid principal
amount hereof shall be accrued at a rate per annum equal to 13.5%. This
Note may not be prepaid by the Borrower prior to demand.
Capitalized terms used herein but not defined shall have the
meanings assigned to such terms in the Security and Pledge Agreement (as
hereinafter defined).
All payments of principal of and interest on this Intercompany
Demand Note shall be payable in lawful currency of the United States of
America, in immediately available funds.
This Intercompany Demand Note is the Terex Cranes Note referred
to in that certain Security and Pledge Agreement, dated as of May 9, 1995
(together with all amendments, modifications, restatements and supplements
from time to time thereto, the "Security and Pledge Agreement"), between
Terex and United States Trust Company of New York as collateral agent (the
"Collateral Agent"), to which Security and Pledge Agreement reference is
hereby made for a statement of terms and provisions pursuant to which this
Intercompany Demand Note has been pledged to the Collateral Agent for the
benefit of the Secured Parties as security for the Secured Obligations.
Payment of this Intercompany Demand Note is secured by certain mortgages
and other security documents, and reference is hereby made thereto for a
description of the properties mortgaged, pledged and assigned, the nature
and extent of the collateral subject thereto and the rights of the parties
to such mortgages and other security documents in respect of such
collateral.
In addition to and not in limitation of the foregoing or the
provisions of any other agreement to which the Borrower, the Company or any
subsidiary of the Company may be a party, the Borrower further agrees,
subject only to any limitation imposed by applicable law, to pay all
expenses, including reasonable attorneys' fees and legal expenses, incurred
by the holder of this Intercompany Demand Note in endeavoring to collect
any amounts payable hereunder which are not paid when due, whether by
acceleration or otherwise.
No delay on the part of the Company or any other holder of this
Intercompany Demand Note in the exercise of any right, power or remedy
shall operate as a waiver thereof, nor shall any single or partial exercise
of any right, power or remedy preclude other or further exercise thereof,
or the exercise of any other right, power or remedy. No amendment,
modification or waiver of, or consent with respect to, any provision of
this Intercompany Demand Note shall in any event be effective unless the
same shall be in writing and signed and delivered by the Company or any
other holder hereof.
All parties hereto, whether as makers, endorsers, or otherwise,
severally waive presentment for payment, demand, protest, notice of
dishonor and notice of the existence, creation or nonpayment of all or any
of the loans or advances evidenced hereby.
THIS INTERCOMPANY DEMAND NOTE SHALL BE CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
Address: TEREX CRANES, INC.
By:_________________________
Name: Ronald DeFeo
Title: Vice President
By:_________________________
Name: Marvin B. Rosenberg
Title: Secretary
Pay to the order of ____________________________
TEREX CORPORATION
By:_________________________
Name: Marvin B. Rosenberg
Title: Secretary
<PAGE>
INTERCOMPANY DEMAND NOTE
US$733,000 May 9, 1995
FOR VALUE RECEIVED, PPM Krane GmbH, a Gesellschaft mit
beschrankter Haftung organized under the laws of the Federal Republic of
Germany (together with its successors, the "Borrower"), promises to pay to
the order of TEREX CORPORATION, a Delaware corporation ("Terex" and,
together with its successors and assigns, the "Company"), at the Company's
offices at 500 Post Road East, Westport, Connecticut 06880, United States
of America, or such other address as the holder hereof shall have
designated to the Borrower, ON DEMAND, the principal amount of SEVEN
HUNDRED THIRTY-THREE THOUSAND UNITED STATES DOLLARS (US$733,000), together
with all accrued and unpaid interest hereon. Interest on the unpaid
principal amount hereof shall be accrued at a rate per annum equal to
13.5%. This Note may not be prepaid by the Borrower prior to demand.
Capitalized terms used herein but not defined shall have the
meanings assigned to such terms in the Security and Pledge Agreement (as
hereinafter defined).
All payments of principal of and interest on this Intercompany
Demand Note shall be payable in lawful currency of the United States of
America, in immediately available funds.
This Intercompany Demand Note is the PPM Krane Note referred to
in that certain Security and Pledge Agreement, dated as of May 9, 1995
(together with all amendments, modifications, restatements and supplements
from time to time thereto, the "Security and Pledge Agreement"), between
Terex and United States Trust Company of New York as collateral agent (the
"Collateral Agent"), to which Security and Pledge Agreement reference is
hereby made for a statement of terms and provisions pursuant to which this
Intercompany Demand Note has been pledged to the Collateral Agent for the
benefit of the Secured Parties as security for the Secured Obligations.
Payment of this Intercompany Demand Note is secured by certain mortgages
and other security documents, and reference is hereby made thereto for a
description of the properties mortgaged, pledged and assigned, the nature
and extent of the collateral subject thereto and the rights of the parties
to such mortgages and other security documents in respect of such
collateral.
In addition to and not in limitation of the foregoing or the
provisions of any other agreement to which the Borrower, the Company or any
subsidiary of the Company may be a party, the Borrower further agrees,
subject only to any limitation imposed by applicable law, to pay all
expenses, including reasonable attorneys' fees and legal expenses, incurred
by the holder of this Intercompany Demand Note in endeavoring to collect
any amounts payable hereunder which are not paid when due, whether by
acceleration or otherwise.
No delay on the part of the Company or any other holder of this
Intercompany Demand Note in the exercise of any right, power or remedy
shall operate as a waiver thereof, nor shall any single or partial exercise
of any right, power or remedy preclude other or further exercise thereof,
or the exercise of any other right, power or remedy. No amendment,
modification or waiver of, or consent with respect to, any provision of
this Intercompany Demand Note shall in any event be effective unless the
same shall be in writing and signed and delivered by the Company or any
other holder hereof.
The Borrower acknowledges that this Intercompany Demand Note has
been pledged by Terex to the Collateral Agent to secure the Secured
Obligations pursuant to the Security and Pledge Agreement and that, in
connection therewith, Terex has assigned its rights hereunder to the
Collateral Agent as additional security therefor. The Borrower further
acknowledges that prior to the full and final payment of the Secured
Obligations, the Collateral Agent shall be and remain, for all purposes,
the holder hereof, and shall (subject to the terms of the Security and
Pledge Agreement) have the sole right to give consents, agree to
amendments, waivers and modifications, make demands and take other actions
permitted of the Company or the holder under this Intercompany Demand Note.
All parties hereto, whether as makers, endorsers, or otherwise,
severally waive presentment for payment, demand, protest, notice of
dishonor and notice of the existence, creation or nonpayment of all or any
of the loans or advances evidenced hereby.
THIS INTERCOMPANY DEMAND NOTE SHALL BE CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
Address: PPM KRANE GMBH
By:_________________________
Name:
Title:
By:_________________________
Name:
Title:
Pay to the order of ____________________________
TEREX CORPORATION
By:_________________________
Name: Marvin B. Rosenberg
Title: Secretary
<PAGE>
INTERCOMPANY DEMAND NOTE
US$21,200,000 May 9, 1995
FOR VALUE RECEIVED, PPM Cranes, Inc., a Delaware corporation
(together with its successors, the "Borrower"), promises to pay to the
order of TEREX CORPORATION, a Delaware corporation ("Terex" and, together
with its successors and assigns, the "Company"), at the Company's offices
at 500 Post Road East, Westport, Connecticut 06880, United States of
America, or such other address as the holder hereof shall have designated
to the Borrower, ON DEMAND, the principal amount of TWENTY-ONE
MILLION TWO HUNDRED THOUSAND UNITED STATES DOLLARS (US$21,200,000),
together with all accrued and unpaid interest hereon. Interest
on the unpaid principal amount hereof shall be accrued at a rate
per annum equal to 13.5%. This Note may not be prepaid by the
Borrower prior to demand.
Capitalized terms used herein but not defined shall
have the meanings assigned to such terms in the Security and
Pledge Agreement (as hereinafter defined).
All payments of principal of and interest on this
Intercompany Demand Note shall be payable in lawful currency of
the United States of America, in immediately available funds.
This Intercompany Demand Note is the PPM U.S. Note
referred to in that certain Security and Pledge Agreement, dated
as of May 9, 1995 (together with all amendments, modifications,
restatements and supplements from time to time thereto, the
"Security and Pledge Agreement"), between Terex and United States
Trust Company of New York as collateral agent (the "Collateral
Agent"), to which Security and Pledge Agreement reference is
hereby made for a statement of terms and provisions pursuant to
which this Intercompany Demand Note has been pledged to the
Collateral Agent for the benefit of the Secured Parties as
security for the Secured Obligations. Payment of this
Intercompany Demand Note is secured by certain mortgages and
other security documents, and reference is hereby made thereto
for a description of the properties mortgaged, pledged and
assigned, the nature and extent of the collateral subject thereto
and the rights of the parties to such mortgages and other
security documents in respect of such collateral.
In addition to and not in limitation of the foregoing
or the provisions of any other agreement to which the Borrower,
the Company or any subsidiary of the Company may be a party, the
Borrower further agrees, subject only to any limitation imposed
by applicable law, to pay all expenses, including reasonable
attorneys' fees and legal expenses, incurred by the holder of
this Intercompany Demand Note in endeavoring to collect any
amounts payable hereunder which are not paid when due, whether by
acceleration or otherwise.
No delay on the part of the Company or any other holder
of this Intercompany Demand Note in the exercise of any right,
power or remedy shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or remedy preclude
other or further exercise thereof, or the exercise of any other
right, power or remedy. No amendment, modification or waiver of,
or consent with respect to, any provision of this Intercompany
Demand Note shall in any event be effective unless the same shall
be in writing and signed and delivered by the Company or any
other holder hereof.
All parties hereto, whether as makers, endorsers, or
otherwise, severally waive presentment for payment, demand,
protest, notice of dishonor and notice of the existence, creation
or nonpayment of all or any of the loans or advances evidenced
hereby.
THIS INTERCOMPANY DEMAND NOTE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
Address: PPM CRANES, INC.
By:_________________________
Name: Ronald DeFeo
Title: Vice President
By:_________________________
Name: Marvin B. Rosenberg
Title: Secretary
Pay to the order of ____________________________
TEREX CORPORATION
By:_________________________
Name: Marvin B. Rosenberg
Title: Secretary
<PAGE>
INTERCOMPANY DEMAND NOTE
US$733,000 May 9, 1995
FOR VALUE RECEIVED, Baulift Baumaschinen und Krane
Handels-GmbH, a Gesellschaft mit beschrankter Haftung organized
under the laws of the Federal Republic of Germany (together with
its successors, the "Borrower"), promises to pay to the order of
TEREX CORPORATION, a Delaware corporation ("Terex" and, together
with its successors and assigns, the "Company"), at the Company's
offices at 500 Post Road East, Westport, Connecticut 06880,
United States of America, or such other address as the holder
hereof shall have designated to the Borrower, ON DEMAND, the
principal amount of SEVEN HUNDRED THIRTY-THREE THOUSAND UNITED
STATES DOLLARS (US$733,000), together with all accrued and unpaid
interest hereon. Interest on the unpaid principal amount hereof
shall be accrued at a rate per annum equal to 13.5%. This Note
may not be prepaid by the Borrower prior to demand.
Capitalized terms used herein but not defined shall
have the meanings assigned to such terms in the Security and
Pledge Agreement (as hereinafter defined).
All payments of principal of and interest on this
Intercompany Demand Note shall be payable in lawful currency of
the United States of America, in immediately available funds.
This Intercompany Demand Note is the Baulift Note
referred to in that certain Security and Pledge Agreement, dated
as of May 9, 1995 (together with all amendments, modifications,
restatements and supplements from time to time thereto, the
"Security and Pledge Agreement"), between Terex and United States
Trust Company of New York as collateral agent (the "Collateral
Agent"), to which Security and Pledge Agreement reference is
hereby made for a statement of terms and provisions pursuant to
which this Intercompany Demand Note has been pledged to the
Collateral Agent for the benefit of the Secured Parties as
security for the Secured Obligations. Payment of this
Intercompany Demand Note is secured by certain mortgages and
other security documents, and reference is hereby made thereto
for a description of the properties mortgaged, pledged and
assigned, the nature and extent of the collateral subject thereto
and the rights of the parties to such mortgages and other
security documents in respect of such collateral.
In addition to and not in limitation of the foregoing
or the provisions of any other agreement to which the Borrower,
the Company or any subsidiary of the Company may be a party, the
Borrower further agrees, subject only to any limitation imposed
by applicable law, to pay all expenses, including reasonable
attorneys' fees and legal expenses, incurred by the holder of
this Intercompany Demand Note in endeavoring to collect any
amounts payable hereunder which are not paid when due, whether by
acceleration or otherwise.
No delay on the part of the Company or any other holder
of this Intercompany Demand Note in the exercise of any right,
power or remedy shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or remedy preclude
other or further exercise thereof, or the exercise of any other
right, power or remedy. No amendment, modification or waiver of,
or consent with respect to, any provision of this Intercompany
Demand Note shall in any event be effective unless the same shall
be in writing and signed and delivered by the Company or any
other holder hereof.
The Borrower acknowledges that this Intercompany Demand
Note has been pledged by Terex to the Collateral Agent to secure
the Secured Obligations pursuant to the Security and Pledge
Agreement and that, in connection therewith, Terex has assigned
its rights hereunder to the Collateral Agent as additional
security therefor. The Borrower further acknowledges that prior
to the full and final payment of the Secured Obligations, the
Collateral Agent shall be and remain, for all purposes, the
holder hereof, and shall (subject to the terms of the Security
and Pledge Agreement) have the sole right to give consents, agree
to amendments, waivers and modifications, make demands and take
other actions permitted of the Company or the holder under this
Intercompany Demand Note.
All parties hereto, whether as makers, endorsers, or
otherwise, severally waive presentment for payment, demand,
protest, notice of dishonor and notice of the existence, creation
or nonpayment of all or any of the loans or advances evidenced
hereby.
THIS INTERCOMPANY DEMAND NOTE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
Address: BAULIFT BAUMASCHINEN UND KRANE
HANDELS-GMBH
By:_________________________
Name:
Title:
By:_________________________
Name:
Title:
Pay to the order of ____________________________
TEREX CORPORATION
By:_________________________
Name: Marvin B. Rosenberg
Title: Secretary
INDEX
Clause No. Heading Page No.
_________ _______ _________
1. Interpretation 2
2. Floating Charge 12
3. Restrictions on dealing 13
4. Undertaking 13
5. Enforcement 16
6. Office of Receiver 17
7. Application of Enforcement Monies 18
8. Release 19
9. Protection of Security 19
10. Further Assurance 21
11. Mandate and Attorney 21
12. Expenses 21
13. Indemnity 22
14. Liability of Collateral Agent and 22
Receiver
15. Avoidance of Payment 23
16. Notices 23
17. Payments 23
18. Governing Law 24
19. Consent to Registration etc. 4
<PAGE>
FLOATING CHARGE
by
(1) TEREX EQUIPMENT LIMITED incorporated under the law of Scotland with
registered number SCO86323 whose registered office is at Newhouse
Industrial Estate, Newhouse, Motherwell, Lanarkshire, ("the Company")
in favour of
(2) UNITED STATES TRUST COMPANY OF NEW YORK, of 114 West 47th Street, New York,
New York 10036, acting as Trustee (as defined below) for itself and the
other Secured Parties (as defined below) (the "Collateral Agent", which
expression shall include any successor Trustee appointed under the
applicable provisions of the Indenture (as defined below))
W H E R E A S:
(A) The Company is a wholly owned subsidiary of Terex Corporation, a
Delaware Corporation (the "Parent").
