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As filed with the Securities and Exchange Commission on May 18, 1998.
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
TEREX CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 34-1531521
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
500 Post Road East
Westport, Connecticut 06880
(203) 222-7170
(Address, including zip code, and telephone number,
including area code, of Registrants' principal executive offices)
------------------------
Eric I Cohen, 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.
(212) 541-2000
Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this Registration Statement as
determined by market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: |_|
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box: |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act of 1933 registration statement number
of the earlier effective registration statement for the same offering: |_|
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act of 1933, check the following box and list the
Securities Act of 1933 registration statement number of the earlier effective
registration statement for the same offering: |_|
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box: |_|
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CALCULATION OF REGISTRATION FEE
=================== ------------- ------------- -------------- ==============
Title of Each Amount Proposed Proposed
Class of to be Maximum Maximum Amount of
Securities to be Registered Offering Aggregate Registration
Registered (1) (2) Price per Offering Fee
Unit (2)(3) Price (2)(3)
=================== ============= ============= ============== ==============
Debt Securities (4) ) ) )
Preferred Stock (5) } (10) } (10) } (10)
Common Stock (6)... ) ) )
Warrants (7).......
Rights (8).........
Total (9).......... $300,000,000 $300,000,000 $88,500.00 (11)
=================== ============= ============= ============= ===============
- ---------------------------
(1) This Registration Statement also covers Debt Securities, Preferred
Stock, Common Stock, Warrants or Rights which may be issued by the
Registrant under delayed delivery contracts pursuant to which the
counterparty may be required to purchase such securities.
(2) In U.S. dollars or the equivalent thereof denominated in one or more
foreign currencies or units of two or more foreign currencies or
composite currencies (such as European Currency Units).
(3) Estimated solely for purposes of calculating the registration fee. No
separate consideration will be received for Preferred Stock or Common
Stock that are issued upon conversion of Debt Securities or Preferred
Stock or upon exercise of the Warrants registered hereunder, as the
case may be. Similarly, no separate consideration will be received for
Debt Securities that are issued upon the exercise of Warrants
registered hereunder.
(4) Subject to note (9) below, there is being registered hereunder an
indeterminate principal amount of Debt Securities. If any Debt
Securities are being issued at an original issue discount, then the
offering price shall be in such greater principal amount as shall
result in an aggregated initial offering price not to exceed
$300,000,000 less the dollar amount of any securities previously issued
hereunder.
(5) Subject to note (9) below, there is being registered hereunder an
indeterminate number of shares of Preferred Stock as may be sold, from
time to time, by the Registrant. There is also being registered
hereunder an indeterminate number of shares of Preferred Stock as shall
be issuable upon conversion or redemption of Debt Securities registered
hereby or upon exercise of Warrants registered hereby.
(6) Subject to note (9) below, there is being registered hereunder an
indeterminate number of shares of Common Stock as may be sold, from
time to time, by the Registrant. There is also being registered
hereunder an indeterminate number of shares Common Stock as shall be
issuable upon conversion or redemption of Debt Securities or Preferred
Stock registered hereby or upon exercise of Warrants or Rights
registered hereby.
(7) Subject to note (9) below, there are being registered hereunder an
indeterminate amount and number of Warrants, representing rights to
purchase Debt Securities, Preferred Stock or Common Stock registered
hereby.
(8) Subject to note (9) below, there is being registered hereunder an
indeterminate number of Rights representing rights to purchase shares
of Common Stock registered hereby.
(9) In no event will the aggregate initial offering price of all securities
issued from time to time pursuant to this Registration Statement exceed
$300,000,000. Any securities registered hereunder may be sold
separately or as units with other securities registered hereunder.
(10) Omitted pursuant to General Instruction II.D of Form S-3 under
theSecurities Act of 1933, as amended.
(11) Calculated pursuant to Rule 457(o) of the rules and regulations under
the Securities Act of 1933, as amended.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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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 of these securities in
any state in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such state.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS, DATED MAY 18, 1998
TEREX CORPORATION
$300,000,000
Debt Securities, Preferred Stock,
Common Stock, Warrants and Rights
Terex Corporation ("Terex" or the "Company") may from time to time
offer in one or more series its (i) unsecured debt securities, which may be
either senior debt securities ("Senior Securities") or subordinated debt
securities ("Subordinated Securities," and together with Senior Securities, the
"Debt Securities"), (ii) preferred stock, par value $.01 per share ("Preferred
Stock"), (iii) common stock, par value $.01 per share ("Common Stock"), (iv)
warrants to purchase Debt Securities, Preferred Stock or Common Stock
(collectively, "Warrants"), or (v) rights to purchase Preferred Stock or Common
Stock ("Rights"), with an aggregate initial public offering price of up to
$300,000,000 on terms to be determined at the time of offering. Debt Securities,
Preferred Stock, Common Stock, Warrants and Rights (collectively, the "Offered
Securities") may be offered, separately or together, in separate series in
amounts, at prices and on terms to be set forth in a supplement to this
Prospectus (a "Prospectus Supplement").
The specific terms of the Offered Securities in respect of which this
Prospectus is being delivered will be set forth in the applicable Prospectus
Supplement and will include, where applicable: (i) in the case of Debt
Securities, the specific title, aggregate principal amount, ranking, currency,
form (which may be registered or bearer, or certificated or global), authorized
denominations, maturity, rate (or manner of calculation thereof) and time of
payment of interest, terms for redemption at the option of the Company or
repayment at the option of the holder, terms for sinking fund payments, terms
for conversion into Preferred Stock or Common Stock, certain covenants, other
terms and conditions, and the initial public offering price; (ii) in the case of
Preferred Stock, the number, specific title and stated value, any distribution,
liquidation, redemption, conversion, voting and other terms and conditions, and
the initial public offering price; (iii) in the case of Common Stock, any
initial public offering price; (iv) in the case of Warrants, the number and
terms thereof, the designation and the number of securities issuable upon their
exercise, the exercise price, the terms of the offering and sale thereof and,
where applicable, the duration and detachability thereof; and (v) in the case of
Rights, the duration, exercise price and transferability thereof.
The applicable Prospectus Supplement will also contain information,
where applicable, about certain United States federal income tax considerations
relating to, and any listing on a securities exchange of, the Offered Securities
covered by such Prospectus Supplement.
The Offered Securities may be offered directly, through agents
designated from time to time by the Company, or to or through underwriters or
dealers. If any agents or underwriters are involved in the sale of any of the
Offered Securities, their names, and any applicable purchase price, fee,
commission or discount arrangement between or among them, will be set forth, or
will be calculable from the information set forth, in the applicable Prospectus
Supplement. See "Plan of Distribution." No Offered Securities may be sold
without delivery of the applicable Prospectus Supplement describing the method
and terms of the offering of such series of Offered Securities.
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 _______, 1998.
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AVAILABLE INFORMATION
Terex Corporation is subject to the informational requirements of the
Exchange Act, and in accordance therewith files reports, proxy statements and
other information with the Commission. Such reports, proxy statements and other
information may be inspected and copied at the public reference facilities
maintained by the Commission at its offices at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549 and at the regional offices of the
Commission located at Seven World Trade Center, 13th Floor, New York, New York
10048 and at Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. 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.
In addition, the Common Stock is listed on the New York Stock Exchange,
Inc. ("NYSE") under the symbol "TEX" and reports, proxy statements and other
information concerning the Company may also be inspected at the offices of the
NYSE, 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission a Registration Statement on
Form S-3 (together with all amendments, exhibits, schedules, and supplements
thereto, the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the securities 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, as
permitted by the rules and regulations of the Commission. For further
information with respect to the Company and the securities offered hereby,
reference is hereby made to the Registration Statement, which may be inspected
and copied at the Public Reference Section 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 or otherwise filed with the Commission, each such
statement being qualified in all respects by such reference.
The Company furnishes stockholders with annual reports containing
audited financial statements. The Company also furnishes its holders of Common
Stock with proxy material for its annual meetings complying with the proxy
requirements of the Exchange Act.
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents which have been filed by the Company with the
Commission are incorporated in this Prospectus by reference:
1. The Company's Annual Report on Form 10-K for the year ended December
31, 1997.
2. The Company's Notice of Annual Meeting of Stockholders and Proxy
Statement dated April 8, 1998.
3. The Company's Current Report on Form 8-K dated March 31, 1998 and filed
on April 7, 1998.
4. The Company Quarterly Report on Form 10-Q for the Three Months Ended
March 31, 1998, dated May 15, 1998 and filed on May 15, 1998.
5. The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A dated February 22, 1991.
All reports and other documents filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date
of this Prospectus and prior to the termination of the Offering of the Offered
Securities made hereby shall be deemed to be incorporated herein by reference
and to be a part hereof on and from the date of filing such documents. Any
statement contained in a document incorporated or deemed to be incorporated by
reference in this Prospectus shall be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement contained herein or
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incorporated herein by reference or in any other subsequently filed document
that also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any and all documents incorporated by reference in this Prospectus (not
including exhibits to such information, unless such exhibits are specifically
incorporated by reference in such information). Such requests should be directed
to Terex Corporation, Attention: Secretary, 500 Post Road East, Westport,
Connecticut 06880 (telephone (203) 222-7170).