(B) The Parent has agreed to issue US $250,000,000 13 1/4% Senior Secured
Notes due 2002 (the "Securities") pursuant to an Indenture (the
"Indenture") dated as of 9 May 1995 between the Parent, the Guarantors
(as therein defined) and United States Trust Company of New York
acting as Trustee for the benefit of the holders of the Securities
from time to time.
(C) The Parent and certain of its subsidiaries have entered into a
Purchase Agreement under which certain purchasers have agreed to
purchase the Securities subject to certain conditions: one of those
conditions is that the Company enters into this Instrument.
(D) The Board of Directors of the Company is satisfied that entering into
this Instrument is to the benefit of the Company and its business.
(E) The Collateral Agent has agreed to hold the floating charges created
by this Instrument for the benefit of itself and the other Secured
Parties (as hereafter defined).
<PAGE>
NOW IT IS HEREBY PROVIDED AND DECLARED THAT:-
1. Interpretation
1.1 In this Instrument unless otherwise specified or the context otherwise
so requires:-
"the Act" means the Companies Act 1985;
"Administration" means administration under Part II of the Insolvency
Act;
"Charge" means the security (or any part thereof) created, or which
may at any time be created, by or pursuant to this Instrument;
"Collateral" means all of the property (including uncalled capital) of
the Company which is or may be from time to time while this
Instrument is in force the subject of the floating charges
created by Clause 2;
"Encumbrance" includes any standard security, mortgage, pledge, lien,
hypothecation, security interest or other charge or encumbrance
of any kind, any assignation in the nature of security with a
provision for reassignment or retrocession, any deed of trust or
trust arrangement, any conditional sale or retention of title
agreement or arrangement or any other agreement or arrangement
having or intended to have the effect of constituting a right in
security;
"Event of Default" bears the meaning ascribed to it in the Indenture;
"Financing Documents" means each and every one of:
(1) the New Security Documents;
(2) the Purchase Agreement; and
(3) the Indenture
"Group" means the Company and the subsidiaries of the Company from
time to time, or any of them as the context requires;
"Holders" means each and every person in whose name the Securities are
registered from time to time and at any relevant time and
"Holder" shall mean any one of those persons;
"Indebtedness" bears the meaning ascribed to it in the Indenture;
"Insolvency Act" means the Insolvency Act 1986;
"Interest Rate" means 1% per annum in excess of the then applicable
interest rate on the Securities (as set out in paragraph 1 of the
Securities);
"New Security Documents" means each and every one of:
(i) this Instrument; and
(ii) the Standard Security dated of even date with this
Instrument granted by the Company to the Collateral Agent
over the Property; and
(iii) the Ranking Agreement;
and each and every other document from time to time entered into
in favour of the Secured Parties (or any of them) for the purpose
of providing security for the Secured Obligations;
"Permitted Encumbrances" means (i) Encumbrances in favour of the
Parent and/or its Restricted Subsidiaries other than with respect
to intercompany Indebtedness, (ii) Encumbrances 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 Encumbrances were not
created in contemplation of such acquisition and do not extend to
assets other than those subject to such Encumbrances immediately
prior to such acquisition, (iii) Encumbrances on property
existing at the time of acquisition thereof by the Company or any
Restricted Subsidiary, provided, however, that such Encumbrances
were not created in contemplation of such acquisition and do not
extend to assets other than those subject to such Encumbrances
immediately prior to such acquisition, (iv) Encumbrances incurred
in the ordinary course of business in respect of Hedging
Obligations (as defined on the Indenture), (v) Encumbrances to
secure Indebtedness for borrowed money of the Company or any of
its subsidiaries in favor of the Parent or any wholly owned
Subsidiary (as defined in the Indenture), (vi) Encumbrances
(other than pursuant to 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) Encumbrances existing
on the date hereof, (viii) Encumbrances 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 generally
accepted accounting principles has been made therefor, (ix)
Encumbrances 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 the
Indenture or this Instrument, (x) Encumbrances consisting of
zoning restrictions, survey exceptions, utility easements,
licenses, rights of way, rights of access or other servitudes, or
easements of ingress or egress over property of the Company or
any of its Restricted Subsidiaries, real conditions affecting the
use of the heritable property of the Company or any of its
Restricted Subsidiaries, minor defects in title, landlord's and
lessor's liens or hypothec under leases on property located on
the premises rented, mechanics' liens, vendors' liens, and
similar encumbrances, rights or restrictions on moveable or
heritable 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) Encumbrances 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, (xii) any
extension, renewal or replacement (or successive extensions,
renewals or replacements), in whole or in part, of Encumbrances
described in clauses (i) to (xi) above, (xiii) any Encumbrance
over Receivables or Stock and the proceeds thereof (and contract
rights and general intangibles relating thereto) and to the
extent not otherwise included in the definition thereof all cash
held by or to the order of the Company or any of its subsidiaries
or standing to the credit of the Company with bank or other
financial institution and (xiv) Purchase Money Liens securing
Purchase Money Indebtedness (as defined in the Indenture)
incurred pursuant to Section 4.9(b)(iv) of the Indenture;
"Permitted Financing" means any financing or funding to be provided to
the Parent and/or any of its subsidiaries and/or the Company
which is permitted pursuant to, and does not cause a breach of,
Section 4.9 (b) (i) of the Indenture;
"Permitted Security" means Permitted Encumbrances and the Encumbrances
created by or pursuant to the New Security Documents (other than
the Ranking Agreement);
"Permitted Working Capital Permitted Financing; Financers" means any
person providing
"person" includes any individual, company, corporation, firm,
partnership, joint venture, association, organisation, trust,
state or agency of a state or any other entity (in each case
whether or not having separate legal personality);
"Purchase Money Liens" bears the same meaning ascribed to it in the
Indenture;
"Proceeds" means "proceeds" as such term is defined in Section
9-306(1) of the UCC;
"Property" means the heritable subjects owned by the Company at
Newhouse Industrial Estate, Motherwell, Lanarkshire registered in
the Land Register of Scotland under title number LAN 1461;
"Ranking Agreement" means the agreement of that title entered into or
to be entered into among the Company (1) Standard Chartered Bank
(2) and the Collateral Agent (3) to regulate the ranking of
certain Permitted Security;
"Receivables" means 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 debtors relating thereto including all
such rights constituted or evidenced by any document or
instrument together with (a) any assets or collateral assigned,
hypothecated or held to secure any of the foregoing and the
rights under any security agreement granting a security interest
in such assets or collateral, (b) all goods, the sale of which
gave rise to any of the foregoing, including, without limitation,
all rights in any returned or repossesed goods and unpaid
seller's rights, (c) all guarantees, endorsements and
indemn-ifications on, or of, any of the foregoing, (d) all powers
of attorney for the execution of any evidence of indebtedness or
security or other writing in connection therewith and (e) all
rights under any policy or policies of insurance in respect
thereof;
"Receiver" means any administrative receiver, receiver and manager or
receiver appointed in respect of the Collateral (whether pursuant
to this Instrument, pursuant to any statute, by a Court or
otherwise) and includes joint receivers;
"Related Expenses" means all legal and other expenses (on a full
indemnity basis) incurred by the Collateral Agent in enforcing
the security created by this Instrument together with interest at
the Interest Rate from two business days after the date on which
they are demanded;
"Restricted bears the meaning Subsidiary" ascribed to it in the
Indenture;
"Secured Obligations" means all moneys, debts and liabilities which
now are or have been or at any time hereafter may be or become
due, owing or incurred by the Parent to the Secured Parties (or
any of them) under or in connection with the Financing Documents
(whether present, future, actual or contingent and whether or not
due, and whether incurred solely, severally and/or jointly, and
whether as principal debtor, guarantor, surety or otherwise);
"Secured Parties" means the Collateral Agent, the Trustee and each and
every Holder and "Secured Party" means any one of those persons;
"Stock" means all stock held by the Company for sale or lease or to be
furnished under contracts of service and all raw materials, work
in progress and materials used and to be used or consumed in
connection with the business of the Company and/or its
subsidiaries including, without limitation and in any event, all
goods (whether such goods are in the possesion of the Company or
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) under any contract of
supply or service;
"Subsidiary" (1) of the Company means any subsidiary within the
meaning of Section 736 of the Act and (2) of any other person
means (i) a corporation or company a majority of whose capital
stock or shares 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;
"Tax(es)" includes any present or future tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature and whatever
called, by whomsoever, on whomsoever and wherever imposed,
levied, collected, withheld or assessed;
"Trustee" means the United States Trust Company of New York as trustee
under the Indenture;
"UCC"means the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of New York; provided, however,
in the event that, by reason of mandatory provisions of law, any
or all of the attachment, perfection or priority of the
Collateral Agent's security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York the term "UCC"
shall mean the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to
such attachment, perfection or priority and for purposes of
definitions related to such provisions;
"Wholly Owned Subsidiary" bears the meaning ascribed to it in the
Indenture;
"Winding-up" of a person also includes the amalgamation,
reconstruction, reorganisation, dissolution, liquidation, merger
or consolidation of that person, and any equivalent or analogous
procedure under the law of any jurisdiction (and a reference to
the commencement of any of the foregoing includes a reference to
the presentation of a petition to a court of competent
jurisdiction or the passing of a valid resolution for or with a
view to any of the foregoing).
1.2 Each reference in this Instrument to a "fixed security" shall be
construed as a reference to a fixed security as defined by sub-section
(1) of Section 486 of the Act as in force at the date hereof.
1.3 Unless any provision of this Instrument or the context otherwise
requires, any reference herein to any statute or any section of any
statute shall be deemed to include a reference to any modification,
extension or re-enactment thereof for the time being in force and
instruments, orders and regulations then in force and made under or
deriving validity from the relevant statute or section.
1.4 In this Instrument the singular includes the plural and vice versa and
the plural includes all or any. Clause headings are for ease of
reference only.
1.5 Any reference in this Instrument to a document of any kind whatsoever
is to that document as amended or supplemented or varied or novated or
substituted from time to time.
1.6 Except to the extent that the context requires otherwise, any
references herein to this "Instrument" shall be construed as a
reference to this Floating Charge as amended or supplemented from time
to time and shall include any document which amends or bears to be
supplemental to, or is entered into by the Company pursuant to or in
accordance with the terms of this Instrument and any reference herein
to a Clause, sub-Clause, Schedule or part of a Schedule shall, except
to the extent that the context requires otherwise, be construed as a
reference to a Clause, sub-Clause, Schedule or part of a Schedule of
this Instrument (as the case may be).
2. Floating charge
2.1 The Company as beneficial owner and as continuing security for the
payment and discharge of the Secured Obligations HEREBY GRANTS in
favour of the Collateral Agent a floating charge over the whole of the
property (including uncalled capital) which is or may be from time to
time while this Instrument is in force comprised in the property and
undertaking of the Company other than:
(a) Receivables and the proceeds thereof (and contract rights
relating thereto) and, to the extent not otherwise included in
the definition thereof, all cash held by or to the order of the
Company or standing to the credit of the Company with bank or
other financial institution;
(b) Stock; and
(c) any Equipment or Fixtures (both as defined in the Indenture)
acquired by the Company with the proceeds of Purchase Money
Obligations (as defined in the Indenture) permitted under the
terms of the Indenture, which Equipment or Fixtures are subject
to Purchase Money Liens (as defined in the Indenture) permitted
under the terms of the Indenture, if, and for so long as, the
agreements governing the terms of such Money Purchase Obligations
and Purchase Money Liens prohibit the grant by the Company of
such Encumbrance on the assets so acquired.
2.2 The Company as beneficial owner and as continuing security for the
payment and discharge of the Secured Obligations HEREBY GRANTS in
favour of the Collateral Agent a floating charge over the Stock.
2.3 Notwithstanding anything contained in this Instrument to the contrary
if the Company wishes to grant a Permitted Encumbrance to any
Permitted Working Capital Financer over the Stock or any part thereof,
the Collateral Agent agrees that it shall:-
(i) as soon as practicable after its receipt of a written request
from the Company (acting reasonably) and in any event prior to
the grant of such Permitted Encumbrance, as required by the
Permitted Working Capital Financer either (a) release some or all
of the Stock from the floating charge hereby created to the
extent required by such Permitted Working Capital Financer or (b)
agree to postpone its security so as to rank after any security
to be granted to the Permitted Working Capital Financer; and
(ii) if so required by such Permitted Working Capital Financer, enter
into any ranking agreement or other document (in terms reasonably
satisfactory to the Collateral Agent) consistent with, and which
is required to give effect to, the provisions of Clause 2.3(i).
2.4 The Charges contained in this Clause 2 shall, subject to Section
464(2) of the Act, the provisions of the Ranking Agreement and the
provisions of this Instrument, rank in priority to any fixed security
which shall be created by the Company over the Collateral or any of it
after the date of this Instrument, (other than a fixed security in
favour of the Collateral Agent) and to any other Encumbrance over the
Collateral or any of it created by the Company.
3. Restrictions on dealing
The Company will not, and will procure that none of its Restricted Subsidiaries
will, create or permit to subsist any Encumbrance on the whole or any part of
the respective present or future assets of the Company or such Restricted
Subsidiary whether ranking or purporting to rank prior, pari passu or postponed
to the Charge other than any of the following which, for the avoidance of doubt,
may rank prior to the Charge:
(a) any fixed security granted in favour of the Collateral Agent;
(b) the Permitted Security; and
(c) any Permitted Encumbrance.
4. Undertakings
4.1 The Company hereby undertakes to and covenants with the Collateral
Agent that it will, and will procure that each of its subsidiaries
will, at all times during the continuance of the Charge:-
(a) keep the whole of its property and assets in sufficient repair
and all plant and machinery, or other moveable property in
sufficient working order and condition for the efficient conduct
of its business and, where necessary, renew and replace the same
as and when the same become obsolete, worn out or destroyed;
(b) insure and keep insured such of its property and assets as
comprise heritable, real, freehold and leasehold, moveable and
personal property and effects of every description with
underwriters, insurance companies or other insurers acceptable to
the Collateral Agent against loss or damage by fire and such
other contingencies and risks as are customarily insured against
by reputable and prudent companies in the same or similar
businesses or may reasonably be required by the Collateral Agent
in amounts and on terms (other than in respect of product
liability if self-insured by the Company or the Parent)
reasonably acceptable to the Collateral Agent in the joint names
of the Collateral Agent and the Company or as the Collateral
Agent may require with the interest of the Collateral Agent noted
or endorsed on the policy or policies;
(c) (unless the insurance to which such policy or policies relate
either (i) is subject to any Permitted Encumbrance or (ii) was
effected by a landlord or other third party with the respective
interests of the Company or such subsidiary and the Collateral
Agent endorsed or noted thereon in a manner satisfactory to the
Collateral Agent) upon request from the Collateral Agent deposit
with the Collateral Agent (or with some third party approved by
the Collateral Agent upon terms that the third party holds the
same to the Collateral Agent's order) such policies of insurance
as may reasonably be required by the Collateral Agent;
(d) duly and promptly pay all premiums and other sums necessary for
maintaining and enforcing the insurances referred to in Clause
4.1(b) and produce the receipts therefor or other evidence of
payment to the Collateral Agent within fourteen days of being
requested by the Collateral Agent so to do, and not do anything
or omit to do anything which will render any such insurances void
or voidable and to the extent reasonably practicable ensure that
every such policy of insurance contains a standard mortgage
clause whereby such insurance will not be invalidated, vitiated
or voidable as against the Collateral Agent by reason of any
misrepresentation, act, neglect or non- disclosure on the part of
the insured; and
(e) notify the Collateral Agent immediately in the event of it
becoming aware of any creditor or other person executing or using
or commencing any diligence against the Company or such
subsidiary or in respect of any of its assets wherever situated;
4.2 If the Company fails to perform any of its obligations hereunder to
keep, or to procure that each of its subsidiaries shall keep, its
respective property and assets in sufficient state of repair and
working order or to effect and keep up any insurance policy or to
produce to the Collateral Agent any such policy or receipt, the
Collateral Agent may, but shall not be obliged to, repair and maintain
any such property or assets or as the case may require, effect or
renew any such insurance as the Collateral Agent shall thank fit or
take such other action as the Collateral Agent shall deem appropriate
to remedy such failure and any sum or sums so expended by the
Collateral Agent shall be repayable by the Company to the Collateral
Agent on demand together with interest at the Interest Rate from the
date of payment by the Collateral Agent as aforesaid.
4.3 All money which may at any time be received or receivable under any
insurances taken out or effected by or on behalf of the Company or any
of its subsidiaries in connection with the Collateral and other than
in respect of third party liability insurance ("Insurance Proceeds")
shall at any time after an Event of Default has occurred and is
continuing be paid to the Collateral Agent and pending such payment
shall be held in trust for the Collateral Agent.
Unless an Event of Default shall have occurred and shall be continuing and
subject to the terms of any fixed security in favour of the Collateral
Agent and the Indenture, (i) all Insurance Proceeds shall be paid to
the Company and (ii) the Company may invest such Insurance 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.
4.4 In fortification of the security hereby granted and any further
securities which may be granted by the Company in favour of the
Collateral Agent the Company will, if the Collateral Agent so
requires, deposit with the Collateral Agent all certificates, deeds
and other documents of title or evidence of ownership in relation to
all or any of its leasehold, heritable or freehold property and all
documents of title to such of the incorporeal moveable property of the
Company or any of its subsidiaries from time to time secured hereunder
in relation to which there is a document of title.
4.5 The Company warrants and represents to the Collateral Agent that
during the period from the date of this Instrument until payment and
discharge in full of all of the Secured Obligations the obligations of
the Company under the Financing Documents shall (subject to any
applicable bankruptcy or insolvency laws) constitute its legal, valid
and binding obligations enforceable in accordance with their
respective terms all of which are and shall throughout such period
remain in full force and effect.
5. Enforcement
5.1 Subject to the provisions of the Insolvency Act, the Charge shall
become immediately enforceable and the Collateral Agent shall be
entitled by instrument in writing to appoint any person or persons (if
more than one with power to act jointly and severally) to be a
Receiver (or Receivers) of all or any part of the Collateral in the
event of and either forthwith upon or at any time subsequent to:
(a) an Event of Default having occurred which is continuing; or
(b) any request from the Board of Directors of the Company that a
Receiver be appointed forthwith; or
(c) the presentation of a petition for the making of an
Administration order in relation to, or for the Winding-up, of
the Company,
and in addition, but without prejudice to the foregoing provisions of this
sub-Clause, if any person so appointed as a Receiver shall be removed
by a Court or shall otherwise cease to act as such, the Collateral
Agent shall be entitled to appoint another person as Receiver in his
place.
5.2 A Receiver appointed under this Instrument shall have and be entitled
to exercise all the powers conferred upon a Receiver by the Insolvency
Act and in addition to and without limiting these powers, such
Receiver shall have the power to:-
(a) implement and exercise all or any of the Company's powers and/or
rights and/or obligations under any contract or other agreement
forming a part of the Collateral;
(b) make any arrangement or compromise which he shall think expedient
or in respect of any claim by or against the Company;
(c) promote or procure the formation of any new company or
corporation;
(d) subscribe for or acquire for cash or otherwise any share capital
of such new company or corporation in the name of the company and
on its behalf and/or in the name(s) of a nominee(s) or trustee(s)
for it;
(e) sell, feu, assign, transfer, exchange, hire out, grant leases of
or otherwise dispose of or realise the Collateral or any part
thereof to any such new company or corporation and accept as
consideration or part of the consideration therefor in the name
of the Company and on its behalf and/or in the name(s) of any
nominee(s) or trustee(s) for it any shares or further shares in
any such company or corporation or allow the payment of the whole
or any part of such consideration to remain deferred or
outstanding by way of loan or debt or credit;
(f) sell, feu, assign, transfer, exchange, hire out, grant leases of
or otherwise dispose of or realise on behalf of the Company any
such shares or deferred consideration or part thereof or any
rights or benefits attaching thereto;
(g) convene an extraordinary general meeting of the Company;
(h) acquire any property on behalf of the Company;
(i) in respect of any assets of the Company situated in England and
Wales, exercise in addition to the foregoing all the powers
conferred by the Insolvency Act or any other enactment or under
law on Receivers appointed in that jurisdiction; and
(j) do all such other acts and things as he may consider necessary or
desirable for protecting or realising the Collateral or any part
thereof or incidental or conducive to any of the matters, powers
or authorities conferred on a Receiver under or by virtue of or
pursuant to this Instrument, and exercise in relation to the
Collateral or any part thereof all such powers and authorities
and do all such things as he would be capable of exercising or
doing if he were the absolute beneficial owner of the same, and
use the name of the Company for all and any of the purposes
aforesaid.
5.3 In the exercise of the powers hereby conferred any Receiver may sever
and sell plant, machinery or other fixtures separately from the
property to which they may be annexed.
<PAGE>
6. Office of Receiver
6.1 Any Receiver appointed under Clause 5 shall be the agent of the
Company for all purposes and subject to the provisions of the
Insolvency Act and to the proviso to Clause 13 hereof the Company
alone shall be responsible for his contracts, engagements, acts,
omissions, defaults and losses and for liabilities incurred by him and
for his reasonable remuneration and his costs, charges and expenses,
and the Collateral Agent shall not incur any liability therefor
(either to the Company or to any other person) by reason of the
Collateral Agent making his appointment as such Receiver or for any
other reason whatsoever.
6.2 Any Receiver appointed under Clause 5 shall be entitled to reasonable
remuneration for his services and the services of his firm appropriate
to the responsibilities involved upon the basis of charging from time
to time adopted by the Receiver.
7. Application of Enforcement Monies
7.1 All monies received by a Receiver shall be applied by him, subject to
the claims of any creditors ranking in priority to or pari passu with
the claims of the Collateral Agent under this Instrument, in the
following order:-
(a) in or towards payment of all costs, charges and expenses of or
incidental to the appointment of the Receiver and the exercise of
all or any of his powers, including his remuneration and all
outgoings properly paid by and liabilities incurred by him as a
result of such exercise;
(b) in or towards satisfaction of the Secured Obligations in such
order as the Collateral Agent may from time to time require; and
(c) any surplus shall be paid to the Company or any other person
entitled thereto.
7.2 Nothing in this Instrument shall limit the right of the Receiver or
the Collateral Agent (and the Company acknowledges that the Receiver
and the Collateral Agent are so entitled) if and for so long as the
Receiver or the Collateral Agent, in their discretion, shall consider
it appropriate, to place all or any monies arising from the
enforcement of the Charge into a suspense account (which account may
be an account with the Collateral Agent), without any obligation to
apply the same or any part thereof in or toward the discharge of any
of the Secured Obligations.
7.3 The Company authorises the Collateral Agent to apply (without prior
notice) any credit balance (whether or not then due) to which the
Company is at any time beneficially entitled on any account at, or any
sum held to its order by, any office of the Collateral Agent in or
towards satisfaction of all or any part of the Secured Obligations
which are due and unpaid and for that purpose, to convert one currency
into another. The Collateral Agent shall not be obliged to exercise
any of its rights under this sub-Clause, which shall be without
prejudice and in addition to any right of set-off, combination of
accounts, lien or other right to which it is at any time otherwise
entitled (whether by operation of law, contract or otherwise).
7.4 All moneys received by the Collateral Agent or any Receiver by virtue
of this Instrument may be converted into such other currency as the
Collateral Agent or any such Receiver (as the case may be) considers
necessary or desirable to cover the Company's liabilities in that
currency at the prevailing relevant rate of exchange (as conclusively
determined by the Collateral Agent or such Receiver (as the case may
be)) for the currency acquired against the currency in which those
moneys were held.
8. Release
The Collateral Agent may at any time release the Company from any or all of its
obligations under or pursuant to this Instrument and/or all or any part of the
Collateral from the security created by or pursuant to this Instrument upon such
terms as the Collateral Agent may think fit but nothing in this Instrument does,
shall constitute, or is intended to constitute a release of any of the
Collateral.
9. Protection of Security
9.1 The security created by this Instrument shall be a continuing security
notwithstanding any settlement of account or other matter or thing
whatsoever and in particular (but without prejudice to the generality
of the foregoing) shall not be considered satisfied by an intermediate
repayment or satisfaction of part only of the Secured Obligations, and
shall continue in full force and effect until all the Secured
Obligations have been irrevocably satisfied in full.
9.2 The security created by this Instrument shall be in addition to and
shall not in any way prejudice or be prejudiced by any collateral or
other security, right or remedy which the Collateral Agent may now or
at any time hereafter hold for all or any part of the Secured
Obligations.
9.3 Neither the security created by this Instrument nor the rights,
powers, discretions and remedies conferred upon the Collateral Agent
by this Instrument or by law shall be discharged, impaired or
otherwise affected by reason of:-
(a) any present or future security, guarantee, indemnity or other
right or remedy held by or available to the Collateral Agent
being or becoming wholly or in part void, voidable or
unenforceable on any ground whatsoever or by the Collateral Agent
from time to time exchanging, varying, realising, releasing or
failing to perfect or enforce any of the same; or
(b) the Collateral Agent or any other Secured Party compounding with,
discharging or releasing or varying the liability of, or granting
any time, indulgence or concession to, the Company or any other
person or renewing, determining, varying or increasing any
accommodation or transaction in any manner whatsoever or
concurring in accepting or varying any compromise, arrangement or
settlement or omitting to claim or enforce payment from the
Company or any other person; or
(c) anything done or omitted which but for this Clause 9.3 might
operate to exonerate the Company from the Secured Obligations or
any of them; or
(d) any legal limitation, disability, incapacity or other similar
circumstance relating to the Company.
9.4 The Collateral Agent shall not be obliged, before exercising any of
the rights, powers or remedies conferred upon it by or pursuant to
this Instrument or by law, to:-
(a) take any action or obtain judgement or decree in any Court
against the Company;
(b) make or file any claim to rank in a Winding- Up of the Company;
or
(c) enforce or seek to enforce any other security taken, or exercise
any right or plea available to the Collateral Agent, in respect
of any of the Company's obligations under the Financing
Documents.
9.5 No failure on the part of the Collateral Agent to exercise and no
delay on its part in exercising any right, remedy, power or privilege
under or pursuant to this Instrument or any other document relating to
or securing all or any part of the Secured Obligations will operate as
a waiver thereof, nor will any single or partial exercise of any right
or remedy preclude any other or further exercise thereof or the
exercise of any other right or remedy. The rights and remedies
provided in this Instrument or any such other document are cumulative
and not exclusive of any right or remedies provided by law.
9.6 Each of the provisions in this Instrument shall be severable from one
another and if at any time one or more of such provisions is or
becomes or is declared null and void, invalid, illegal or
unenforceable in any respect under any law or otherwise howsoever the
validity, legality and enforceability of the remaining provisions
hereof shall not in any way be affected or impaired thereby.
9.7 At any time after (1) the Collateral Agent receives or is deemed to be
affected by notice whether actual or constructive of any subsequent
Encumbrance (other than Permitted Security or a Permitted Encumbrance)
or other interest affecting any part of the Collateral and/or the
proceeds of sale thereof, or (2) the commencement of the Winding-up of
the Company, the Collateral Agent may open a new account or accounts
with the Company (whether or not it permits any existing account to
continue). If the Collateral Agent does not open a new account it
shall nevertheless be treated as if it had done so at the time, as the
case may be, when it received or was deemed to have received such
notice or the Winding-up commenced and as from that time all payments
made to the Collateral Agent shall be credited or be treated as having
been credited to the new account and shall not operate to reduce the
amount for which this Instrument is security.
10. Further Assurance
The Company shall promptly and at its own expense execute and do or give all
such assurances, acts and things as the Collateral Agent may reasonably require
for perfecting or protecting the security created by or pursuant to this
Instrument over the Collateral or for facilitating the realisation of such
assets and the exercise of all powers, authorities and discretions vested in the
Collateral Agent or in any Receiver and shall, in particular, execute all fixed
or floating charges, assignations, securities, transfers, dispositions and
assurances of the Collateral whether to the Collateral Agent or to its
nominee(s) or otherwise and give all notices, orders and directions which the
Collateral Agent may think expedient.
11. Mandate and Attorney
11.1 The Company hereby irrevocably appoints the Collateral Agent and any
Receiver to be its mandatory and attorney for it and on its behalf and
in its name or otherwise to create or constitute, or to make any
alteration or addition or deletion in or to, any documents which the
Collateral Agent or Receiver may reasonably require for perfecting or
protecting the title of the Collateral Agent or any Receiver to the
Collateral or for vesting any of the Collateral in the Collateral
Agent or any Receiver or the Collateral Agent's nominees or any
purchaser and to re-deliver the same thereafter and otherwise
generally to sign, seal and deliver and otherwise perfect any fixed
security, floating charge, transfer, disposition, assignation,
security and/or assurance or any writing, assurance, document or act
which may be required or may be deemed proper by the Collateral Agent
or any Receiver on or in connection with any sale, lease, disposition,
realisation, getting in or other enforcement by the Collateral Agent
or any Receiver of all or any of the Collateral and to collect and
give a good discharge to insurers for all and any insurance monies
payable to the Company.
11.2 The Company hereby ratifies and confirms and agrees to ratify and
confirm whatever any such mandatory or attorney shall do in the
exercise of all or any of the powers, authorities and discretions
referred to in this Clause 11.
12. Expenses
12.1 The Company binds and obliges itself for the whole expenses of
enforcing the security hereby granted and the reasonable expenses of
any discharge thereof.
12.2 All costs, charges and expenses reasonably incurred and all payments
made by the Collateral Agent or any Receiver hereunder in the lawful
exercise of the powers hereby conferred whether or not occasioned by
any act, neglect or default of theCompany shall carry interest from
the date of the same being incurred or becoming payable at the
Interest Rate. The amount of all such costs, charges, expenses and
payments and all interest thereon and all remuneration payable
hereunder shall be payable by the Company on demand and shall form
part of the Secured Obligations. All such costs, charges, expenses and
payments shall be paid and charged as between the Collateral Agent or
any Receiver and the Company on the basis of a full and unqualified
indemnity.
13. Indemnity
The Collateral Agent, every Receiver and every attorney, manager, agent or other
person appointed by the Collateral Agent or any such Receiver in connection
herewith shall be entitled to be indemnified out of the Collateral in respect of
all costs, charges, liabilities and expenses incurred by them or him in the
execution or purported execution of any of the powers, authorities or
discretions vested in them or him pursuant hereto and against all actions,
proceedings, costs, claims and demands in respect of any matter or thing done or
omitted relating to the Collateral together with interest thereon at the
Interest Rate from the date of the same being incurred or becoming due until
payment in full and any Receiver may retain and pay all sums in respect of the
same out of any moneys received under the powers hereby conferred: PROVIDED THAT
there shall be excluded from the scope of the foregoing indemnity in favour of
any person, all losses, costs and expenses and all actions, proceedings, claims
and demands caused by the fraud, negligence or wilful default of such person.