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THE COMPANY
Terex is a global manufacturer of a broad range of construction and
mining related capital equipment. The Company strives to manufacture high
quality machines which are low cost, simple to use and easy to maintain. The
Company's principal products include telescopic mobile cranes, aerial work
platforms, utility aerial devices, telescopic material handlers, truck mounted
mobile cranes, rigid and articulated off-highway trucks and high capacity
surface mining trucks, large hydraulic mining shovels and related components and
replacement parts. The Company's products are manufactured at 16 plants in the
United States and Europe and are sold primarily through a worldwide network of
dealers in over 750 locations to the global construction, infrastructure and
surface mining markets.
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 and changed the Company's business through a series of
acquisitions and dispositions. In 1988, Northwest Engineering Company merged
into a subsidiary acquired in 1986 named Terex Corporation, with Terex
Corporation as the surviving entity. As a result of the completion of the PPM
Acquisition (as defined below) in May 1995, the Company's operations were
divided into three principal segments: Material Handling, Heavy Equipment and
Mobile Cranes. On November 27, 1996, the Company completed the sale of its
worldwide material handling segment, which was originally acquired in July 1992,
and currently the Company operates in two business segments: Terex Lifting
(formerly known as Terex Cranes) and Terex Earthmoving (formerly known as Terex
Trucks). 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.
Terex Lifting (formerly known as Terex Cranes) manufactures and sells
telescopic mobile cranes (including rough terrain, truck and all terrain mobile
cranes), aerial work platforms (including scissor, articulated boom and straight
telescoping boom aerial work platforms), utility aerial devices (including
digger derricks and articulated aerial devices), telescopic material handlers
(including container stackers, scrap handlers and telescopic rough terrain boom
forklifts), truck mounted cranes (boom trucks) and related components and
replacement parts. These products are primarily used by construction and
industrial customers and utility companies. Terex Lifting is comprised of a
number of divisions and subsidiaries.
Terex Lifting was established as a separate business segment as a result of
the acquisition (the "PPM Acquisition") in May 1995 of substantially all of the
shares of P.P.M. S.A. and certain of its subsidiaries, including P.P.M. SpA,
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 (collectively, "PPM Europe"), from
Potain S.A., and all of the capital stock of Legris Industries, Inc., which
owned 92.4% of the capital stock of PPM Cranes, Inc. ("Terex Lifting -- Conway
Operations"; PPM Europe and Terex Lifting -- Conway Operations are collectively
referred to herein as "PPM") from Legris Industries, S.A. Concurrently with the
completion of the PPM Acquisition, the Company contributed the assets (subject
to liabilities) of its Koehring Cranes and Excavators and Mark Industries
division to Terex Cranes, Inc., a wholly-owned subsidiary of the Company. The
former division now operates as Koehring Cranes, Inc., a wholly owned subsidiary
of Terex Cranes, Inc.
During 1997, the Company completed two acquisitions to augment its Terex
Lifting segment. On April 7, 1997, the Company completed the acquisition of
substantially all of the capital stock of certain of the former subsidiaries of
Simon Engineering plc (the "Simon Access Companies") for $90 million (subject to
adjustment under certain circumstances). The Simon Access Companies consist
principally of business units in the United States and Europe engaged in the
manufacture, sale and worldwide distribution of access equipment designed to
position people and materials to work at heights. The Simon Access Companies'
products include utility aerial devices, aerial work platforms and truck mounted
cranes (boom trucks) which are sold to customers in the industrial and
construction markets, as well as utility companies. Specifically, the Company
acquired 100% of the outstanding common stock of (i) Simon Telelect, Inc. (now
named Terex Telelect, Inc.), a Delaware corporation, (ii) Simon Aerials, Inc.
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(now named Terex Aerials, Inc.), a Wisconsin corporation and parent company of
Terex-RO Corporation ("Terex RO"), (iii) Sim-Tech Management Limited, a private
limited company incorporated under the laws of Hong Kong, (iv) Simon Cella,
S.r.1., a company incorporated under the laws of Italy, and (v) Simon Aerials
Limited (now named Terex Aerials Limited), a company incorporated under the laws
of Ireland; and 60% of the outstanding common stock of Simon-Tomen Engineering
Company Limited, a limited liability stock company organized under the laws of
Japan. On April 14, 1997, the Company completed the acquisition of all of the
capital stock of Baraga Products, Inc. and M&M Enterprises of Baraga, Inc.
(together, the "Square Shooter Business"), which manufacture the Square Shooter,
a rough terrain telescopic lift truck designed to lift materials to heights
where they are used in construction.
Terex Earthmoving (formerly known as Terex Trucks) manufactures and sells
articulated and rigid off-highway trucks, high capacity surface mining trucks,
large hydraulic mining shovels, and related components and replacement parts.
These products are used primarily by construction, mining and government
customers. On January 5, 1998, the Company also acquired Payhauler Corp.
("Payhauler"), which manufactures and markets 30 and 50 ton all wheel drive
rigid frame trucks designed to move material in more severe operating conditions
than a standard rear wheel drive rigid frame truck. On March 31, 1998, the
Company purchased all of the outstanding shares of O&K Mining GmbH ("O&K
Mining") from O&K Orenstein & Koppel AG for net aggregate consideration of
approximately $168 million, subject to certain post-closing adjustments. O&K
Mining is engaged in the manufacture, sale and worldwide distribution of large
hydraulic mining shovels primarily used to load coal, copper ore, iron ore,
other mineral-bearing materials or rocks into trucks. These products are used by
mining equipment contractors, mining and quarrying companies and large
construction companies involved in infrastructure projects worldwide. Terex
Earthmoving is comprised of Terex Equipment Limited ("TEL"), located in
Motherwell, Scotland, Unit Rig ("Unit Rig"), located in Tulsa, Oklahoma,
Payhauler, located in Batavia, Illinois, and O&K Mining, located in Dortmund,
Germany.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the unaudited historical ratios of
earnings to fixed charges for the Company for the periods indicated below:
Year Ended December 31, Three Months Ended March 31,
1993 1994 1995 1996 1997 1997 1998
---- ---- ---- ---- ---- ---- ----
Ratio of earnings
to fixed charges --- 1.1x --- --- 1.6x 1.3x 2.5x
In calculating the ratio of earnings to fixed charges, earnings consist
of income (loss) from continuing operations before income taxes and
extraordinary items plus fixed charges. Fixed charges consist of interest
expense, preferred stock accretion, amortization of indebtedness issuance costs,
and rental expense representative of the interest factor. Earnings were
insufficient to cover fixed charges by $40.0 million, $32.1 million and $54.3
million during the years ended December 31, 1993, 1995, and 1996, respectively.
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USE OF PROCEEDS
Unless otherwise described in the applicable Prospectus Supplement, the
Company intends to use the net proceeds from the sale of the Offered Securities
for general corporate purposes, which may include acquisitions and other
business combinations as suitable opportunities arise, the repayment of
indebtedness outstanding at such time and working capital.
DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and
provisions of the Debt Securities to which any Prospectus Supplement may relate.
The particular terms of the Debt Securities being offered and the extent to
which such general provisions may apply will be described in a Prospectus
Supplement relating to such Debt Securities.
The Senior Securities are to be issued under an Indenture, as amended
or supplemented from time to time (the "Senior Securities Indenture"), between
the Company and a trustee to be selected by the Company (the "Senior Securities
Trustee") and the Subordinated Securities are to be issued under an Indenture,
as amended or supplemented from time to time (the "Subordinated Securities
Indenture"), between the Company and a trustee to be selected by the Company
(the "Subordinated Securities Trustee"). The Senior Securities Indenture and the
Subordinated Securities Indenture are referred to herein individually as the
"Indenture" and collectively as the "Indentures," and the Senior Securities
Trustee and the Subordinated Securities Trustee are referred to herein
individually as the "Trustee" and collectively as the "Trustees." A form of the
Senior Securities Indenture and a form of the Subordinated Securities Indenture
will be filed as exhibits to the Registration Statement of which this Prospectus
is a part and will be available for inspection at the corporate trust offices of
the respective Trustees or as described above under "Available Information." The
Indentures will be subject to and governed by the Trust Indenture Act of 1939,
as amended (the "TIA"). The description of the Indentures set forth below
assumes that the Company has entered into the Indentures. The Company will
execute the applicable Indenture when and if the Company issues Debt Securities.
The statements made hereunder relating to the Indentures and the Debt Securities
to be issued thereunder are summaries of certain provisions thereof and do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all provisions of the Indentures and such Debt Securities.
Unless otherwise specified, all capitalized terms used but not defined
herein shall have the meanings set forth in the Indentures.
General
The Debt Securities will be direct, unsecured obligations of the
Company. Senior Securities will rank pari passu with certain other senior debt
of the Company that may be outstanding from time to time, and will rank senior
to all Subordinated Securities that may be outstanding from time to time.
Subordinated Securities will be subordinated in right of payment to the prior
payment in full of the Senior Debt of the Company, as described under
"Subordination."
Each Indenture provides that the Debt Securities may be issued without
limit as to aggregate principal amount, in one or more series, in each case as
established from time to time in or pursuant to authority granted by a
resolution of the Board of Directors of the Company or as established in one or
more indentures supplemental to the Indenture. All Debt Securities of one series
need not be issued at the same time and, unless otherwise provided, a series may
be reopened, without the consent of the holders of the Debt Securities of such
series, for issuances of additional Debt Securities of such series.
Each Indenture provides that there may be more than one Trustee
thereunder, each with respect to one or more series of Debt Securities. Any
Trustee under either Indenture may resign or be removed with respect to one or
more series of Debt Securities, and a successor Trustee shall be appointed by
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the Company, by or pursuant to a resolution adopted by the Board of Directors of
the Company, to act with respect to such series. In the event that two or more
persons are acting as Trustee with respect to different series of Debt
Securities, each such Trustee shall be a Trustee of a trust under the applicable
Indenture separate and apart from the trust administered by any other Trustee
thereunder, and, except as otherwise indicated herein or therein, any action
described herein or therein to be taken by the Trustee may be taken by each such
Trustee with respect to, and only with respect to, the one or more series of
Debt Securities for which it is Trustee under the applicable Indenture.
Reference is made to the Prospectus Supplement relating to the series
of Debt Securities being offered for the specific terms thereof, including:
(1) the title of such Debt Securities;
(2) the classification of such Debt Securities as Senior
Securities or Subordinated Securities;
(3) the aggregate principal amount of such Debt Securities and any
limit on such aggregate principal amount;
(4) the percentage of the principal amount at which such Debt
Securities will be issued and, if other than the principal
amount thereof, the portion of the principal amount thereof
payable upon declaration of acceleration of the maturity
thereof, or (if applicable) the portion of the principal
amount of such Debt Securities which is convertible into
Common Stock or Preferred Stock, or the method by which any
such portion shall be determined;
(5) the date or dates, or the method for determining such date or
dates, on which the principal of such Debt Securities will be
payable;
(6) the rate or rates (which may be fixed or variable), or the
method by which such rate or rates shall be determined, at
which such Debt Securities will bear interest, if any;
(7) the date or dates, or the method for determining such date or
dates, from which any such interest will accrue, the Interest
Payment Dates on which any such interest will be payable, the
Regular Record Dates for such Interest Payment Dates, or the
method by which such dates shall be determined, the person to
whom such interest shall be payable, and the basis upon which
interest shall be calculated if other than that of a 360-day
year of twelve 30-day months;
(8) the place or places where the principal of (and premium, if
any) and interest and other amounts, if any, on such Debt
Securities will be payable, such Debt Securities may be
surrendered for conversion or registration of transfer or
exchange and notices or demands to or upon the Company in
respect of such Debt Securities and the applicable Indenture
may be served;
(9) the period or periods within which, the price or prices
(including premium, if any) at which and the terms and
conditions upon which such Debt Securities may be redeemed, in
whole or in part, at the option of the Company, if the Company
is to have such an option;
(10) the obligation, if any, of the Company to redeem, repay or
purchase such Debt Securities pursuant to any sinking fund or
analogous provision or at the option of a Holder thereof, and
the period or periods within which, the price or prices at
which and the terms and conditions upon which such Debt
Securities will be redeemed, repaid or purchased, in whole or
in part, pursuant to such obligation;
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(11) if other than U.S. dollars, the currency or currencies in
which such Debt Securities are denominated and payable, which
may be a foreign currency or units of two or more foreign
currencies or a composite currency or currencies, and the
terms and conditions relating thereto;
(12) whether the amount of payments of principal of (and premium,
if any) or interest, if any, on such Debt Securities may be
determined with reference to an index, formula or other method
(which index, formula or other method may, but need not, be
based on a currency, currencies, currency unit or units or
composite currency or currencies) and the manner in which such
amounts shall be determined;
(13) whether such Debt Securities will be issued in the form of one
or more global securities and whether such global securities
are to be issuable in a temporary global form or permanent
global form;
(14) any additions to, modifications of or deletions from the terms
of such Debt Securities with respect to the Events of Default
or covenants set forth in the applicable Indenture;
(15) whether the principal of (and premium, if any) or interest or
other amounts, if any, on such Debt Securities are to be
payable, at the election of the Company or a Holder, in one or
more currencies other than that in which such Debt Securities
are denominated or stated to be payable, the period or periods
within which, and the terms and conditions upon which, such
election may be made, and the time and manner of, and identity
of the exchange rate agent with responsibility for,
determining the exchange rate between the currency or
currencies in which such Debt Securities are denominated or
stated to be payable and the currency or currencies in which
such Debt Securities are to be so payable;
(16) whether such Debt Securities will be issued in certificated or
book-entry form;
(17) whether such Debt Securities will be in registered or bearer
form and, if in registered form, the denominations thereof if
other than $1,000 and any integral multiple thereof and, if in
bearer form, the denominations thereof and the terms and
conditions relating thereto;
(18) the applicability, if any, of the defeasance and covenant
defeasance provisions of the applicable Indenture;
(19) if such Debt Securities are to be issued upon the exercise of
Warrants, the time, manner and place for such Debt Securities
to be authenticated and delivered;
(20) the terms, if any, upon which such Debt Securities may be
convertible into Common Stock or Preferred Stock and the terms
and conditions upon which such conversion will be effected,
including, without limitation, the initial conversion price or
rate and the conversion period;
(21) whether and under what circumstances the Company will pay any
other amounts as contemplated in the applicable Indenture on
<PAGE>
11
such Debt Securities in respect of any tax, assessment or
governmental charge and, if so, whether the Company will have
the option to redeem such Debt Securities in lieu of making
such payment;
(22) the name of the applicable Trustee and the address of its
corporate trust office; and
(23) any other terms of such Debt Securities not inconsistent with
the provisions of the applicable Indenture.
The Debt Securities may provide for less than the entire principal
amount thereof to be payable upon declaration of acceleration of the maturity
thereof ("Original Issue Discount Securities") or that the principal amount
thereof payable at their stated maturity may be more or less than the principal
face amount thereof at original issuance ("Indexed Securities"). Special U.S.
federal income tax, accounting and other considerations applicable to Original
Issue Discount Securities and Index Securities will be described in the
applicable Prospectus Supplement.
Except as set forth below under "Certain Covenants--Senior Securities
Indenture Limitations on Incurrence of Indebtedness," neither Indenture contains
any other provisions that would limit the ability of the Company to incur
indebtedness or that would afford holders of Debt Securities protection in the
event of a highly leveraged or similar transaction involving the Company or in
the event of a change of control. See "Description of Preferred Stock" and
"Description of Common Stock."
Reference is made to the applicable Prospectus Supplement for
information with respect to any deletions from, modifications of or additions to
the Events of Default or covenants of the Company that are described below,
including any addition of a covenant or other provision providing event risk or
similar protection.
Denominations, Interest, Registration and Transfer
Unless otherwise described in the applicable Prospectus Supplement, the
Debt Securities of any series will be issuable in denominations of $1,000 and
integral multiples thereof. Unless otherwise described in the applicable
Prospectus Supplement, the Debt Securities of any series issued in bearer form
will be issuable in denominations of $5,000.
Unless otherwise specified in the applicable Prospectus Supplement, the
principal of (and premium, if any) and interest on any series of Debt Securities
will be payable at an office or agency established by the Company in accordance
with the Indenture, provided that, at the option of the Company, payment of
interest may be made by check mailed to the address of the person entitled
thereto as it appears in the Security Register or by wire transfer of funds to
such person at an account maintained within the United States.
Any interest not punctually paid or duly provided for on any Interest
Payment Date with respect to a Debt Security ("Defaulted Interest") will
forthwith cease to be payable to the Holder on the applicable Regular Record
Date and may either be paid to the person in whose name such Debt Security is
registered at the close of business on a special record date (the "Special
Record Date") for the payment of such Defaulted Interest to be fixed by the
applicable Trustee, notice whereof shall be given to the Holder of such Debt
Security not less than 10 days prior to such Special Record Date, or may be paid
at any time in any other lawful manner, all as more completely described in the
applicable Indenture.