14. Liability of Collateral Agent and Receiver
14.1 The Collateral Agent shall not in any circumstances (either by reason
of taking possession of the Collateral or for any other reason
whatsoever):-
(a) be liable to account to the Company or any other person for any
thing except the Collateral Agent's own actual receipts which
have not been distributed or paid to the Company or the persons
entitled or at the time of payment believed by the Collateral
Agent to be entitled thereto; or
(b) be liable to the Company or any other person for any costs,
charges, losses, damages, liabilities or expenses arising from or
connected with any realisation of the Collateral or the
conversion of one currency to another except to the extent that
they shall be caused by the Collateral Agent's own fraud,
negligence or wilful misconduct or that of its officers or
employees.
14.2 The Collateral Agent shall not by virtue of Clause 14.1 owe any duty
of care or other duty to any person which it would not owe in the
absence of that Clause.
14.3 All the provisions of Clauses 14.1 and 14.2 shall apply, mutatis
mutandis, in respect of the liability of any Receiver or any officer,
employee or agent of the Collateral Agent or Receiver.
15. Avoidance of Payment
No assurance, security, guarantee or payment which may be avoided under any law
relating to bankruptcy, insolvency, Administration or Winding- up (including,
without limitation, Sections 238 to 245 of the Insolvency Act) and no release,
settlement, discharge or arrangement given or made by the Collateral Agent or
any Receiver on the faith of any such assurance, security, guarantee or payment
shall prejudice or affect the right of the Collateral Agent or any Receiver to
enforce the security created by this Instrument to the full extent of the
Secured Obligations.
16. Notices
A demand or other communication to the Company hereunder shall be in writing
signed by an officer, agent, authorised signatory or other official or employee
of the Collateral Agent and may (without prejudice to any other mode of service
or delivery) be served on the Company at any place or by post addressed to the
Company at its Registered office as intimated to the Registrar of Companies from
time to time and a demand or notice so addressed and posted shall be effective
notwithstanding that it be returned undelivered.
17. Payments
All sums due and payable by the Company under this Instrument shall be paid in
full without set off or counter claim and free and clear of and (subject as
provided in the next sentence) without deduction for or an account or any future
or present Taxes. If:-
(i) the Company is required by any law to make any deduction or
withholding from any sum payable by the Company to the Collateral
Agent under this Instrument; or
(ii) the Collateral Agent is required by law to make any payment, on
account of Tax (other than Tax on its overall net income) or otherwise
on or in relation to any amount received or receivable by the
Collateral Agent under this Instrument;
then the sum payable by the Company in respect of which such deduction,
withholding or repayment is required to be made shall be increased to the extent
necessary to ensure that, after the making of such deduction, withholding or
repayment the Collateral Agent receives and retains (free from any liability in
respect of any such deduction, withholding or payment) a net sum equal to the
sum which it would have received and so retained had no such deduction,
withholding or payment been made.
18. Governing Law
This Instrument shall be construed and governed in all respects in accordance
with the law of Scotland and the Company hereby irrevocably submits to the
non-exclusive jurisdiction of the Scottish Courts.
19. Consent to registration etc
A Certificate signed by any officer or agent or any authorised signatory of the
Collateral Agent shall, save in the case of manifest error or a question of law,
be sufficient to fix and ascertain the amount of the Secured Obligations at any
relevant time and shall constitute a balance and charge against the Company, and
no suspension of a charge or of a threatened charge for payment of the balance
so constituted shall pass nor any sist of execution be granted except on
consignation. The Company hereby consents to the registration of this Instrument
and of any such Certificate for perservation and execution: IN WITNESS WHEREOF
these presents are executed as follows:-
<PAGE>
SUBSCRIBED for and on behalf
of TEREX EQUIPMENT LIMITED at
on
1995 by
and
both directors thereof
........................... Director
........................... Director
<PAGE>
9th May 1995
Floating Charge
by
Terex Equipment Limited
(as Chargor)
in favour of
United States Trust
Company of New York (as
Collateral Agent)
INDEX
Clause No. Heading Page No.
__________ _______ ________
1. Interpretation 2
2. Bond 9
3. Floating Charge 9
4. Enforcement 11
5. Office of Receiver 12
6. Application of Enforcement Monies 12
7. Release 13
8. Protection of Security 14
9. Further Assurance 15
10. Mandate and Attorney 16
11. Expenses 16
12. Indemnity 17
13. Liability of Collateral Agent and
Receiver 17
14. Avoidance of Payment 17
15. Notices 18
16. Payments 18
17. Governing Law 18
18. Consent to Registration etc. 19
<PAGE>
BOND AND FLOATING CHARGE
by
(1) TEREX CORPORATION, a Delaware corporation having a place of business at 201
West Walnut Street, Green Bay, Wisconsin 54305 ("the Company")
in favour of
(2) UNITED STATES TRUST COMPANY OF NEW YORK, of 114 West 47th Street, New York,
New York 10036, acting as Trustee (as defined below) for itself and the
other Secured Parties (as defined below) (the "Collateral Agent", which
expression shall include any successor Trustee appointed under the
applicable provisions of the Indenture (as defined below))
W H E R E A S:
(A) The Company has agreed to issue US $250,000,000 13% Senior Secured Notes
due 2002 (the "Securities") pursuant to an Indenture (the "Indenture")
dated as of 9 May 1995 between the Company, the Guarantors (as therein
defined) and United States Trust Company of New York acting as Trustee for
the benefit of the holders of the Securities from time to time.
(B) The Company and certain of its subsidiaries have entered into a Purchase
Agreement under which certain purchasers have agreed to purchase the
Securities subject to certain conditions: one of those conditions is that
the Company enters into this Instrument.
(C) The Board of Directors of the Company is satisfied that entering into this
Instrument is to the benefit of the Company and its business.
(D) The Collateral Agent has agreed to hold the Charge created by this
Instrument for the benefit of itself and the other Secured Parties (as
hereafter defined).
NOW IT IS HEREBY PROVIDED AND DECLARED THAT:-
<PAGE>
1. Interpretation
1.1 In this Instrument unless otherwise specified or the context otherwise
so requires:-
"the Act" means the Companies Act 1985;
"Administration" means administration under Part II of the Insolvency
Act;
"Charge" means the security created, or which may at any time be
created, by or pursuant to this Instrument;
"Collateral" means the whole of the property and assets which are from
time to time subject to the Charge in terms of Clause 3.1;
"Collateral Records" means 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 licence or franchise agreement
that prohibit assignment or disclosure of such items;
"Encumbrance" includes any standard security, mortgage, pledge, lien,
hypothecation, security interest or other charge or encumbrance
of any kind, any assignation in the nature of security with a
provision for reassignment or retrocession, any deed of trust or
trust arrangement, any conditional sale or other retention of
title agreement or arrangement or any other agreement or
arrangement having or intended to have the effect of constituting
a right in security;
"Equipment" means "equipment" as such term is defined in Section 9 -
109(2) UCC and, without limitation and in any event, all plant
and machinery, manufacturing and assembly equipment, data
processing equipment, motor vehicles not constituting Stock
computers, office equipment, furniture, appliances, tools, dies
and material handling equipment;
"Event of Default" bears the meaning ascribed to it in the Indenture;
"Financing Documents" means each and every one of:
(1) the Indenture;
(2) this Instrument;
(3) the Mortgages;
(4) the Security Agreement; and
(5) the Purchase Agreement.
"Group" means the Company and the subsidiaries of the Company from
time to time, or any of them as the context requires;
"Holders" means each and every person in whose name the Securities are
registered from time to time and at any relevant time and
"Holder" shall mean any one of those persons;
"Insolvency Act" means the Insolvency Act 1986;
"Insurance Policies" means all insurance policies of the Company
relating to the Collateral and all rights to and interests in all
claims under all such insurance policies and all sums received
and receivable thereunder;
"Interest Rate" means 1% per annum in excess of the then applicable
interest rate on the Securities (as set out in paragraph 1 of the
Securities);
"Mortgages" means those several Mortgage, Assignment of Rents,
Security Documents and Fixtures Filings, pursuant to which the
Company and certain of its subsidiaries have granted, first
ranking charges on the real estate therein described in favour of
the Collateral Agent and each and every mortgage, charge,
assignation of rents and other Encumbrance (other than the Charge
and the Encumbrances created under the Security Agreement)
granted by the Company from time to time and outstanding in
favour of the Collateral Agent or Trustee or any other person on
behalf of the Secured Parties (or any of them) as security for
inter alia all or any of the Secured Obligations;
"Mortgaged Property" means all corporeal, incorporeal, moveable and
heritable property whatsoever (wherever situated) charged or made
subject to an Encumbrance pursuant to or in accordance with the
Mortgages and the Security Agreement;
"Permitted Working means any financing or funding Capital" to be
provided to the Company or any of its subsidiaries which is
permitted pursuant to, and does not cause a breach of, Section
4.9(b)(i) of the Indenture;
"Permitted Working" means any person providing Capital Financer
Permitted Working Capital;
"person" includes any individual, company, corporation, firm,
partnership, joint venture, association, joint stock company,
unincorporated organisation, trust, govern-ment or any agency or
political subdivision thereof, or any other entity (in each case
whether or not having separate legal personality);
"Pledge Agreement" means the Security and Pledge Agreement dated as of
9 May 1995 made between the Company and the Collateral Agent;
"Proceeds" means "proceeds" as such term is defined in Section
9-306(1) of the UCC;
"Purchase Agreement" means the Purchase Agreement dated as of 9 May
1995 between the Company, certain of its subsidiaries and the
original Holders relating to the purchase and sale of the
Securities and certain other securities;
"Receivables" means 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 debtor relating thereto including
(without limitation) all such rights constituted or evidenced by
any document or instrument together with (a) any assets or
collateral assigned, hypothecated or held to secure any of the
foregoing and the rights under any security agreement granting a
security interest in such assets or 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.
"Receiver" means any administrative receiver, receiver and manager or
receiver appointed in respect of the Collateral (whether pursuant
to this Instrument, pursuant to any statute, by a Court or
otherwise) and includes joint receivers;
"Related Expenses" means all legal and other expenses (on a full
indemnity basis) incurred by the Collateral Agent in enforcing
the security created by this Instrument, together with interest
at the Interest Rate from two business days after the date on
which they are demanded;
"Secured Obligations" means all moneys, debts and liabilities which
now are or have been or at any time hereafter may be or become
due, owing or incurred by the Company or any of its subsidiaries
to the Secured Parties (or any of them) under or in connection
with the Financing Documents (whether present, future, actual or
contingent and whether or not due, and whether incurred solely,
severally and/or jointly, and whether as principal debtor,
guarantor, surety or otherwise);
"Security Agreement" means the Security and Pledge Agreement dated as
of 9 May 1995 between the Company and the Collateral Agent;
"Stock" means "inventory" as such term is defined in Section 9 -
109(4) of the UCC including without limitation and in any event
all stock held by the Company for sale or lease or to be
furnished under contracts of service and all raw materials, work
in progress and materials used and to be used or consumed in
connection with the business of the Company and/or its
subsidiaries including, without limitation and in any event, all
goods (whether such goods are in the possesion of the Company or
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) under any contract of
supply or service;
"Secured Parties" means the Collateral Agent, the Trustee and each and
every Holder and "Secured Party" means any one of those persons;
"subsidiary" (1) of the Company means any subsidiary within the
meaning of Section 736 of the Act and (2) of any other person
means (i) a corporation or company a majority of whose capital
stock or shares 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;
"Tax(es)" includes any present or future tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature and whatever
called, by whomsoever, on whomsoever and wherever imposed,
levied, collected, withheld or assessed;
"Trustee" means the United States Trust Company of New York as trustee
under the Indenture;
"UCC"means the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of New York; provided, however,
in the event that, by reason of mandatory provisions of law, any
or all of the attachment, perfection or priority of the
Collateral Agent's security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York the term "UCC"
shall mean the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to
such attachment, perfection or priority and for purposes of
definitions related to such provisions;
"Winding-up "of a person also includes the amalgamation,
reconstruction, reorganisation, dissolution, liquidation, merger
or consolidation of that person, and any equivalent or analogous
procedure under the law of any jurisdiction (and a reference to
the commencement of any of the foregoing includes a reference to
the presentation of a petition to a court of competent
jurisdiction or the passing of a valid resolution for or with a
view to any of the foregoing).
1.2 Each reference in this Instrument to a "fixed security" shall be
construed as a reference to a fixed security as defined by sub-
section (1) of Section 486 of the Act as in force at the date hereof.
1.3 Unless any provision of this Instrument or the context otherwise
requires, any reference herein to any statute or any section of any
statute shall be deemed to include a reference to any modification,
extension or re-enactment thereof for the time being in force and
instruments, orders and regulations then in force and made under or
deriving validity from the relevant statute or section.
1.4 In this Instrument the singular includes the plural and vice versa and
the plural includes all or any. Clause headings are for ease of
reference only.
1.5 Any reference in this Instrument to a document of any kind whatsoever
is to that document as amended or supplemented or varied or novated or
substituted from time to time.
1.6 Except to the extent that the context requires otherwise, any
references herein to this "Instrument" shall be construed as a
reference to this Bond and Floating Charge as amended or supplemented
from time to time and shall include any document which amends or bears
to be supplemental to, or is entered into by the Company pursuant to
or in accordance with the terms of this Instrument and any reference
herein to a Clause, sub-Clause, Schedule or part of a Schedule shall,
except to the extent that the context requires otherwise, be construed
as a reference to a Clause, sub-Clause, Schedule or part of a Schedule
of this Instrument (as the case may be).
2. Bond
The Company undertakes to the Collateral Agent and to each of the other Secured
Parties that it will pay or discharge each of the Secured Obligations in the
manner and at the times provided for in the Financing Documents.
3. Floating Charge
3.1 The Company as beneficial owner and as continuing security for the
payment and discharge of the Secured Obligations HEREBY GRANTS in
favour of the Collateral Agent a floating charge over the whole of the
Company's right, title and interest in and to the following, in each
case whether now owned or existing or hereafter acquired or arising
which are situated in Scotland:
(i) all Stock;
(ii) all Equipment;
(iii) all Collateral Records;
(iv) all Insurance Policies; and
(v) all accessions and additions to, all substitutions and
replacements for, and all Proceeds or products of, any or all of
the foregoing,
provided that the Charge hereby created shall not extend (a) to any of the
assets or rights referred to above which are situated in the United
States of America and which are the subject of another Encumbrance
granted by the Company in favour of the Collateral Agent; or (b) any
Equipment or Fixtures (as defined in the Indenture) acquired by the
Company with the proceeds of Purchase Money Obligations (as defined in
the Indenture) permitted under the terms of the Indenture, which
Equipment or Fixtures are subject to Purchase Money Liens (as defined
in the Indenture) 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 Encumbrance on the assets so acquired.
3.2 The Charge shall, subject to Section 464(2) of the Act and the
provisions of Clause 3.3 of this Instrument, rank in priority to any
fixed security which shall be created by the Company over the
Collateral or any of it after the date of this Instrument, (other than
a fixed security in favour of the Collateral Agent) and to any other
Encumbrance over the Collateral or any of it created by the Company.