Subject to certain limitations imposed upon Debt Securities issued in
book-entry form, the Debt Securities of any series will be exchangeable for
other Debt Securities of the same series and of a like aggregate principal
amount and tenor of different authorized denominations upon surrender of such
Debt Securities at the corporate trust office of the applicable Trustee or at an
office or agency established by the Company in accordance with the Indenture. In
addition, subject to certain limitations imposed upon Debt Securities issued in
book-entry form, the Debt Securities of any series may be surrendered for
exchange or registration of transfer thereof at the corporate trust office of
the applicable Trustee or at an office or agency established by the Company in
accordance with the Indenture. Every Debt Security surrendered for registration
<PAGE>
12
of transfer or exchange shall be duly endorsed or accompanied by a written
instrument of transfer. No service charge will be made for any registration of
transfer or exchange of any Debt Securities, but the Company may require payment
of a sum sufficient to cover any tax or other governmental charge payable in
connection therewith. If the applicable Prospectus Supplement refers to any
transfer agent (in addition to the Trustee) initially designated by the Company
with respect to any series of Debt Securities, the Company may at any time
rescind the designation of any such transfer agent or approve a change in the
location through which any such transfer agent acts, except that the Company
will be required to maintain a transfer agent in each place of payment for such
series. The Company may at any time designate additional transfer agents with
respect to any series of Debt Securities.
Neither the Company nor any Trustee shall be required to (i) issue,
register the transfer of or exchange Debt Securities of any series during a
period beginning at the opening of business 15 days before any selection of Debt
Securities of that series to be redeemed and ending at the close of business on
the day of mailing of the relevant notice of redemption; (ii) register the
transfer of or exchange any Debt Security, or portion thereof, called for
redemption, except the unredeemed portion of any Debt Security being redeemed in
part; or (iii) issue, register the transfer of or exchange any Debt Security
which has been surrendered for repayment at the option of the Holder, except the
portion, if any, of such Debt Security not to be so repaid.
Certain Covenants
Certain Definitions.
As used herein,
"Acquired Indebtedness" means Indebtedness of a person or any of
its Subsidiaries (the "Acquired person") (i) existing at the time such
person becomes a Restricted Subsidiary of the Company or at the time it
merges or consolidates with the Company or any of its Restricted
Subsidiaries or (ii) assumed in connection with the acquisition of
assets from such person.
"Asset Disposition" means any sale, lease, transfer, conveyance or
other disposition (or series of related sales, leases, transfers or
dispositions) by the Company or any Restricted Subsidiary, including
any disposition by means of a merger or consolidation (each referred to
for the purposes of this definition as a "disposition"), of (i) any
shares of capital stock of a Restricted Subsidiary (other than
directors' qualifying shares or shares required by applicable law to be
held by a person other than the Company or a Restricted Subsidiary),
(ii) all or substantially all the assets of any division or line of
business of the Company or any Restricted Subsidiary or (iii) any other
assets of the Company or any Restricted Subsidiary outside of the
ordinary course of business of the Company or such Restricted
Subsidiary (other than, in the case of (i), (ii) and (iii) above, a
disposition by a Restricted Subsidiary to the Company or by the Company
or a Restricted Subsidiary to a Wholly Owned Subsidiary; provided,
however, that each of (a) the consummation of any sale or series of
related sales of assets or properties of the Company and the Restricted
Subsidiaries by the Company and any Restricted Subsidiaries having an
aggregate fair market value of less than $1 million in any fiscal year
and (b) the discounting of accounts receivable or the sale of
inventory, in each case in the ordinary course of business, shall not
be deemed an Asset Disposition.
"Bank Indebtedness" means (i) the Indebtedness outstanding or
arising under any credit facility, (ii) all obligations and other
amounts owing to the holders of such Indebtedness or any agent or
representative thereof outstanding or arising under any credit facility
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13
(including, but not limited to, interest (including interest accruing
on or after the filing of any petition in bankruptcy, reorganization or
similar proceeding relating to the Company or any Restricted
Subsidiary, whether or not a claim for such interest is allowed in such
proceeding), fees, charges, indemnities, expense reimbursement
obligations and other claims under any credit facility), and (iii) all
Hedging Obligations arising in connection therewith with any party to
any credit facility.
"Capital Lease Obligations" of a person means any obligation which
is required to be classified and accounted for as a capital lease on
the face of a balance sheet of such person prepared in accordance with
GAAP; the amount of such obligation shall be the capitalized amount
thereof, determined in accordance with GAAP; and the Stated Maturity
thereof shall be the date of the last payment of rent or any other
amount due under such capital lease prior to the first date upon which
such lease may be terminated by the lessee without payment of a
penalty.
"Cash Flow" for any period means the Consolidated Net Income for
such period, plus the following (but without duplication) to the extent
deducted in calculating such Consolidated Net Income for such period:
(i) income tax expense, (ii) Consolidated Interest Expense, (iii)
depreciation expense and amortization expense, provided that
consolidated depreciation and amortization expense of a Subsidiary that
is not a Wholly Owned Subsidiary shall only be added to the extent of
the equity interest of the Company in such Subsidiary and (iv) all
other non-cash charges (other than any recurring non-cash charges to
the extent such charges represent an accrual of or reserve for cash
expenditures in any future period). Notwithstanding clause (iv) above,
there shall be deducted from Cash Flow in any period any cash expended
in such period that funds a non-recurring, non-cash charge accrued or
reserved in a prior period which was added back to Cash Flow pursuant
to clause (iv) in such prior period.
"Consolidated Cash Flow Coverage Ratio" as of any date of
determination means the ratio of (i) the aggregate amount of Cash Flow
for the period of the most recent four consecutive fiscal quarters for
which financial statements are available to (ii) Consolidated Interest
Expense for such four fiscal quarters; provided, however, that (1) if
the Company or any Restricted Subsidiary has issued any Indebtedness
since the beginning of such period that remains outstanding or if the
transaction giving rise to the need to calculate the Consolidated Cash
Flow Coverage Ratio is an issuance of Indebtedness, or both, Cash Flow
and Consolidated Interest Expense for such period shall be calculated
after giving effect on a pro forma basis to such Indebtedness as if
such Indebtedness had been issued on the first day of such period and
the discharge of any other Indebtedness repaid, repurchased, defeased
or otherwise discharged with the proceeds of such new Indebtedness as
if such discharge had occurred on the first day of such period, (2) if
since the beginning of such period the Company or any Restricted
Subsidiary shall have made any Asset Disposition, the Cash Flow for
such period shall be reduced by an amount equal to the Cash Flow (if
positive) directly attributable to the assets which are the subject of
such Asset Disposition for such period, or increased by an amount equal
to the Cash Flow (if negative), directly attributable thereto for such
period, and Consolidated Interest Expense for such period shall be
reduced by an amount equal to the Consolidated Interest Expense
directly attributable to any Indebtedness of the Company or any
Restricted Subsidiary repaid, repurchased, defeased or otherwise
discharged with respect to the Company and its continuing Restricted
Subsidiaries in connection with such Asset Dispositions for such period
(or, if the capital stock of any Restricted Subsidiary is sold, the
Consolidated Interest Expense for such period directly attributable to
the Indebtedness of such Restricted Subsidiary to the extent the
Company and its continuing Restricted Subsidiaries are no longer liable
for such Indebtedness after such sale), (3) if since the beginning of
such period the Company or any Restricted Subsidiary (by merger or
otherwise) shall have made an Investment in any Restricted Subsidiary
(or any person which becomes a Restricted Subsidiary) or an acquisition
of assets (including capital stock of a Subsidiary), including any
acquisition of assets occurring in connection with a transaction
<PAGE>
14
causing a calculation to be made hereunder, Cash Flow and Consolidated
Interest Expense for such period shall be calculated after giving pro
forma effect thereto (including the issuance of any Indebtedness) as if
such Investment or acquisition occurred on the first day of such
period, and (4) if since the beginning of such period any person (that
subsequently became a Restricted Subsidiary or was merged with or into
the Company or any Restricted Subsidiary since the beginning of such
period) shall have made any Asset Disposition or any Investment that
would have required an adjustment pursuant to clause (2) or (3) above
if made by the Company or a Restricted Subsidiary during such period,
Cash Flow and Consolidated Interest Expense for such period shall be
calculated after giving pro forma effect thereto as if such Asset
Disposition or Investment occurred on the first day of such period. For
purposes of this definition, whenever pro forma effect is to be given
to an acquisition of assets, the amount of income or earnings relating
thereto, and the amount of Consolidated Interest Expense associated
with any Indebtedness issued in connection therewith, the pro forma
calculations shall be determined in good faith by a responsible
financial or accounting Officer of the Company. If any Indebtedness
bears a floating rate of interest and is being given pro forma effect,
the interest of such Indebtedness shall be calculated as if the average
interest rate for the period up to the date of determination had been
the applicable rate for the entire period (taking into account any
Interest Rate Protection Agreement applicable to such Indebtedness if
such Interest Rate Protection Agreement has a remaining term in excess
of 12 months). For purposes of this definition, whenever pro forma
effect is to be given to any Indebtedness Incurred pursuant to a
revolving credit facility the amount outstanding under such
Indebtedness shall be equal to the average of the amount outstanding
during the period commencing on the first day of the first of the four
most recent fiscal quarters for which financial statements are
available and ending on the date of determination.
"Consolidated Interest Expense" means, for any period, the total
interest expense of the Company and its consolidated Restricted
Subsidiaries, plus, to the extent not included in such interest expense
but Incurred by the Company or its Restricted Subsidiaries, (i)
interest expense attributable to capital leases, (ii) amortization of
debt discount, (iii) capitalized interest, (iv) original issue discount
and non-cash interest payments or accruals, (v) commissions, discounts
and other fees and charges owed with respect to letters of credit and
bankers' acceptance financing, (vi) net costs under Hedging Obligations
(including amortization of fees), (vii) dividends in respect of all
Disqualified Stock held by persons other than the Company, a Subsidiary
Guarantor or a Wholly Owned Subsidiary, (viii) interest Incurred in
connection with investments in discontinued operations, (ix) the
interest portion of any deferred payment obligations constituting
Indebtedness, and (x) the cash contributions to any employee stock
ownership plan or similar trust to the extent such contributions are
used by such plan or trust to pay interest or fees to any person (other
than the Company) in connection with Indebtedness Incurred by such plan
or trust. For purposes of this definition, interest expense
attributable to any Indebtedness represented by the guarantee (other
than (a) Guarantees permitted by the terms of clauses (b)(x) and (xi),
respectively, of the covenants described under "-- Certain Covenants --
Limitation on Indebtedness" and "-- Limitation on Indebtedness and
Preferred Stock of Restricted Subsidiaries" and (b) Guarantees by the
Company of Indebtedness of a consolidated Restricted Subsidiary or by a
consolidated Restricted Subsidiary of the Company or another
consolidated Restricted Subsidiary) by such person or a Subsidiary of
such person of an obligation of another person shall be deemed to be
the interest expense attributable to the Indebtedness guaranteed.
"Currency Agreement Obligations" means the obligations of any
person under a foreign exchange contract, currency swap agreement or
other similar agreement or arrangement to protect such person against
fluctuations in currency values.
<PAGE>
15
"Disqualified Stock" means, with respect to any person, any capital
stock which by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable) or upon the happening
of any event (i) matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise prior to the 91st day after the
stated maturity of the Debt Securities, (ii) is convertible or
exchangeable for Indebtedness or Disqualified Stock prior to the 91st
day after the stated maturity of the Debt Securities or (iii) is
redeemable at the option of the holder thereof, in whole or in part on
or prior to the 91st day after the stated maturity of the Debt
Securities.
"Floor Plan Guarantees" means guarantees (including but not limited
to repurchase or remarketing obligations) by the Company or a
Restricted Subsidiary Incurred in the ordinary course of business
consistent with past practice of Indebtedness Incurred by a franchise
dealer, or other purchaser or lessor, for the purchase 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 such inventory to such franchise dealer and any related reasonable
fees and expenses (including financing fees), provided, however, that
(1) 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 (2) 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 (q) title to such inventory, (r)
a valid assignment of a perfected first priority lien in such inventory
or (s) the net proceeds of any resale of such inventory.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the date of the Indenture,
including those 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.
"Guarantee" means any obligation, contingent or otherwise, of any
person directly or indirectly guaranteeing in any manner any
Indebtedness or other obligation of any person and any obligation,
direct or indirect, contingent or otherwise, of such person (i) to
purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation of such person (whether
arising by virtue of partnership arrangements, or by agreement to
keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or
otherwise) or (ii) entered into for purposes of assuring in any other
manner the obligee of such Indebtedness or other obligation of the
payment thereof or to protect such obligee against loss in respect
thereof (in whole or in part); provided, however, that the term
"Guarantee" shall not include endorsements of negotiable instruments
for collection or deposit in the ordinary course of business. The term
"Guarantee" used as a verb has a corresponding meaning.
"Hedging Obligations" of any person means the obligations of such
person pursuant to any interest rate swap agreement, foreign currency
exchange agreement, interest rate collar agreement, option or futures
contract or other similar agreement or arrangement designed to protect
such person against changes in interest rates or foreign exchange
rates.
"Indebtedness" of any person means, without duplication, and
whether or not contingent,
(i) the principal of and premium (if any) in respect of (A)
indebtedness of such person for money borrowed and (B) indebtedness
evidenced by notes, debentures, bonds or other similar instruments for
the payment of which such person is responsible or liable;
<PAGE>
16
(ii) all Capital Lease Obligations of such person;
(iii) all obligations of such person issued or assumed as the
deferred purchase price of property, all conditional sale obligations
of such person and all obligations of such person under any title
retention agreement (but excluding trade accounts payable arising in
the ordinary course of business);
(iv) all obligations of such person for the reimbursement of any
obligor on any letter of credit, banker's acceptance or similar credit
transaction;
(v) the amount of all obligations of such person with respect to
the redemption, repayment or other repurchase of any Disqualified Stock
(measured at the greater of its voluntary or involuntary maximum fixed
repurchase price plus accrued and unpaid dividends);
(vi) to the extent not otherwise included in this definition, all
Hedging Obligations;
(vii) all obligations of the type referred to in clauses (i)
through (vi) of other persons and all dividends of other persons for
the payment of which, in either case, such person is responsible or
liable, directly or indirectly, as obligor, guarantor or otherwise,
including by means of any Guarantee (other than in each case by reason
of activities described in the proviso to the definition of
"Guarantee"); and
(viii) all obligations of the type referred to in clauses (i)
through (vii) of other persons secured by any lien on any property or
asset of such person (whether or not such obligation is assumed by such
person), the amount of such obligation being deemed to be the lesser of
the value of such property or assets or the amount of the obligation so
secured.
For purposes hereof, the "maximum fixed repurchase price" of any
Disqualified Stock which does not have a fixed repurchase price shall
be calculated in accordance with the terms of such Disqualified Stock
as if such Disqualified Stock were purchased on any date on which
Indebtedness shall be required to be determined pursuant to the
Indenture, and if such price is based upon, or measured by, the fair
market value of such Disqualified Stock, such fair market value to be
determined in good faith by the Board of Directors. For purposes
hereof, the amount of any Indebtedness issued with original issue
discount shall be the original purchase price plus accrued interest,
provided, however, that such accretion shall not be deemed an
incurrence of Indebtedness.
"Interest Rate Protection Agreement" means any interest rate swap
agreement, interest rate cap agreement or other financial agreement or
arrangement designed to protect the Company or any Restricted
Subsidiary against fluctuations in interest rates.
"Investment" in any person means any direct or indirect advance,
loan (other than advances to customers in the ordinary course of
business that are recorded as accounts receivable or deposits on the
balance sheet of the person making the advance or loan, in each case in
accordance with GAAP) or other extensions of credit (including by way
of Guarantee or similar arrangement) or capital contribution to (by
means of any transfer of cash or other property to others or any
payment for property or services for the account or use of others), or
any purchase or acquisition of capital stock , Indebtedness or other
<PAGE>
17
similar instruments issued by such person and shall include the
designation of a Restricted Subsidiary as an Unrestricted Subsidiary.
For purposes of the definition of "Unrestricted Subsidiary," the
definition of "Restricted Payment" and the covenant described under "--
Certain Covenants -- Limitation on Restricted Payments," (i)
"Investment" shall include the portion (proportionate to the Company's
equity interest in such Subsidiary) of the fair market value of the net
assets of any Subsidiary of the Company at the time that such
Subsidiary is designated an Unrestricted Subsidiary; provided, however,
that upon a redesignation of such Subsidiary as a Restricted
Subsidiary, the Company shall be deemed to continue to have a permanent
investment in an Unrestricted Subsidiary in an amount (if positive)
equal to (x) the Company's "Investment" in such Subsidiary at the time
of such redesignation less (y) the portion (proportionate to the
Company's equity interest in such Subsidiary) of the fair market value
of the net assets of such Subsidiary at the time of such redesignation,
and (ii) any property transferred to or from an Unrestricted Subsidiary
shall be valued at its fair market value at the time of such transfer,
in each case as determined in good faith by the Board of Directors.
Notwithstanding the foregoing, in no event shall any issuance of
capital stock (other than Preferred Stock or Disqualified Stock, or
capital stock exchangeable, exercisable or convertible for any of the
foregoing) of the Company in exchange for capital stock , property or
assets of another person constitute an Investment by the Company in
such person.
"Restricted Subsidiary" means any Subsidiary of the Company that
is not an Unrestricted Subsidiary.
"Senior Debt" means with respect to the Company or any Subsidiary
Guarantor (x) Bank Indebtedness and (y) any other Indebtedness that, by
the terms of the instrument creating or evidencing such Indebtedness,
is expressly made senior in right of payment to the Notes or the
applicable Guarantee, other than (1) any obligation of such person to
any subsidiary of such person or to any officer, director or employee
of such person or any such subsidiary, (2) any liability of such person
for federal, state, local or other taxes owed or owing by such person,
(3) any accounts payable or other liability of such person to trade
creditors arising in the ordinary course of business (including
Guarantees thereof or instruments evidencing such liabilities), (4) any
Indebtedness, Guarantee or obligation of such person which is,
expressly by its terms, subordinate or junior in any respect to any
other Indebtedness, Guarantee or obligation of such person, (5) that
portion of any Indebtedness of such person which at the time of
issuance is issued in violation of the Indenture, (6) Indebtedness of
such person represented by Disqualified Stock or (7) Capital Lease
Obligations.