3.3 Notwithstanding anything contained in this Instrument to the contrary,
the Collateral Agent agrees that:-
(i) the Company shall be entitled to grant to any Permitted Working
Capital Financer as Security for Permitted Working Capital
Financing an Encumbrance over all or any Receivables and/or all
or any Stock and/or all or any other Working Capital Collateral
(as defined in the Pledge Agreement) which Encumbrance may rank
ahead of the Charge provided that at the time of granting of any
such Encumbrance the Charge has not become immediately
enforceable under Clause 4.1 of this Instrument; and
(ii) it will enter into any ranking agreement, discharge, release or
other document (in terms reasonably satisfactory to the
Collateral Agent) consistent with, and which is required to give
effect to the provisions of Clause 3.3 (i).
4. Enforcement
4.1 Subject to the provisions of the Insolvency Act, the Charge shall
become immediately enforceable and the Collateral Agent shall be
entitled by instrument in writing to appoint any person or persons (if
more than one with power to act jointly and severally) to be a
Receiver (or Receivers) of all or any part of the Collateral in the
event of and either forthwith upon or at any time subsequent to:
(a) an Event of Default having occurred which is continuing; or
(b) any request from the Board of Directors of the Company that a
Receiver be appointed forthwith; or
(c) the presentation of a petition for the making of an
Administration order in relation to or for the Winding-up of the
Company,
and in addition, but without prejudice to the foregoing provisions of this
sub-Clause, if any person so appointed as a Receiver shall be removed
by a Court or shall otherwise cease to act as such, the Collateral
Agent shall be entitled to appoint another person as Receiver in his
place.
4.2 A Receiver appointed under this Instrument shall have and be entitled
to exercise all the powers conferred upon a Receiver by the Insolvency
Act and in addition to and without limiting these powers, such
Receiver shall have the power to:-
(a) implement and exercise all or any of the Company's powers and/or
rights and/or obligations under any contract or other agreement
forming a part of the Collateral;
(b) promote or procure the formation of any new company or
corporation;
(c) subscribe for or acquire for cash or otherwise any share capital
of such new company or corporation in the name of the company and
on its behalf and/or in the name(s) of a nominee(s) or trustee(s)
for it;
(d) in respect of any assets of the Company situated in England and
Wales, exercise in addition to the foregoing all the powers
conferred by the Insolvency Act for any other enactment or under
law on receivers appointed in that jurisdiction;
(e) do all such other acts and things as he may consider necessary or
desirable for protecting or realising the Collateral or any part
thereof or incidental or conducive to any of the matters, powers
or authorities conferred on a Receiver under or by virtue of or
pursuant to this Instrument, and exercise in relation to the
Collateral or any part thereof all such powers and authorities
and do all such things as he would be capable of exercising or
doing if he were the absolute beneficial owner of the same, and
use the name of the Company for all and any of the purposes
aforesaid.
4.3 In the exercise of the powers hereby conferred any Receiver may sever
and sell plant, machinery or other fixtures separately from the
property to which they may be annexed.
5. Office of Receiver
5.1 Any Receiver appointed under Clause 4 shall be the agent of the
Company for all purposes and subject to the provisions of the
Insolvency Act and to the proviso to Clause 12 hereof the Company
alone shall be responsible for his contracts, engagements, acts,
omissions, defaults and losses and for liabilities incurred by him and
for his reasonable remuneration and his costs, charges and expenses,
and the Collateral Agent shall not incur any liability therefor
(either to the Company or to any other person) by reason of the
Collateral Agent making his appointment as such Receiver or for any
other reason whatsoever.
5.2 Any Receiver appointed under Clause 4 shall be entitled to reasonable
remuneration for his services and the services of his firm appropriate
to the responsibilities involved upon the basis of charging from time
to time adopted by the Receiver.
6. Application of Enforcement Monies
6.1 All monies received by a Receiver shall be applied by him, subject to
the claims of any creditors ranking in priority to or pari passu with
the claims of the Collateral Agent under this Instrument, in the
following order:-
(a) in or towards payment of all costs, charges and expenses of or
incidental to the appointment of the Receiver and the exercise of
all or any of his powers, including his remuneration and all
outgoings properly paid by and liabilities incurred by him as a
result of such exercise;
(b) in or towards satisfaction of the Secured Obligations in such
order as the Collateral Agent may from time to time require; and
(c) any surplus shall be paid to the Company or any other person
entitled thereto.
6.2 Nothing in this Instrument shall limit the right of the Receiver or
the Collateral Agent (and the Company acknowledges that the Receiver
and the Collateral Agent are so entitled) if and for so long as the
Receiver or the Collateral Agent, in their discretion, shall consider
it appropriate, to place all or any monies arising from the
enforcement of the Charge into a suspense account (which account may
be an account with the Collateral Agent), without any obligation to
apply the same or any part thereof in or toward the discharge of any
of the Secured Obligations.
6.3 The Company authorises the Collateral Agent to apply (without prior
notice) any credit balance (whether or not then due) to which the
Company is at any time beneficially entitled on any account at, or any
sum held to its order by, any office of the Collateral Agent in or
towards satisfaction of all or any part of the Secured Obligations
which are due and unpaid and for that purpose, to convert one currency
into another. The Collateral Agent shall not be obliged to exercise
any of its rights under this sub-Clause, which shall be without
prejudice and in addition to any right of set-off, combination of
accounts, lien or other right to which it is at any time otherwise
entitled (whether by operation of law, contract or otherwise).
6.4 All moneys received by the Collateral Agent or any Receiver by virtue
of this Instrument may be converted into such other currency as the
Collateral Agent or any such Receiver (as the case may be) considers
necessary or desirable to cover the Company's liabilities in that
currency at the prevailing relevant rate of exchange (as conclusively
determined by the Collateral Agent or such Receiver (as the case may
be)) for the currency acquired against the currency in which those
moneys were held.
7. Release
The Collateral Agent may at any time release the Company from any or all of its
obligations under or pursuant to this Instrument and/or all or any part of the
Collateral from the security created by or pursuant to this Instrument upon such
terms as the Collateral Agent may think fit but nothing in this Instrument does,
shall constitute, or is intended to constitute a release of any of the
Collateral.
8. Protection of Security
8.1 The security created by this Instrument shall be a continuing security
notwithstanding any settlement of account or other matter or thing
whatsoever and in particular (but without prejudice to the generality
of the foregoing) shall not be considered satisfied by an intermediate
repayment or satisfaction of part only of the Secured Obligations, and
shall continue in full force and effect until all the Secured
Obligations have been irrevocably satisfied in full.
8.2 The security created by this Instrument shall be in addition to and
shall not in any way prejudice or be prejudiced by any collateral or
other security, right or remedy which the Collateral Agent may now or
at any time hereafter hold for all or any part of the Secured
Obligations.
8.3 Neither the security created by this Instrument nor the rights,
powers, discretions and remedies conferred upon the Collateral Agent
by this Instrument or by law shall be discharged, impaired or
otherwise affected by reason of:-
(a) any present or future security, guarantee, indemnity or other
right or remedy held by or available to the Collateral Agent
being or becoming wholly or in part void, voidable or
unenforceable on any ground whatsoever or by the Collateral Agent
from time to time exchanging, varying, realising, releasing or
failing to perfect or enforce any of the same; or
(b) the Collateral Agent or any other Secured Party compounding with,
discharging or releasing or varying the liability of, or granting
any time, indulgence or concession to, the Company or any other
person or renewing, determining, varying or increasing any
accommodation or transaction in any manner whatsoever or
concurring in accepting or varying any compromise, arrangement or
settlement or omitting to claim or enforce payment from the
Company or any other person; or
(c) anything done or omitted which but for this Clause 8.3 might
operate to exonerate the Company from the Secured Obligations or
any of them; or
(d) any legal limitation, disability, incapacity or other similar
circumstance relating to the Company.
8.4 The Collateral Agent shall not be obliged, before exercising any of
the rights, powers or remedies conferred upon it by or pursuant to
this Instrument or by law, to:-
(a) take any action or obtain judgement or decree in any Court
against the Company;
(b) make or file any claim to rank in a Winding-Up of the Company; or
(c) enforce or seek to enforce any other security taken, or exercise
any right or plea available to the Collateral Agent, in respect
of any of the Company's obligations under the Financing
Documents.
8.5 No failure on the part of the Collateral Agent to exercise and no
delay on its part in exercising any right, remedy, power or privilege
under or pursuant to this Instrument or any other document relating to
or securing all or any part of the Secured Obligations will operate as
a waiver thereof, nor will any single or partial exercise of any right
or remedy preclude any other or further exercise thereof or the
exercise of any other right or remedy. The rights and remedies
provided in this Instrument or any such other document are cumulative
and not exclusive of any right or remedies provided by law.
8.6 Each of the provisions in this Instrument shall be severable from one
another and if at any time one or more of such provisions is or
becomes or is declared null and void, invalid, illegal or
unenforceable in any respect under any law or otherwise howsoever the
validity, legality and enforceability of the remaining provisions
hereof shall not in any way be affected or impaired thereby.
8.7 At any time after (1) the Collateral Agent receives or is deemed to be
affected by notice whether actual or constructive of any subsequent
Encumbrance (other than an Encumbrance permitted in terms of the
Financing Documents) or other interest affecting any part of the
Collateral and/or the proceeds of sale thereof, or (2) the
commencement of the Winding-up of the Company, the Collateral Agent
may open a new account or accounts with the Company (whether or not it
permits any existing account to continue). If the Collateral Agent
does not open a new account it shall nevertheless be treated as if it
had done so at the time, as the case may be, when it received or was
deemed to have received such notice or the Winding-up commenced and as
from that time all payments made to the Collateral Agent shall be
credited or be treated as having been credited to the new account and
shall not operate to reduce the amount for which this Instrument is
security.
9. Further Assurance
The Company shall promptly and at its own expense execute and do or give all
such assurances, acts and things as the Collateral Agent may reasonably require
for perfecting or protecting the security created by or pursuant to this
Instrument over the Collateral or for facilitating the realisation of such
assets and the exercise of all powers, authorities and discretions vested in the
Collateral Agent or in any Receiver and shall, in particular, execute all fixed
or floating charges, assignations, securities, transfers, dispositions and
assurances of the Collateral whether to the Collateral Agent or to its
nominee(s) or otherwise and give all notices, orders and directions which the
Collateral Agent may think expedient.
10. Mandate and Attorney
10.1 The Company hereby irrevocably appoints the Collateral Agent and any
Receiver to be its mandatory and attorney for it and on its behalf and
in its name or otherwise to create or constitute, or to make any
alteration or addition or deletion in or to, any documents which the
Collateral Agent or Receiver may reasonably require for perfecting or
protecting the title of the Collateral Agent or any Receiver to the
Collateral or for vesting any of the Collateral in the Collateral
Agent or any Receiver or the Collateral Agent's nominees or any
purchaser and to re-deliver the same thereafter and otherwise
generally to sign, seal and deliver and otherwise perfect any fixed
security, floating charge, transfer, disposition, assignation,
security and/or assurance or any writing, assurance, document or act
which may be required or may be deemed proper by the Collateral Agent
or any Receiver on or in connection with any sale, lease, disposition,
realisation, getting in or other enforcement by the Collateral Agent
or any Receiver of all or any of the Collateral and to collect and
give a good discharge to insurers for all and any insurance monies
payable to the Company.
10.2 The Company hereby ratifies and confirms and agrees to ratify and
confirm whatever any such mandatory or attorney shall do in the
exercise of all or any of the powers, authorities and discretions
referred to in this Clause 11.
11. Expenses
11.1 The Company binds and obliges itself for the whole expenses of
enforcing the security hereby granted and the reasonable expenses of
any discharge thereof.
11.2 All costs, charges and expenses reasonably incurred and all payments
made by the Collateral Agent or any Receiver hereunder in the lawful
exercise of the powers hereby conferred whether or not occasioned by
any act, neglect or default of the Company shall carry interest from
the date of the same being incurred or becoming payable at the
Interest Rate. The amount of all such costs, charges, expenses and
payments and all interest thereon and all remuneration payable
hereunder shall be payable by the Company on demand and shall form
part of the Secured Obligations. All such costs, charges, expenses and
payments shall be paid and charged as between the Collateral Agent or
any Receiver and the Company on the basis of a full and unqualified
indemnity.
12. Indemnity
The Collateral Agent, every Receiver and every attorney, manager, agent or other
person appointed by the Collateral Agent or any such Receiver in connection
herewith shall be entitled to be indemnified out of the Collateral in respect of
all costs, charges, liabilities and expenses incurred by them or him in the
execution or purported execution of any of the powers, authorities or
discretions vested in them or him pursuant hereto and against all actions,
proceedings, costs, claims and demands in respect of any matter or thing done or
omitted relating to the Collateral together with interest thereon at the
Interest Rate from the date of the same being incurred or becoming due until
payment in full and any Receiver may retain and pay all sums in respect of the
same out of any moneys received under the powers hereby conferred: PROVIDED THAT
there shall be excluded from the scope of the foregoing indemnity in favour of
any person, all losses, costs and expenses and all actions, proceedings, claims
and demands caused by the fraud, negligence or wilful default of such person.
13. Liability of Collateral Agent and Receiver
13.1 The Collateral Agent shall not in any circumstances (either by reason
of taking possession of the Collateral or for any other reason
whatsoever):-
(a) be liable to account to the Company or any other person for any
thing except the Callateral Agent's own actual receipts which
have not been distributed or paid to the Company or the persons
entitled or at the time of payment believed by the Collateral
Agent to be entitled thereto; or
(b) be liable to the Company or any other person for any costs,
charges, losses, damages, liabilities or expenses arising from or
connected with any realisation of the Collateral or the
conversion of one currency to another except to the extent that
they shall be caused by the Collateral Agent's own fraud,
negligence or wilful misconduct or that of its officers or
employees.
13.2 The Collateral Agent shall not by virtue of Clause 13.1 owe any duty
of care or other duty to any person which it would not owe in the
absence of that Clause.
13.3 All the provisions of Clauses 13.1 and 13.2 shall apply, mutatis
mutandis, in respect of the liability of any Receiver or any officer,
employee or agent of the Collateral Agent or Receiver.
14. Avoidance of Payment
No assurance, security, guarantee or payment which may be avoided under any law
relating to bankruptcy, insolvency, Administration or Winding-up (including,
without limitation, Sections 238 to 245 of the Insolvency Act) and no release,
settlement, discharge or arrangement given or made by the Collateral Agent or
any Receiver on the faith of any such assurance, security, guarantee or payment
shall prejudice or affect the right of the Collateral Agent or any Receiver to
enforce the security created by this Instrument to the full extent of the
Secured Obligations.
15. Notices
A demand or other communication to the Company hereunder shall be in writing
signed by an officer, agent, authorised signatory or other official or employee
of the Collateral Agent and may (without prejudice to any other mode of service
or delivery) be served on the Company at any place or by post addressed to the
Company at its Registered office as intimated to the Registrar of Companies from
time to time and a demand or notice so addressed and posted shall be effective
notwithstanding that it be returned undelivered.
16. Payments
All sums due and payable by the Company under this Instrument shall be paid in
full without set off or counter claim and free and clear of and (subject as
provided in the next sentence) without deduction for or an account or any future
or present Taxes. If:-
(i) the Company is required by any law to make any deduction or
withholding from any sum payable by the Company to the Collateral
Agent under this Instrument; or
(ii) the Collateral Agent is required by law to make any payment, on
account of Tax (other than Tax on its overall net income) or otherwise
on or in relation to any amount received or receivable by the
Collateral Agent under this Instrument;
then the sum payable by the Company in respect of which such deduction,
withholding or repayment is required to be made shall be increased to the extent
necessary to ensure that, after the making of such deduction, withholding or
repayment the Collateral Agent receives and retains (free from any liability in
respect of any such deduction, withholding or payment) a net sum equal to the
sum which it would have received and so retained had no such deduction,
withholding or payment been made.