"Significant Subsidiary" means any Restricted Subsidiary that would
be a "Significant Subsidiary" of the Company within the meanings of
Rule 1-02 under Regulation S-X promulgated by the Commission.
"Subsidiary" means (a) any corporation, association, partnership,
limited liability company or other business entity of which more than
50% of the total voting power of shares of capital stock or other
interests (including partnership interests) entitled (without regard to
the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by (i) the Company, (ii) the
Company and one or more Subsidiaries or (iii) one or more Subsidiaries
or (b) any limited partnership of which the Company or any Subsidiary
is a general partner, or (c) any other person (other than a corporation
or limited partnership) in which the Company, or one or more other
Subsidiaries or the Company and one or more other Subsidiaries,
directly or indirectly, has more than 50% of the outstanding
partnership or similar interests or has the power, by contract or
otherwise, to direct or cause the direction of the policies, management
and affairs thereof. Unless the context other wise requires, Subsidiary
means each direct and indirect Subsidiary of the Company.
<PAGE>
18
"Subsidiary Guarantor" means any Subsidiary of the Company that
Guarantees the Company's obligations with respect to the Debt
Securities.
"Unrestricted Subsidiary" means any Subsidiary of the Company
(other than a Subsidiary Guarantor) designated as such pursuant to and
in compliance with the covenant described under "Limitation on
Designations of Unrestricted Subsidiaries." Any such designation may be
revoked by a resolution of the Board of Directors of the Company
delivered to the Trustee, subject to the provisions of such covenant.
"Voting Stock" of a person means capital stock of such person of
the class or classes pursuant to which the holders thereof have the
general voting power under ordinary circumstances 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 stock of any other class or
classes shall have or might have voting power by reason of the
happening of any contingency).
"Wholly Owned Subsidiary" means (i) a Restricted Subsidiary all the
capital stock of which (other than directors' qualifying shares and
shares held by other persons to the extent such Shares are required by
applicable law to be held by a person other than the Company or a
Restricted Subsidiary) is owned by the Company or one or more Wholly
Owned Subsidiaries and (ii) each of Terex Cranes, Inc., P.P.M. Cranes,
Inc., P.P.M. S.A., and any future wholly owned subsidiaries of any of
the foregoing, in each case so long as the Company or one or more
Wholly Owned Subsidiaries maintains a percentage ownership interest in
such entity equal to or greater than such ownership interest (on a
fully diluted basis) on the later of (a) the applicable Indenture or
(b) the date such entity is incorporated or acquired by the Company or
one or more Wholly Owned Subsidiaries.
Senior Securities Indenture Limitations on Incurrence of Indebtedness.
The Company will not, and will not permit any Subsidiary to, incur any
Indebtedness if the Consolidated Cash Flow Coverage Ratio at the date on which
such additional Indebtedness is to be incurred shall have been less than 2.0 to
1.0.
Existence. Except as permitted under "Merger, Consolidation or Sale,"
the Company will do or cause to be done all things necessary to preserve and
keep in full force and effect its existence, rights (charter and statutory) and
franchises; provided, however, that the Company will not be required to preserve
any right or franchise if it determines that the preservation thereof is no
longer desirable in the conduct of its business and that the loss thereof is not
disadvantageous in any material respect to the holders of the Debt Securities.
Maintenance of Properties. The Company will cause all of its properties
used or useful in the conduct of its business or the business of any Subsidiary
to be maintained and kept in good condition, repair and working order and
supplied with all necessary equipment and will cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as in
the judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided, however, that the Company and its Subsidiaries shall not be prevented
from selling or otherwise disposing for value its properties in the ordinary
course of business.
Insurance. The Company will, and will cause each of its Subsidiaries
to, keep all of its insurable properties adequately insured against loss or
damage with financially sound and reputable insurance companies.
Payment of Taxes and Other Claims. The Company will pay or discharge or
cause to be paid or discharged, before the same shall become delinquent, (i) all
taxes, assessments and governmental charges levied or imposed upon it or any
Subsidiary or upon the income, profits or property of the Company or any
<PAGE>
19
Subsidiary, and (ii) all lawful claims for labor, materials and supplies which,
if unpaid, might by law become a lien upon the property of the Company or any
Subsidiary, unless such lien would not have a material adverse effect upon such
property; provided, however, that the Company will not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate proceedings or for which the Company has set apart and maintains
an adequate reserve.
Provision of Financial Information. Whether or not the Company is
subject to Section 13 or 15(d) of the Exchange Act, the Company will, to the
extent permitted under the Exchange Act, file with the Commission the annual
reports, quarterly reports and other documents which the Company would have been
required to file with the Commission pursuant to such Section 13 or 15(d) (the
"Financial Statements"), or which the Company would have been so required if the
Company were so subject, such documents to be filed with the Commission on or
prior to the respective dates (the "Required Filing Dates") by which the Company
is or would have been so required to file such documents if the Company is or
were so subject. The Company will also in any event (x) within 15 days of each
Required Filing Date (i) transmit by mail to all holders of Debt Securities, as
their names and addresses appear in the Security Register, without cost to such
holders, copies of the annual reports and quarterly reports which the Company is
required to file with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act, or which the Company would have been so required if the Company
were subject to such Sections and (ii) file with the Trustees copies of annual
reports, quarterly reports and other documents which the Company is required to
file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act, or
which the Company would have been so required if the Company were subject to
such Sections, and (y) if filing such documents by the Company with the
Commission is not permitted under the Exchange Act, promptly upon written
request and payment of the reasonable cost of duplication and delivery, supply
copies of such documents to any prospective holder.
Merger, Consolidation or Sale
The Company may consolidate with, or sell, lease or convey all or
substantially all of its assets to, or merge with or into, any other entity,
provided that (a) either the Company shall be the continuing entity, or the
successor entity (if other than the Company) formed by or resulting from any
such consolidation or merger or which shall have received the transfer of such
assets shall expressly assume payment of the principal of (and premium, if any)
and interest (and any other amounts) on all of the Debt Securities and the due
and punctual performance and observance of all of the covenants and conditions
contained in the Indentures; (b) immediately after giving effect to such
transaction and treating any indebtedness which becomes an obligation of the
Company or any Subsidiary as a result thereof as having been incurred by the
Company or such Subsidiary at the time of such transaction, no Event of Default
under the Indentures, and no event which, after notice or the lapse of time, or
both, would become such an Event of Default, shall have occurred and be
continuing; and (c) an officer's certificate and legal opinion covering such
conditions shall be delivered to the Trustees.
Events of Default, Notice and Waiver
Each Indenture will provide that the following events are "Events of
Default" with respect to any series of Debt Securities issued thereunder: (a)
default for 30 days in the payment of any installment of interest or other
amounts on any Debt Security of such series; (b) default in the payment of the
principal of (or premium, if any, on) any Debt Security of such series when due;
(c) default in making any sinking fund payment as required for any Debt Security
of such series; (d) default in the performance of any other covenant of the
Company contained in the applicable Indenture (other than a covenant added to
such Indenture solely for the benefit of a series of Debt Securities issued
thereunder other than such series) continued for 60 days after written notice as
provided in such Indenture; (e) default in the payment of an aggregate principal
amount exceeding $10,000,000 of any evidence of indebtedness for borrowed money
<PAGE>
20
of the Company or any mortgage, indenture or other instrument under which such
indebtedness is issued or by which such indebtedness is secured, such default
having occurred after the expiration of any applicable grace period and having
resulted in the acceleration of the maturity of such indebtedness, but only if
such indebtedness is not discharged or such acceleration is not rescinded or
annulled; (f) certain events of bankruptcy, insolvency or reorganization, or
court appointment of a receiver, liquidator or trustee of the Company, any
Significant Subsidiary or the property of the Company or any Significant
Subsidiary or all or substantially all of either of its property; and (g) any
other Event of Default provided with respect to a particular series of Debt
Securities. The term "Significant Subsidiary" means each significant subsidiary
(as defined in Regulation S-X promulgated under the Securities Act) of the
Company.