17. Governing Law
This Instrument shall be construed and governed in all respects in accordance
with the law of Scotland and the Company hereby irrevocably submits to the
non-exclusive jurisdiction of the Scottish Courts.
18. Consent to registration etc
A Certificate signed by any officer or agent or any authorised signatory of the
Collateral Agent shall, save in the case of manifest error or a question of law,
be sufficient to fix and ascertain the amount of the Secured Obligations at any
relevant time and shall constitute a balance and charge against the Company, and
no suspension of a charge or of a threatened charge for payment of the balance
so constituted shall pass nor any sist of execution be granted except on
consignation.
The Company hereby consents to the registration of this Instrument and of any
such Certificate for perservation and execution: IN WITNESS WHEREOF these
presents are executed as follows:-
SUBSCRIBED for and on behalf
of TEREX CORPORATION at
on
1995 by
and
both directors thereof
........................... Director
........................... Director
<PAGE>
Bond and Floating Charge
by
Terex Corporation (as
Chargor)
in favour of
United States Trust
Company of New York (as
Collateral Agent)
MSR/AJM/104,353-7
FAS 4889
9th May 1995
Standard Security
by
Terex Equipment Limited
in favour of
United States Trust
Company of New York
Subjects: Premises at
Newhouse Industrial
Estate, Motherwell
<PAGE>
WE, TEREX EQUIPMENT LIMITED, incorporated under the law of Scotland with
registered number 86323 and having our Registered Office at Newhouse
Industrial Estate, Motherwell, Lanarkshire, ML1 5RY, HEREBY in security of
the payment and discharge to UNITED STATES TRUST COMPANY OF NEW YORK, a New
York banking corporation of One hundred and fourteen West 47th Street, New
York, New York 10036 in its capacity as trustee for the Secured Parties (as
defined in the Floating Charge hereinafter mentioned) (in such capacity
referred to herein as "the Collateral Agent" which expression includes any
successor acting in that capacity) of all of the Secured Obligations (as
defined in a Floating charge granted by us in favour of the Collateral
Agent and executed by us of even date herewith), GRANT a Standard Security
in favour of the Collateral Agent over ALL and WHOLE those subjects at
Newhouse Industrial Estate, Motherwell registered in the Land Register of
Scotland under title Number LAN 1461 (hereinafter called "the Collateral");
The Standard Conditions specified in Schedule 3 to the Conveyancing and
Feudal Reform (Scotland) Act, 1970 and any lawful variation thereof
operative for the time being shall apply; And we agree that the Standard
Conditions shall be varied to the effect that the following provisions
shall apply in addition to the provisions contained in the last mentioned
Schedule (and to the extent that the following provisions are inconsistent
with the provisions contained in the said Schedule, the following
provisions shall be given effect):-
1. General
Rights granted to and obligations imposed upon the Collateral Agent
under the following provisions and /or pursuant to the said Schedule 3 to
the last mentioned Act shall be deemed to be respectively granted to and
imposed upon the Collateral Agent acting as trustee foresaid.
2. Repairing Obligations
2.1 We hereby bind and oblige ourselves that, at all times during the
subsistence of the security hereby granted:-
2.1.1 we shall (or shall procure that tenants or sub-tenants
of the Collateral or parts thereof shall) repair and keep in good and
substantial repair to the reasonable satisfaction of the Collateral Agent
all buildings and other erections, trade and other fixtures and the fixed
plant and machinery at any time forming part of the Collateral;
2.1.2 we shall not without the consent of the Collateral
Agent, such consent not to be unreasonably withheld or delayed, effect,
carry-out or permit any reconstruction or rebuilding of or any structural
alteration to or material change in the use of the Collateral or any part
thereof nor sever or unfix or remove any of the fixtures thereto nor
(except for the purpose and in the course of effecting necessary repairs
thereto or of replacing the same with new or improved items or equivalent
items which do not reduce the value of the Collateral) remove any of the
plant or machinery thereon or therein (except for obsolete plant or
machinery which may be removed without the necessity for such consent)
belonging to or in use by us;
2.1.3 before any such works for which the Collateral Agent's
consent is required as aforesaid are carried out by any person, we shall
submit to the Collateral Agent for approval by its surveyors the plans and
specifications of any such reconstruction, rebuilding or structural
alteration and also, if the Collateral Agent shall consent in writing as
aforesaid, we shall duly apply to the Local Planning Authority as defined
by the Town and Country Planning (Scotland) Acts for any necessary
permission to carry out such reconstruction or rebuilding or structural
alteration or material change of use in the name or on behalf of the
Collateral Agent and all other persons (if any) for the time being
interested in the Collateral and we shall give to the Collateral Agent
notice of the result of such application within seven days of receipt of
the same and we shall at all times indemnify and keep indemnified the
Collateral Agent, its successors and assignees against all proceedings,
costs, expenses, claims and demands whatsoever in respect of any such
application to the Local Planning Authority;
2.1.4 we shall permit the Collateral Agent and any person
authorised by it to enter the Collateral at all reasonable hours and with
reasonable prior notice to inspect the state and condition of or any
of the buildings and other erections, trade and other fixtures and fixed
plant and machinery forming part thereof;
2.1.5 within such reasonable period as the Collateral Agent
may require by notice in writing, we shall (or shall procure that tenants
or sub-tenants of the Collateral or parts thereof shall) make good any want
of repair in such buildings, other erections, trade and other fixtures and
fixed plant and machinery constituting a breach of the foregoing
obligations.
3. Compliance with Obligations etc
We undertake to the Collateral Agent that at all times during the
subsistence of the security hereby granted:-
3.1 we shall (or shall procure that the tenants or sub-tenants of the
Collateral or parts thereof shall) observe and perform all restrictions,
conditions, stipulations and burdens for the time being affecting the
Collateral or the use or enjoyment thereof;
3.2 we shall (or shall procure that tenants or sub-tenants of the
Collateral or parts thereof shall) comply with all requirements of the Town
and Country Planning (Scotland) Acts and all building and other regulations
and bye-laws so far in each case as the same affect any land or buildings
forming part of the Collateral, or the user thereof;
3.3 we shall produce (if the Collateral Agent so requires) to the
Collateral Agent evidence sufficient to satisfy the Collateral Agent that
the provisions of this clause 3 have been complied with and shall indemnify
and keep indemnified the Collateral Agent in respect of all actions,
proceedings, demands, claims, costs and expenses occasioned by any breach
of the provisions of this Clause 3. Any costs, damages and expenses
incurred by the Collateral Agent by reason of any such breach shall be
deemed part of the obligations hereby secured;
3.4 we shall, within four working days of the receipt of notice of
the same, give full particulars (and if requested a copy of any written
particulars received by us) to the Collateral Agent of any notice, order,
direction, designation, resolution or proposal having application to the
Collateral or to the area on which it is situate by any planning authority
or other public body or authority whatever under or by virtue of the Town
and Country Planning (Scotland) Acts or any other statutory power whatever
or in pursuance of the powers conferred by any other statute and if so
required by the Collateral Agent, the Collateral Agent may (if the same be
necessary to preserve the value of its security hereunder) at our cost take
all reasonable or necessary steps (in our name or otherwise) to comply with
any such notice or order and may at our cost make such objection or
objections or representations against or in respect of any proposal for
such a notice or order as the Collateral Agent shall, acting reasonably,
deem appropriate in the circumstances;
3.5 we shall (or shall procure that the tenants or sub-tenants of the
Collateral or parts thereof shall) fully, faithfully and punctually comply
with the provisions of all statutes for the time being in force and every
notice, order, direction, licence, consent or permission given or made
thereunder and the requirements of any competent authority so far as any of
the same shall relate to the Collateral or its user or anything done
thereon and in particular shall not do or omit or suffer to be done or
omitted any act, matter or thing in, on or respecting the Collateral or any
part thereof required to be omitted or done by the Town and Country
Planning (Scotland) Acts or any other Act or statutory provision whatever
or which shall contravene the provisions of such Act or Acts or statutory
provision aforesaid or any of them and will at all times indemnify and keep
indemnified the Collateral Agent against all actions, proceedings, costs,
expenses, claims or demands in respect of any such matter or thing
contravening the provisions of the said Acts or provision aforesaid or any
of them.
4. The Collateral Agent's Right to Enter and Repair
If at any time we shall fail to perform any of our obligations under
Clauses 2 or 3 above, it shall be lawful for the Collateral Agent, but the
Collateral Agent shall be under no obligation, to enter the Collateral with
agents appointed by it and architects, contractors, workmen and others and
to execute such works and do such other things as may in the reasonable
opinion of the Collateral Agent be required to remedy such failure and to
take such other steps on or in relation to the Collateral (including,
without limitation, the payment of money) as may, in the reasonable opinion
to the Collateral Agent, be required to remedy such failure. The cost to
the Collateral Agent of such works and steps shall be reimbursed by us to
the Collateral Agent on demand and until so reimbursed shall bear interest
at the Interest Rate (as defined in the said Guarantee and Bond and
Floating charge) from the date of payment to the date of reimbursement. No
exercise by the Collateral Agent of its powers under this Clause shall
render the Collateral Agent liable to account as a security holder in
possession.
5. Insurance
5.1 We hereby undertake that we will at all times during the
subsistence of the security hereby granted comply with all covenants,
undertakings and conditions as to the insurance of the Collateral or any
part thereof imposed by the terms of the title to the Collateral and,
subject to the foregoing and so far as not prohibited by any such terms, we
shall:-
5.1.1 cause all buildings and trade and other fixtures, fixed
plant and machinery forming part of the Collateral to be insured and to be
kept insured in an insurance office or with underwriters approved by the
Collateral Agent against loss or damage by fire, explosion, aircraft,
malicious damage and all such other risks as the Collateral Agent shall
reasonably stipulate in a sum not being less that the full reinstatement
value thereof, adequate provision also being made for the cost of clearing
the site and architects', engineers', surveyors' and other professional
fees incidental thereto and the loss of rents or prospective rents (for a
period of not less than three years) with the interest of the Collateral
Agent endorsed on the Policy or Policies of Insurance relating thereto in a
form approved by the Collateral Agent;
5.1.2 duly and punctually pay all premiums and other monies
payable under all such insurances as aforesaid and promptly upon request by
the Collateral Agent produce to the Collateral Agent receipts therefor or
other evidence of the payment thereof; and
5.1.3 if so required by the Collateral Agent, deposit with
the Collateral Agent all Policies and other Contracts of Insurance effected
by us and any subsequent endorsements relating to the Collateral.
5.2 If we default in complying with Clause 5.1 above, it shall be
lawful for the Collateral Agent, but not obligatory on the Collateral
Agent, to effect or renew any such insurance as is mentioned in that Clause
in our name with an endorsement of the Collateral Agent's interest. The
monies expended by the Collateral Agent in so effecting or renewing such
insurance shall be reimbursed by us to the Collateral Agent on demand and
until so reimbursed shall bear interest at the Interest Rate from the date
of payment to the date of such reimbursement.
5.3 All claims and monies received or receivable by us under any such
insurances as aforesaid shall be held in trust for the Collateral Agent and
shall be applied by us in repairing, replacing, restoring or rebuilding the
property damaged or destroyed or in such other manner as the Collateral
Agent shall reasonably require.
6. Prohibition against Dealings with the Collateral
6.1 We bind and oblige ourselves that, at no time during the
subsistence of the security hereby granted, will we, except with the prior
written consent of the Collateral Agent (such consent not to be
unreasonably withheld) and in accordance with any reasonable conditions
that may be attached to such consent:-
6.1.1 consent to any assignation of the tenant's interest in
any Lease in which we are the Landlords;
6.1.2 grant or agree to grant any licence or consent, whether
expressly or by conduct, for any assignation, parting with or sharing
possession or occupation, under-letting, licence (for occupation), change
of use or alterations in relation to any Lease to which the Collateral or
any part thereof may from time to time be subject;
6.1.3 grant or agree to grant any Lease or tenancy or Licence
for Occupation of or in relation to the Collateral or any part thereof;
6.1.4 accept or agree to accept any renunciation or surrender
of any Lease or tenancy or Licence for Occupation affecting the Collateral
or any part thereof or vary or agree to vary the provisions of any Leases
or tenancy or Licence for Occupation affecting the Collateral or any part
thereof or exercise any right to terminate any Lease or tenancy or Licence
for Occupation affecting the Collateral or any part thereof;
6.1.5 allow any person any Licence or other right to occupy
or share possession of the Collateral or any part thereof.
Notwithstanding the foregoing, we shall be permitted to lease up to
one half of the area of the Collateral provided such lease is to a
bona fide third party tenant for a fair market rental rate and
provided we give notice in writing of such lease to the Collateral
Agent and provide the Collateral Agent with a copy thereof.
6.2 Without prejudice to the generality of the foregoing, we shall
procure that no persons shall be or become entitled to assert any
proprietary or other like right or interest which might affect the value of
the Collateral without the prior written consent of the Collateral Agent.
6.3 In relation to any Lease or Agreement for Lease to which the
Collateral may from time to time be subject with the Collateral Agent's
consent, and under which we are the Landlords, we bind and oblige
ourselves:-
6.3.1 to observe and perform the Landlords' obligations
thereunder at all times;
6.3.2 to enforce due performance and observance of the
tenants' obligations thereunder at all times;
6.3.3 duly and efficiently to implement any provisions
therein for the review of any rent;
6.3.4 from time to time on demand to supply to the Collateral
Agent such information in relation to the foregoing matters as the
Collateral Agent shall require.
7. Restrictions on the Grant of Other Securities and Others
We bind and oblige ourselves that, at no time during the subsistence
of the security hereby granted, will we, except with the prior written
consent of the Collateral Agent and in accordance with any conditions that
may be attached to such consent create, grant or execute or agree to
create, grant or execute a subsequent security over the interest in land
affected by this security or any part thereof (otherwise than in favour of
the Collateral Agent) or any transfer or conveyance of the Collateral or
any interest therein.
8. The Collateral Agent's Possessory Rights
The rights available to the Collateral Agent on entering into
possession of the Collateral shall (subject to the terms of any subsisting
Leases) include:-
8.1 the right to enter into leases or agreements for lease, to assign
(or consent to the assignation of) leases or grant or accept renunciations
of leases and grant options in respect of all or any part of the
Collateral, all at the Collateral Agent's discretion and upon such terms
and conditions as the Collateral Agent shall think fit;
8.2 the right to undertake or complete any work of repair, building,
improvement or development on the Collateral or any part thereof as the
Collateral Agent may think expedient and to make and effect such repairs or
improvements to the buildings, plant and machinery and effect on the
Collateral as the Collateral Agent may think expedient;
8.3 the right to sever any plant, machinery and other fixtures and
fittings belonging to us and sell the same separately without the need to
obtain our consent;
8.4 the right to do or omit to do all such other acts and things as
an absolute owner could do or omit to do in relation to the Collateral or
any part thereof and as the Collateral Agent may consider to be incidental
or conducive to any of the matters or powers referred to in or arising
pursuant to these presents.