If an Event of Default under either Indenture with respect to Debt
Securities of any series at the time outstanding occurs and is continuing, then
in every such case the Trustee or the holders of not less than 25% in principal
amount of the outstanding Debt Securities of that series may declare the
principal amount (or, if the Debt Securities of that series are Original Issue
Discount Securities or Indexed Securities, such portion of the principal amount
as may be specified in the terms thereof) of the outstanding Debt Securities of
that series to be due and payable immediately by written notice thereof to the
Company (and to the applicable Trustee if given by the holders). However, at any
time after such a declaration of acceleration with respect to Debt Securities of
such series (or of all Debt Securities then outstanding under the applicable
Indenture, as the case may be) has been made, but before a judgment or decree
for payment of the money due has been obtained by the applicable Trustee, the
holders of not less than a majority in principal amount of Debt Securities then
outstanding of such series (or of all Debt Securities then outstanding under the
applicable Indenture, as the case may be) may rescind and annul such declaration
and its consequences if (a) the Company shall have deposited with the applicable
Trustee all required payments of the principal of (and premium, if any) and
interest, and any other amounts, on the Debt Securities of such series (or of
all Debt Securities then outstanding under the applicable Indenture, as the case
may be), plus certain fees, expenses, disbursements and advances of the Trustee
and (b) all Events of Default, other than the non-payment of accelerated
principal (or specified portion thereof and the premium, if any, or interest),
with respect to Debt Securities of such series (or of all Debt Securities then
outstanding under the applicable Indenture, as the case may be) have been cured
or waived as provided in the applicable Indenture. Each Indenture also provides
that the holders of not less than a majority in principal amount of the
outstanding Debt Securities of any series (or of all Debt Securities then
outstanding under the applicable Indenture, as the case may be) may waive any
past default with respect to such series and its consequences, except a default
(x) in the payment of the principal of (premium, if any) or interest or other
amounts on any Debt Security of such series or (y) in respect of a covenant or
provision contained in the applicable Indenture that cannot be modified or
amended without the consent of the Holder of each outstanding Debt Security
affected thereby.
Each Trustee is required to give notice to the holders of Debt
Securities within 90 days of a default under the applicable Indenture; provided,
however, that the Trustee may withhold notice to the holders of any series of
Debt Securities of any default with respect to such series (except a default in
the payment of the principal of (or premium, if any) or interest payable on or
any other amounts with respect to any Debt Security of such series or in the
payment of any sinking fund installment in respect of any Debt Security of such
series) if the Responsible Officers of the Trustee consider such withholding to
be in the interest of such holders.
Each Indenture provides that no holders of Debt Securities of any
series may institute any proceedings, judicial or otherwise, with respect to the
applicable Indenture or for any remedy thereunder, except in the case of failure
of the Trustee thereunder for 60 days, to act after it has received a written
request to institute proceedings in respect of an Event of Default from the
holders of not less than 25% in principal amount of the outstanding Debt
Securities of such series, as well as an offer of reasonable indemnity. This
provision will not prevent, however, any holder of Debt Securities from
instituting suit for the enforcement of payment of the principal of (and
premium, if any) and interest on, and other amounts payable with respect to,
such Debt Securities at the respective due dates thereof.
<PAGE>
21
Subject to provisions in each Indenture relating to its duties in case
of default, each Trustee is under no obligation to exercise any of its rights or
powers under the applicable Indenture at the request or direction of any holders
of any series of Debt Securities then outstanding under such Indenture, unless
such holders shall have offered to the Trustee reasonable security or indemnity.
The holders of not less than a majority in principal amount of the applicable
outstanding Debt Securities of any series (or of all Debt Securities then
outstanding under the applicable Indenture, as the case may be) shall have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or of exercising any trust or power conferred
upon the Trustee. However, the Trustee may refuse to follow any direction which
is in conflict with any law or the applicable Indenture, which may involve the
Trustee in personal liability or which may be unduly prejudicial to the holders
of Debt Securities of such series not joining therein.
Within 120 days after the close of each fiscal year, the Company must
deliver to each Trustee a certificate, signed by two officers, one of whom must
be the principal financial officer or principal accounting officer, stating
whether or not such officers have knowledge of any default under the applicable
Indenture and, if so, specifying each such default and the nature and status
thereof.
Modification of the Indentures
Except as described below, modifications and amendments of each
Indenture may be made with the consent of the holders of not less than a
majority in principal amount of all outstanding Debt Securities issued under
such Indenture which are affected by such modification or amendment; provided,
however, that no such modification or amendment may, without the consent of the
Holder of each such Debt Security affected thereby, (a) change the Stated
Maturity of the principal of, or any installment of interest or other amounts
payable on (or premium, if any) any such Debt Security; (b) reduce the principal
amount of, or the rate or amount of interest on, or any premium payable on
redemption of, or change any obligation of the Company to pay any other amounts
set forth in the Indenture relating to, or reduce any other amounts payable with
respect to, any such Debt Security, or reduce the amount of principal of an
Original Issue Discount Security or premium, if any, that would be due and
payable upon declaration of acceleration of the maturity thereof or would be
payable in bankruptcy, or adversely affect any right of repayment of the Holder
of any such Debt Security; (c) change the place of payment, or the coin or
currency, for payment of principal of (and premium, if any), or interest on, or
any other amounts payable with respect to, any such Debt Security; (d) impair
the right to institute suit for the enforcement of any payment on or with
respect to any such Debt Security; (e) reduce the percentage of outstanding Debt
Securities of any series necessary to modify or amend the applicable Indenture,
to waive compliance with certain provisions thereof or certain defaults and
consequences thereunder or to reduce the quorum or voting requirements set forth
in such Indenture; or (f) modify any of the foregoing provisions or any of the
provisions relating to the waiver of certain past defaults or certain covenants,
except to increase the required percentage to effect such action or to provide
that certain other provisions may not be modified or waived without the consent
of the Holder of such Debt Security.
The holders of not less than a majority in principal amount of
outstanding Debt Securities issued under either Indenture have the right to
waive compliance by the Company with certain covenants in the applicable
Indenture.
Modifications and amendments of each Indenture may be made by the
Company and the applicable Trustee without the consent of any Holder of Debt
Securities issued thereunder for any of the following purposes: (i) to evidence
the succession of another person to the Company as obligor under the applicable
Indenture; (ii) to add to the covenants of the Company for the benefit of the
holders of all or any series of Debt Securities or to surrender any right or
power conferred upon the Company in the applicable Indenture; (iii) to add
Events of Default for the benefit of the holders of all or any series of Debt
<PAGE>
22
Securities; (iv) to add or change any provisions of the applicable Indenture to
facilitate the issuance of, or to liberalize certain terms of, Debt Securities
in bearer form, or to permit or facilitate the issuance of Debt Securities in
uncertificated form, provided that such action shall not adversely affect the
interests of the holders of the Debt Securities of any series in any material
respect; (v) to change or eliminate any provision of the applicable Indenture,
provided that any such change or elimination shall become effective only when
there are no Debt Securities outstanding of any series issued thereunder created
prior thereto which are entitled to the benefit of such provision; (vi) to
secure the Debt Securities; (vii) to establish the form or terms of Debt
Securities of any series, including the provisions and procedures, if
applicable, for the conversion of such Debt Securities into Preferred Stock or
Common Stock; (viii) to provide for the acceptance of appointment by a successor
Trustee or facilitate the administration of the trusts under the applicable
Indenture by more than one Trustee; (ix) to cure any ambiguity, defect or
inconsistency in the applicable Indenture, provided that such action will not
adversely affect the interests of holders of Debt Securities of any series in
any material respect; (x) to close the applicable Indenture with respect to the
authentication and delivery of additional series of Debt Securities or to
qualify or maintain qualification of, the applicable Indenture under the TIA; or
(xi) to supplement any of the provisions of the applicable Indenture to the
extent necessary to permit or facilitate defeasance and discharge of any series
of such Debt Securities, provided that such action will not adversely affect the
interests of the holders of the Debt Securities of any series in any material
respect.
Each Indenture provides that, in determining whether the holders of the
requisite principal amount of outstanding Debt Securities of a series have given
any request, demand, authorization, direction, notice, consent or waiver
thereunder or whether a quorum is present at a meeting of holders of Debt
Securities, (i) the principal amount of an Original Issue Discount Security that
shall be deemed to be outstanding will be the amount of the principal thereof
that would be due and payable as of the date of such determination upon
declaration of acceleration of the maturity thereof, (ii) the principal amount
of a Debt Security denominated in a currency other than U.S. dollars that shall
be deemed outstanding will be the U.S. dollar equivalent, determined on the
issue date for such Debt Security, of the principal amount (or, in the case of
an Original Issue Discount Security, the U.S. dollar equivalent on the issue
date of such Debt Security of the amount determined as provided in (i) above),
(iii) the principal amount of an Indexed Security that will be deemed
outstanding will be the principal face amount of such Indexed Security at
original issuance, unless otherwise provided with respect to such Indexed
Security pursuant to the applicable Indenture, and (iv) Debt Securities owned by
the Company or any other obligor upon the Debt Securities or any Affiliate of
the Company or of such other obligor will be disregarded.