9. Indemnity
9.1 We hereby agree to indemnify and hold harmless the Collateral
Agent from and against all actions, claims, demands, expenses and
liabilities whether arising out of contract or in delict or in any other
way incurred or which may at any time be incurred by it or by any manager,
agent, officer, servant or workman for whose debt, default or miscarriage
it may be answerable for anything done or omitted to be done in the
exercise or purported exercise of its powers under the provisions of the
security hereby granted or pursuant hereto.
9.2 It is hereby expressly agreed and declared that, without
prejudice to the generality of the foregoing, the Collateral Agent shall
not be liable for involuntary losses which may happen in or about the
exercise or execution of any of the powers expressed or implied which may
be vested in the Collateral Agent by virtue of the provisions of the
security hereby granted.
10. Remedies, Time or indulgence
10.1 The rights, powers and remedies provided by the security hereby
granted are cumulative and are not, nor are they to be construed as,
exclusive of any rights, powers and remedies provided by law.
10.2 No failure on the part of the Collateral Agent to exercise, or
delay on its part in exercising, any of the rights, powers and remedies
provided by the security hereby granted or by law (collectively hereinafter
called "the Collateral Agent's Rights") shall operate as a waiver thereof,
nor shall any single or partial waiver of any of the Collateral Agent's
Rights preclude any further or other exercise of that one of the Collateral
Agent's Rights concerned or the exercise of any other of the Collateral
Agent's Rights.
10.3 The Collateral Agent may in its discretion and without requiring
our consent grant time or other indulgence or make any other arrangement,
variation or release with any person or persons not party hereto (whether
or not such person or persons are jointly liable with us) in respect of
the obligations hereby secured or in any way affecting or concerning them
or any of them or in respect of any security for such obligations or any of
them, without in any such case prejudicing, discharging, affecting or
impairing the security hereby granted, or any of the Collateral Agent's
Rights or the exercise of the same, or any indebtedness or other liability
of us to the Secured Parties or the Collateral Agent.
11. Costs, Charges and Expenses
11.1 All costs, charges and expenses incurred or paid by the
Collateral Agent in the exercise of any of the Collateral Agent's Rights or
in connection with the execution of or otherwise in relation to the
security hereby granted or in connection with perfection or enforcement of
the security hereby granted shall be reimbursed to the Collateral Agent by
us on demand on a full indemnify basis together with (unless paid within
fourteen days of demand) interest at the Interest Rate from the date of the
same having been incurred to the date of payment.
11.2 Without prejudice to the generality of Clause 10.1 above, we
hereby undertake to indemnify the Collateral Agent against all existing and
future rents, rates, taxes, duties, charges, assessments, impositions and
outgoings whatsoever (whether imposed by deed or statute or otherwise and
whether of the nature of capital or revenue and even though of a wholly
novel character) now or at any time during the continuance of the
security hereby granted payable or accrued due in respect of the
Collateral or by the owner or occupier thereof together with (unless paid
within fourteen days of demand) interest at the Interest Rate from the date
of the same having been incurred to the date of payment.
12. Notices
12.1 Clause 12.2 hereof applies only to demands or notices for which
the procedure for service is not laid down by the Conveyancing and Feudal
Reform (Scotland) Act, 1970. In particular, Clause 12.2 does not apply to
the service of Calling-up Notices or Default Notices under the Conveyancing
and Feudal Reform (Scotland) Act, 1970.
12.2 Subject to the foregoing Clause 12.1, any Notice or Demand
requiring to be served on us by the Collateral Agent hereunder may be
served on any Director of us personally, or by letter addressed to us or
to any of our Directors and left at our Registered Office.
12.3 Any Notice or Demand sent by first class post in accordance with
the immediately preceding sub-clause shall be deemed to have been served on
us at 10.00am on the business day next following the date of posting. In
proving such service by post, it shall be sufficient to show that the
letter containing the Notice or Demand was properly addressed and posted
and such proof of service shall be effective notwithstanding that the
letter was in fact not delivered or was returned undelivered.
13. Law and Jurisdiction
This Standard Security shall be governed by and construed in
accordance with the Law of Scotland, and we hereby irrevocably submit to
the non-exclusive jurisdiction of the Scottish Courts.
14. Discretions
Any liberty or power which may be exercised or any determination which
may be made hereunder by the Collateral Agent may (save as otherwise herein
provided) be exercised or made in the absolute and unfettered discretion of
the Collateral Agent which shall not be under any obligation to give
reasons therefor.
15. Interpretation
15.1 Any reference herein to any statute or to any provisions of any
statute shall be construed as including a reference to any statutory
modification or re-enactment thereof and to any regulations or orders made
thereunder and from time to time in force.
15.2 The expression "the Town and Country Planning (Scotland) Acts"
shall mean the Town and Country Planning (Scotland) Acts, 1972 - 1977.
15.3 Without prejudice to the provisions hereof restricting disposals
of or dealing with the Collateral, our obligations hereunder, in relation
to the Collateral and the security hereby granted shall be binding on any
successor entitled to the Collateral or any part thereof.
15.4 The Clause headings shall not affect the construction hereof;
And we grant warrandice: IN WITNESS WHEREOF
RANKING AGREEMENT
among
(1) TEREX EQUIPMENT LIMITED incorporated under the law
of Scotland with registered number SC086323 whose
registered office is at Newhouse Industrial
Estate, Newhouse, Motherwell, Lanarkshire ("the
Company")
(2) STANDARD CHARTERED BANK of 1 Aldermanbury Square,
London EC2V 7SB ("SCB")
and
(3) UNITED STATES TRUST COMPANY OF NEW YORK of 114 West
47th Street, New York 10036, acting as trustee for
itself and the other Secured Parties (as defined
below) ("the Collateral Agent", which expression
shall include any successor trustee appointed under
the applicable provisions of the Indenture (as
defined below))
W H E R E A S
(1) The Company has granted or is about to grant:-
(a) in favour of SCB pursuant to the Facility Letter (as hereinafter
defined)
(i) a Charge, dated 27 January 1994, over Cash Deposits over all
monies standing to the credit of the Company with SCB or any
subsidiary or nominee of SCB ("the Cash Balances"); and
(ii) an assignment of a credit insurance policy ("the Insurance
Policy") taken out by the Company with NCM Credit Insurance
Co. Limited
(hereinafter together called "the SCB Fixed Charges")
(b) in favour of the Collateral Agent;
(i) a standard security over subjects at Newhouse Industrial
Estate, Motherwell registered in the Land Register of Scotland
under Title Number LAN1461 ("the Property") dated 8th May,
1995 (the "Collateral Agent's Fixed Charge"); and
(ii) floating charge dated 8th May, 1995 over the whole of the
Company's property (including uncalled capital) excluding
Receivables (as therein defined) from time to time ("the
Collateral Agents' Floating Charge");
(2) The parties hereto have resolved to enter into this agreement to
regulate the ranking of the Charges (as hereinafter defined) inter se
but for no other purpose.
THEREFORE notwithstanding the respective dates of creation or registration of
the Charges or any provisions as to ranking contained therein, the parties
thereto have agreed and hereby agree as follows:-
1. DEFINITIONS
1.1 In this Agreement unless the context otherwise requires the
following expressions shall have the meanings respectively ascribed to
them:
"Charges" means, collectively, the SCB Fixed
Charges, the Collateral Agent's Fixed
Charge and the Collateral Agent's
Floating Charges;
"Chargeholders" means, collectively, SCB and the
Collateral Agent and "Chargeholder" shall
mean either of them;
"Collateral" means in relation to any Chargeholder,
all or any of the property, assets and/or
undertaking of the Company over which
that Chargeholder holds a mortgage,
charge or other encumbrance in its
favour;
"Encumbrance" including any standard security,
mortgage, pledge, lien, hypothecation,
security interest or other charge or
encumbrance of any kind, any assignation
in the nature of security with a
provision for reassignment or
retrocession, any deed of trust or trust
arrangement, any conditional sale or
retention of title agreement or
arrangement or any other agreement or
arrangement having or intended to have
the effect of constituting a right in
security;
"Facility Letter" means the Facility Letter dated 23rd
December 1993 from SCB to the Company and
the Parent;
"Financiers" means SCB and the Secured Parties and
each of them;
"Indenture" means the Indenture dated 9th May 1995
between the Parent, the Guarantors (as
defined in the Indenture) and the
Collateral Agent under which the
Securities are constituted;
"Parent" means Terex Corporation, a Delaware
Corporation having a place of business at
201 West Walnut Street, Green Bay,
Wisconsin 54305;
"Securities" means the US$250,000,000 Senior Secured
Notes due 2002 constituted under the
Indenture;
"Secured Parties" means each and every one of the
Collateral Agent (1), United States Trust
Company of New York as Trustee under the
Indenture (2), and the registered holders
of the issued Securities from time to
time (3);
1.2 Any reference in this Agreement to (or to any specified provision
of) this Agreement or any other document whatever is to this Agreement
or document as amended, varied, novated or substituted from time to time
in accordance with the terms thereof, or, as the case may be, with the
agreement of the parties to this Agreement or to that document (as the
case may be).
1.3 Any reference in this Agreement to a Charge shall include reference
to any further Encumbrance over all or any part of the assets secured by
that Charge created by or pursuant to a covenant or obligation contained
in that Charge.
1.4 References to clauses are references to clauses of this Agreement,
unless otherwise specified.
1.5 The singular includes the plural and words importing a gender shall
include any other gender.
1.6 References to a "person" shall include any individual, company,
firm, corporation, partnership, joint venture, association, joint stock
company, trust, unincorporated organisation, government or any agency or
political subdivision thereof or any other entity.
1.7 Clause headings are for convenience only and do not affect
interpretation.
2. RANKING
2.1 The Charges shall (notwithstanding the dates of their respective
creation and registration) rank inter se in all respects in the
following order of priority (in each case (unless otherwise specified)
to the extent of the assets of the Company charged by or pursuant to the
respective Charge):-
(FIRST) the Collateral Agent's Fixed Charge shall rank prior to the
Collateral Agent's Floating Charge in all respects; and
(SECOND) to the extent that the Collateral Agent's Floating Charges
create a security over the Cash Balances, the Insurance Policy
or the proceeds of any claim made under the Insurance Policy,
the Collateral Agent's Floating Charges shall be postponed to
the ranking of the SCB Fixed Charges but only to the extent of
the amount due from time to time to SCB in respect of the
credit facilities made available to the Company by SCB in
terms of the Facility Letter (including all interest,
commissions, fees, expenses and other sums due thereunder) as
detailed in the Schedule hereto.
2.2 SCB and the Collateral Agent hereby agree and consent to the
execution of the Indenture and the issue of the Securities and to
the continuance of the credit facilities in the amounts and on the
terms set out in the Facility Letter and to the creation and
subsistence of the Charges and to the Charges ranking as regards
security and priority as provided in this Agreement,
notwithstanding anything to the contrary contained in the Charges
or in any other document or agreement constituting the obligations
and liabilities which the Charges (or any of them) secure, and
notwithstanding the dates of execution, registration or
crystallisation of the Charges; And the parties hereto hereby
acknowledge and agree that:-
(a) notwithstanding anything to the contrary contained in the
Charges or any rule of law which might operate to the
contrary effect, the foregoing provisions as to ranking
shall be valid and effective irrespective of the date or
dates on which any sum or sums were or may be advanced by
the Financiers (or any of them) to the Company, or have
been or shall be drawn out by the Company from the
Financiers (or any of them) or shall have been or shall
be debited to any account of the Company with the
Financiers (or any of them);
(b) the ranking of the Charges (as set out in this Agreement)
shall not be affected by any fluctuations in the
aggregate amounts outstanding from time to time by the
Company to the Financiers (or any of them) from time to
time or by the existence at any time of a credit balance
on any current or other account held with the Financiers
(or any of them) or any other party;
(c) all debts entitled to preferential ranking in terms of
Sections 59, 175 and 386 of the Insolvency Act 1986 shall
rank after the SCB Fixed Charges and the Collateral
Agent's Fixed Charge;
(d) any breach of any warranty or undertaking contained in
the Securities or any other document or agreement
constituting the obligations and liabilities which the
Securities (or any of them) secure which arises as a
result of the granting, or the continuing existence of
the Charges (or any of them) or this Agreement is, and
for so long as any of the Charges remain undischarged
shall be deemed to be, waived;
(e) the existence of the Collateral Agent's Fixed Charge
shall in no way inhibit or interfere with SCB's
enforcement of and recovery under the SCB Fixed Charges
nor shall the existence of the SCB Fixed Charges in any
way inhibit or interfere with the enforcement of and
recovery under the Collateral Agent's Fixed Charge or the
Collateral Agent's Floating Chargees subject to the
provisions of Clause 2.1 hereof.
3. COMPENSATION
If on a liquidation or a receivership of the Company the liquidator or
receiver thereof (as the case may be) shall not regard himself as bound
by all the provisions of this Agreement, the Chargeholders hereby
respectively bind and oblige themselves and their successors and
assignees whomsoever in the event of such liquidation or receivership to
give effect to all the provisions of this Agreement by mutual
adjustments and/or appropriate payments made between them and, to the
extent that it is necessary to do so to give effect to the foregoing
provisions of this Agreement as to the ranking of the Charges, all sums
received by each Chargeholder under or by virtue of the Charges (or any
of them) shall be held by such Chargeholder in trust and applied in or
towards payment to itself and the other Chargeholder in accordance with
and in the ranking specified in Clause 2 of this Agreement.
4. VARIATION
The Charges are hereby varied to the extent specified in this Agreement,
and this Agreement so far as affecting those of the Charges which create
floating charges shall be construed and receive effect as an Instrument
of Alteration within the meaning of Section 466 of the Companies Act,
1985 (as amended).
5. INVALIDITY
If any of the Charges shall be released or become wholly or partially
invalid or unenforceable, the Chargeholder entitled to the benefit of
the Charges concerned shall itself bear the loss resulting and shall not
be entitled to share in moneys derived from assets over which it has no
effective security but the Chargeholders shall not themselves challenge
or question the validity or enforceability of the Charges (or any of
them).
<PAGE>
6. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
law of Scotland and the parties hereto consent to registration of this
Agreement for preservation and execution: IN WITNESS WHEREOF this and
the eight preceding pages together with the Schedule hereto are executed
as follows:-
SUBSCRIBED for and on behalf of
TEREX EQUIPMENT LIMITED
on by ..........................
Director
both directors thereof at
.........................
Director
SUBSCRIBED for and on behalf of
STANDARD CHARTERED BANK on ..........................
by and
duly authorised officers at ..........................
SUBSCRIBED for and on behalf of
UNITED STATES TRUST COMPANY OF
NEW YORK by ..........................
at on
in the presence of:-
Witness .................... Witness ....................
Full Name .................... Full Name ....................
Address .................... Address ....................
.................... ....................
Occupation .................... Occupation ....................
<PAGE>
THE SCHEDULE
Facility Maximum Principal Amount
________ ________________________
Discounting Facility L3,000,000
Debt Purchase Facility L2,500,000
General Bonding Line L5,000,000
NCM Insured Bill Advance/Discount
Facility L7,500,000
Forward Foreign Exchange Line L10,000,00
...........................
........................... .........................
for Terex Equipment Limited for United States Trust
Company of New York
...........................
...........................
for Standard Chartered Bank
<PAGE>
9th May 1995
Ranking Agreement
among
(1) Terex Equipment
Limited
(2) Standard Chartered
Bank
and
(3) United States Trust
Company of New York
July 18, 1996
Terex Corporation
500 Post Road East
Westport, Connecticut 06880
Re: Terex Corporation Registration Statement
on Form S-4 (Registration No. 333-1449)
________________________________________
Ladies and Gentlemen:
We are rendering this opinion in connection with the
registration by Terex Corporation (the "Company") pursuant to
the above-captioned Registration Statement (the "Registration
Statement") under the Securities Act of 1933, as amended, of
$250,000,000 aggregate principal amount of the Company's Series
B 13-1/4% Senior Secured Notes due 2002 (the "Notes"), payment
of principal and interest of which is guaranteed by Terex
Cranes, Inc., PPM Cranes, Inc., Koehring Cranes, Inc., Clark
Material Handling Company, CMH Acquisition Corp. and CMH
International Acquisition Corp.
We are familiar with the proceedings undertaken by the
Company in connection with the authorization and issuance of the
Notes. We have also examined the Company's Registration
Statement. Additionally, we have examined such questions of law
and fact as we have considered necessary or appropriate for
purposes of this opinion.
Based on the foregoing, it is our opinion that each of
the Notes has been duly authorized by the Company and, when
issued in accordance with the terms of the governing Indenture,
will constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms,
except as limited by bankruptcy, insolvency, reorganization,
moratorium, marshalling and other similar laws relating to
creditors' rights generally or by general principles of equity
(whether considered in an action at law or in equity) and to the
discretion of the court before which any such proceeding may be
brought.
Capitalized terms used and not defined herein shall
have the respective meanings ascribed thereto in the Prospectus.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement and to the use of our name
under the caption "Legal Matters" in the Prospectus.
Very truly yours,
ROBINSON SILVERMAN PEARCE ARONSOHN & BERMAN LLP
<TABLE>
<CAPTION>
EXHIBIT 11.1
(Page 1 of 2)
TEREX CORPORATION AND SUBSIDIARIES
Computation of Earnings per Common Share
(in millions except per share amounts)
Six Months Ended
June 30, Year Ended December 31,
1996 1995 1995 1994 1993
<S> <C> <C> <C> <C> <C>
PRIMARY:
Income (loss) from continuing operations
before extraordinary items ......................... $ (4.4) $ (12.5) $ (32.1) $ 4.9 $ (40.7)
Income (loss) from discontinued operations .......... 9.4 (5.6) 4.4 (3.7) (24.3)
Income (loss) before extraordinary items ............ 5.0 (18.1) (27.7) 1.2 (65.0)
Less: Accretion of Preferred Stock .................. (3.8) (3.5) (7.3) (6.0) (0.2)
Income (loss) before extraordinary item
applicable to common stock ......................... 1.2 (21.6) (35.0) (4.8) (65.2)
Extraordinary gain (loss) on retirement of debt ..... -- (7.5) (7.5) (0.7) (1.5)
Net income (loss) applicable to common stock ........ $ 1.2 $ (29.1) $ (42.5) $ (5.5) $ (66.7)
Weighted average shares outstanding
during the period .................................. 10.7 10.3 10.4 10.3 10.0
Assumed exercise of warrants at ratio determined
as of June 30, 1996 ................................ 1.5 --- (a) --- (a) --- (a) --- (b)
Assumed exercise of stock options ................... 0.2 --- (a) --- (a) --- (a) --- (a)
Primary shares outstanding .......................... 12.4 10.3 10.4 10.3 10.0
Primary income (loss) per common share
Income (loss) from continuing operations before
extraordinary items ................................. $ (0.66) $ (1.57) $ (3.79) $ (0.10) $ (4.11)
Income (loss) from discontinued operations 0.76 (0.55) 0.42 (0.36) (2.44)
Income (loss) before extraordinary items ............ 0.10 (2.12) (3.37) (0.46) (6.55)
Extraordinary items ................................. -- (0.72) (0.72) (0.07) (0.15)
Net income (loss) ................................... $ 0.10 $ (2.84) $ (4.09) $ (0.53) $ (6.70)
<FN>
(a) Excluded from the computation because the effect is anti-dilutive.
(b) Not issued or outstanding during this period.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT 11.1
(Page 2 of 2)
TEREX CORPORATION AND SUBSIDIARIES
Computation of Earnings per Common Share
(in millions except per share amounts)
Six Months Ended
June 30, Year Ended December 31,
1996 1995 1995 1994 1993
<S> <C> <C> <C> <C> <C>
FULLY DILUTED:
Income (loss) from continuing operations
before extraordinary items ............................ $ (4.4) $ (12.5) $ (32.1) $ 4.9 $ (40.7)
Income (loss) from discontinued operations ............ 9.4 (5.6) 4.4 (3.7) (24.3)
Income (loss) before extraordinary items .............. 5.0 (18.1) (27.7) 1.2 (65.0)
Less: Accretion of Preferred Stock .................... (3.8) (3.5) (7.3) (6.0) (0.2)
Income (loss) before extraordinary item applicable
to common stock ....................................... 1.2 (21.6) (35.0) (4.8) (65.2)
Add: Accretion of Preferred Stock assumed converted
at beginning of period ................................ -- -- -- -- --
1.2 21.6 (35.0) (4.8) (65.2)
Extraordinary gain (loss) on retirement of debt ....... -- (7.5) (7.5) (0.7) (1.5)
Net income (loss) applicable to common stock .......... $ 1.2 $ (29.1) $ (42.5) $ (5.5) $ (66.7)
Weighted average shares outstanding during the period . 10.6 10.3 10.4 10.3 10.0
Assumed exercise of warrants at ratio determined
as of June 30, 1996 ................................... 1.5 --- (a) --- (a) --- (a) --- (a)
Assumed conversion of Preferred Stock ................. --- (a) --- (a) --- (a) --- (a) --- (b)
Assumed exercise of stock options ..................... 0.2 --- (a) --- (a) --- (a) --- (a)
Fully diluted shares outstanding ...................... 12.4 10.3 10.4 10.3 10.0
Fully diluted income (loss) per common share
Income (loss) from continuing operations
before extraordinary items ............................ $ (0.66) $ (1.57) $ (3.79) $ (0.10) $ (4.11)
Income (loss) from discontinued operations ............ 0.76 (0.55) 0.42 (0.36) (2.44)
Income (loss) before extraordinary items .............. 0.10 (2.12) (3.37) (0.46) (6.55)
Extraordinary items ................................... -- (0.72) (0.72) (0.07) (0.15)
Net income (loss) ..................................... $ 0.10 $ (2.84) $ (4.09) $ (0.53) $ (6.70)
<FN>
(a) Excluded from the computation because the effect is anti-dilutive.
(b) Not issued or outstanding during this period.
</FN>
</TABLE>
EXHIBIT 12.1
<TABLE>
<CAPTION>
TEREX CORPORATION
CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES
(amounts in millions)
Six Months
Ended June 30, Year Ended December 31,
------------------- ------------------------------------------
1996 1995 1995 1994 1993 1992 * 1991
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings
Income (loss) from continuing
operations before taxes and
minority interest ..................... $ (4.4) $ (12.5) $ (32.1) $ 4.9 $ (40.7) $ 0.7 $ (41.9)
Adjustments:
Minority interest in losses of
consolidated subsidiaries ............. -- -- -- -- -- -- --
Undistributed (income) loss of
less than 50% owned investments ....... -- -- -- -- 0.7 3.7 (5.8)
Distributions from less than
50% owned investments ................. -- -- -- -- -- -- 1.7
Fixed charges ......................... 28.7 21.6 50.4 39.7 33.6 26.7 36.2
Earnings .............................. 24.3 9.1 18.3 44.6 (6.4) 31.1 (9.8)
Combined fixed charges, including
preferred accretion
Interest expense, including debt
discount amortization ................. 22.9 16.4 39.5 30.5 31.2 23.3 31.5
Accretion of redeemable convertible
preferred stock ....................... 3.8 3.5 7.3 5.9 0.2 -- --
Amortization/writeoff of debt
issuance costs ........................ 1.3 1.1 2.3 2.3 1.3 1.7 1.6
Portion of rental expense
representative of interest factor
(assumed to be 33%) ................... 0.7 0.6 1.3 1.0 0.9 1.7 3.1
Fixed charges ......................... $ 28.7 $ 21.6 $ 50.4 $ 39.7 $ 33.6 $ 26.7 $ 36.2
Ratio of earnings to combined fixed
charges ............................... (1) (1) (1) 1.1 (1) 1.2 (1)
Amount of earnings deficiency for
coverage of combined fixed charges .... $ 4.4 $ 12.5 $ 32.1 $ -- $ 40.0 $ -- $ 46.0
<FN>
(1) Less than 1.0x.
*Fruehauf deconsolidated as of January 1, 1992
</FN>
</TABLE>
EXHIBIT 24.1
(Page 1 of 7)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature appears
below hereby constitutes and appoints Ronald M. DeFeo and Marvin B. Rosenberg,
or either of them, as his true and lawful attorneys-in-fact and agents 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 documents to be filed with
the Securities and Exchange Commission during the period from the date of this
document to August 31, 1997, and to file the same with all exhibits thereto, and
all documents in connection therewith, with the Securities and Exchange
Commission, granting said attorney-in-fact and agent, and each of them, 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 attorneys-in-fact
and agents, or any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof during the period from the date
of this document to August 31, 1997.
Signature Title Date
/s/ Ronald M. DeFeo President, Chief Executive Officer, September 6, 1996
Ronald M. DeFeo Chief Operating Officer
and Director
(Principal Executive Officer)
/s/ David J. Langevin Executive Vice President September 6, 1996
David J. Langevin (Acting Principal
Financial Officer)
/s/ Marvin B. Rosenberg Senior Vice President, September 6, 1996
Marvin B. Rosenberg General Counsel, Secretary
and Director
/s/ Joseph F. Apuzzo Vice President-Finance September 6, 1996
Joseph F. Apuzzo and Controller
(Principal Accounting Officer)
/s/ G. Chris Andersen Director September 6, 1996
G. Chris Andersen
/s/ William H. Fike Director September 6, 1996
William H. Fike
/s/ Bruce I. Raben Director September 6, 1996
Bruce I. Raben
/s/ David A. Sachs Director September 6, 1996
David A. Sachs
/s/ Adam E. Wolf Director September 6, 1996
Adam E. Wolf
<PAGE>
EXHIBIT 24.1
(Page 2 of 7)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature appears
below constitutes and appoints Ronald M. DeFeo and Marvin B. Rosenberg, or
either of them, as his true and lawful attorneys-in-fact and agents 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 the Form S-4/A Registration Statement for the
Senior Secured Notes, and to file the same with all exhibits thereto, and all
documents in connection therewith, with the Securities and Exchange Commission,
granting said attorneys-in-fact and agents, and each of them, 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 his substitute, may lawfully do or cause to be done by virtue hereof.
Signature Title Date
/s/ Fil Filipov President June 5, 1996
Fil Filipov (Principal Executive Officer)
/s/ David J. Langevin Vice President, Treasurer and Director June 5, 1996
David J. Langevin (Principal Financial and
Accounting Officer)
/s/ Marvin B. Rosenberg Vice President, Secretary and Director June 5, 1996
Marvin B. Rosenberg
/s/ Ronald M. DeFeo Director June 5, 1996
Ronald M. DeFeo
<PAGE>
EXHIBIT 24.1
(Page 3 of 7)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature appears
below constitutes and appoints Ronald M. DeFeo and Marvin B. Rosenberg, or
either of them, as his true and lawful attorneys-in-fact and agents 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 the Form S-4/A Registration Statement for the
Senior Secured Notes, and to file the same with all exhibits thereto, and all
documents in connection therewith, with the Securities and Exchange Commission,
granting said attorneys-in-fact and agents, and each of them, 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 his substitute, may lawfully do or cause to be done by virtue hereof.
Signature Title Date
/s/ Fil Filipov President June 5, 1996
Fil Filipov (Principal Executive Officer)
/s/ David J. Langevin Vice President, Treasurer and Director June 5, 1996
David J. Langevin (Principal Financial and
Accounting Officer)
/s/ Marvin B. Rosenberg Vice President, Secretary and Director June 5, 1996
Marvin B. Rosenberg
/s/ Ronald M. DeFeo Director June 5, 1996
Ronald M. DeFeo
Director
K. Thor Lundgren
<PAGE>
EXHIBIT 24.1
(Page 4 of 7)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature appears
below constitutes and appoints Ronald M. DeFeo and Marvin B. Rosenberg, or
either of them, as his true and lawful attorneys-in-fact and agents 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 the Form S-4/A Registration Statement for the
Senior Secured Notes, and to file the same with all exhibits thereto, and all
documents in connection therewith, with the Securities and Exchange Commission,
granting said attorneys-in-fact and agents, and each of them, 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 his substitute, may lawfully do or cause to be done by virtue hereof.
Signature Title Date
/s/ Fil Filipov President June 5, 1996
Fil Filipov (Principal Executive Officer)
/s/ David J. Langevin Vice President, Treasurer and Director June 5, 1996
David J. Langevin (Principal Financial and
Accounting Officer)
/s/ Marvin B. Rosenberg Vice President, Secretary and Director June 5, 1996
Marvin B. Rosenberg
/s/ Ronald M. DeFeo Director June 5, 1996
Ronald M. DeFeo
<PAGE>
EXHIBIT 24.1
(Page 5 of 7)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature appears
below constitutes and appoints Marvin B. Rosenberg, as 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 the Form S-4/A
Registration Statement for the Senior Secured Notes, and to file the same with
all exhibits thereto, and all documents in connection therewith, with the
Securities and Exchange Commission, granting 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 his substitute, may lawfully do or cause to be
done by virtue hereof.
Signature Title Date
/s/ Martin Dorio President and Chief Executive Officer June 5, 1996
Martin Dorio (Principal Executive Officer)
/s/ Joseph F. Lingg Vice President Finance June 5, 1996
Joseph F. Lingg (Principal Financial and
Accounting Officer)
/s/ Marvin B. Rosenberg Secretary and Director June 5, 1996
Marvin B. Rosenberg
<PAGE>
EXHIBIT 24.1
(Page 6 of 7)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature appears
below constitutes and appoints Ronald M. DeFeo and Marvin B. Rosenberg, or
either of them, as his true and lawful attorneys-in-fact and agents 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 the Form S-4/A Registration Statement for the
Senior Secured Notes, and to file the same with all exhibits thereto, and all
documents in connection therewith, with the Securities and Exchange Commission,
granting said attorneys-in-fact and agents, and each of them, 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 his substitute, may lawfully do or cause to be done by virtue hereof.
Signature Title Date
/s/ Ronald M. DeFeo President June 5, 1996
Ronald M. DeFeo (Principal Executive, Financial and
Accounting Officer)
/s/ Marvin B. Rosenberg Vice President, Secretary June 5, 1996
Marvin B. Rosenberg and Director
<PAGE>
EXHIBIT 24.1
(Page 7 of 7)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature appears
below constitutes and appoints Ronald M. DeFeo and Marvin B. Rosenberg, or
either of them, as his true and lawful attorneys-in-fact and agents 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 the Form S-4/A Registration Statement for the
Senior Secured Notes, and to file the same with all exhibits thereto, and all
documents in connection therewith, with the Securities and Exchange Commission,
granting said attorneys-in-fact and agents, and each of them, 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 his substitute, may lawfully do or cause to be done by virtue hereof.
Signature Title Date
/s/ Ronald M. DeFeo President June 5, 1996
Ronald M. DeFeo (Principal Executive, Financial and
Accounting Officer)
/s/ Marvin B. Rosenberg Vice President, Secretary June 5, 1996
Marvin B. Rosenberg and Director
<PAGE>