Each Indenture contains provisions for convening meetings of the
holders of Debt Securities of a series. A meeting may be called at any time by
the applicable Trustee, and also, upon request, by the Company, pursuant to a
resolution adopted by the Board of Directors of the Company, or the holders of
at least 10% in principal amount of the outstanding Debt Securities of such
series, in any such case upon notice given as provided in the applicable
Indenture. Except for any consent that must be given by the Holder of each Debt
Security affected by certain modifications and amendments of the applicable
Indenture, any resolution presented at a meeting or adjourned meeting duly
reconvened at which a quorum is present may be adopted by the affirmative vote
of the holders of a majority in principal amount of the outstanding Debt
Securities of that series; provided, however, that, except as referred to above,
any resolution with respect to any request, demand, authorization, direction,
notice, consent, waiver or other action that may be made, given or taken by the
holders of a specified percentage, which is less than a majority, in principal
amount of the outstanding Debt Securities of a series may be adopted at a
meeting or adjourned meeting duly reconvened at which a quorum is present by the
affirmative vote of the holders of such specified percentage in principal amount
of the outstanding Debt Securities of that series. Any resolution passed or
decision taken at any meeting of holders of Debt Securities of any series duly
held in accordance with the applicable Indenture will be binding on all holders
of Debt Securities of that series. The quorum at any meeting called to adopt a
resolution, and at any reconvened meeting, will be persons holding or
representing a majority in principal amount of the outstanding Debt Securities
of a series; provided, however, that, if any action is to be taken at such
meeting with respect to a consent or waiver which may be given by the holders of
<PAGE>
23
not less than a specified percentage in principal amount of the outstanding Debt
Securities of a series, the persons holding or representing such specified
percentage in principal amount of the outstanding Debt Securities of such series
will constitute a quorum.
Notwithstanding the foregoing provisions, if any action is to be taken
at a meeting of holders of Debt Securities of any series with respect to any
request, demand, authorization, direction, notice, consent, waiver or other
action that the applicable Indenture expressly provides may be made, given or
taken by the holders of a specified percentage in principal amount of all
outstanding Debt Securities affected thereby, or of the holders of such series
and one or more additional series: (i) there shall be no minimum quorum
requirement for such meeting and (ii) the principal amount of the outstanding
Debt Securities of such series that vote in favor of such request, demand,
authorization, direction, notice, consent, waiver or other action shall be taken
into account in determining whether such request, demand, authorization,
direction, notice, consent, waiver or other action has been made, given or taken
under the applicable Indenture.
Discharge, Defeasance and Covenant Defeasance
The Company may discharge certain obligations to holders of any series
of Debt Securities that have not already been delivered to the Trustee for
cancellation and that either have become due and payable or will become due and
payable within one year (or scheduled for redemption within one year) by
irrevocably depositing with the applicable Trustee, in trust, funds in such
currency or currencies, currency unit or units or composite currency or
currencies in which such Debt Securities are payable in an amount sufficient to
pay the entire indebtedness on such Debt Securities in respect of principal (and
premium, if any) and interest and other amounts payable to the date of such
deposit (if such Debt Securities have become due and payable) or to the Stated
Maturity or Redemption Date, as the case may be.
Each Indenture provides that, under certain circumstances, the Company
may elect to (a) defease and be discharged from any and all obligations with
respect to such Debt Securities (except for the obligation to pay other amounts,
if any, upon the occurrence of certain events of tax, assessment or governmental
charge with respect to payments on such Debt Securities and the obligations to
register the transfer or exchange of such Debt Securities, to replace temporary
or mutilated, destroyed, lost or stolen Debt Securities, to maintain an office
or agency in respect of such Debt Securities and to hold moneys for payment in
trust) ("defeasance") and/or (b) be released from its obligations with respect
to such Debt Securities under the applicable Indenture (being the restrictions
described under "Certain Covenants") or, under certain circumstances, its
obligations with respect to any other covenant, and any omission to comply with
such obligations will not constitute a default or an Event of Default with
respect to such Debt Securities ("covenant defeasance"), in either case upon the
irrevocable deposit by the Company with the applicable Trustee, in trust, of an
amount, in such currency or currencies, currency unit or units or composite
currency or currencies in which such Debt Securities are payable at Stated
Maturity, or Government Obligations (as defined below), or both, applicable to
such Debt Securities which through the scheduled payment of principal and
interest in accordance with their terms will provide money in an amount
sufficient to pay the principal of (and premium, if any) and interest on such
Debt Securities, and any mandatory sinking fund or analogous payments thereon,
on the scheduled due dates therefor.
Such a trust may only be established if, among other things, the
Company has delivered to the applicable Trustee an Opinion of Counsel (as
specified in the applicable Indenture) to the effect that the holders of such
Debt Securities will not recognize income, gain or loss for U.S. federal income
tax purposes as a result of such defeasance or covenant defeasance and will be
subject to U.S. federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such defeasance or covenant
defeasance had not occurred, and such Opinion of Counsel, in the case of
defeasance, must refer to and be based upon a ruling of the Internal Revenue
Service (the "IRS") or a change in applicable United States federal income tax
law occurring after the date of the Indenture.
<PAGE>
24
"Government Obligations" means securities which are (i) direct
obligations of the United States of America or the government which issued the
currency (if other than U.S. dollars) in which the Debt Securities of a
particular series are payable, for the payment of which its full faith and
credit is pledged or (ii) obligations of a person controlled or supervised by
and acting as an agency or instrumentality of the United States of America or
such government which issued the currency (if other than U.S. dollars) in which
the Debt Securities of such series are payable, the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America or such other government, which, in either case, are not
callable or redeemable at the option of the issuer thereof, and will also
include a depository receipt issued by a bank or trust company as custodian with
respect to any such Government Obligation or a specific payment of interest on
or principal of any such Government Obligation held by such custodian for the
account of the holder of a depository receipt, provided that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the Government Obligation or the specific payment of
interest on or principal of the Government Obligation evidenced by such
depository receipt.
Unless otherwise provided in the applicable Prospectus Supplement, if,
after the Company has deposited funds and/or Government Obligations to effect
defeasance or covenant defeasance with respect to Debt Securities of any series,
(a) the Holder of a Debt Security of such series is entitled to, and does, elect
pursuant to the applicable Indenture or the terms of such Debt Security to
receive payment in a currency, currency unit or composite currency other than
that in which such deposit has been made in respect of such Debt Security, or
(b) a Conversion Event (as defined below) occurs in respect of the currency,
currency unit or composite currency in which such deposit has been made, the
indebtedness represented by such Debt Security shall be deemed to have been, and
will be, fully discharged and satisfied through the payment of the principal of
(and premium, if any) and interest on such Debt Security as they become due out
of the proceeds yielded by converting the amount so deposited in respect of such
Debt Security into the currency, currency unit or composite currency in which
such Debt Security becomes payable as a result of such election or such
cessation of usage based on the applicable market exchange rate. "Conversion
Event" means the cessation of use of (i) a currency (other than U.S. dollars,
the ECU or other currency unit), both by the government of the country which
issued such currency and for the settlement of transactions by a central bank or
other public institutions of or within the international banking community, (ii)
the ECU both within the European Monetary System and for the settlement of
transactions by public institutions of or within the European Communities or
(iii) any currency unit or composite currency other than the ECU for the
purposes for which it was established. Unless otherwise provided in the
applicable Prospectus Supplement, all payments of principal of (and premium, if
any) and interest on any Debt Security that is payable in a currency other than
U.S. dollars that ceases to be used by its government of issuance will be made
in U.S.
dollars.
In the event the Company effects covenant defeasance with respect to
any Debt Securities and such Debt Securities are declared due and payable
because of the occurrence of any Event of Default other than the Event of
Default described in clause (d) under "Events of Default, Notice and Waiver"
under certain circumstances or described in clause (g) under "Events of Default,
Notice and Waiver" under certain circumstances, the amount in such currency,
currency unit or composite currency in which such Debt Securities are payable,
and Government Obligations on deposit with the applicable Trustee, will be
sufficient to pay amounts due on such Debt Securities at the time of their
Stated Maturity but may not be sufficient to pay amounts due on such Debt
Securities at the time of the acceleration resulting from such Event of Default.
However, the Company would remain liable to make payment of such amounts due at
the time of acceleration.
The applicable Prospectus Supplement may further describe the
provisions, if any, permitting such defeasance or covenant defeasance, including
any modifications to the provisions described above, with respect to the Debt
Securities of or within a particular series.
<PAGE>
25
Conversion Rights
The terms and conditions, if any, upon which the Debt Securities are
convertible into Preferred Stock or Common Stock will be set forth in the
applicable Prospectus Supplement relating thereto. Such terms will include
whether such Debt Securities are convertible into Preferred Stock or Common
Stock, the conversion price (or manner of calculation thereof), the conversion
period, provisions as to whether conversion will be at the option of the holders
or the Company, the events requiring an adjustment of the conversion price and
provisions affecting conversion in the event of the redemption of such Debt
Securities.
Global Securities
The Debt Securities of a series may be issued in whole or in part in
the form of one or more fully registered global securities (the "Global
Securities") that will be deposited with, or on behalf of, a depositary (the
"Depositary") identified in the applicable Prospectus Supplement relating to
such series. Global Securities are expected to be deposited with The Depository
Trust Company, as Depositary. Global Securities may be issued in either
registered or bearer form and in either temporary or permanent form.
Unless and until it is exchanged in whole or in part for the individual
Debt Securities represented thereby, a Global Security may not be transferred
except as a whole by the Depositary for such Global Security to a nominee of
such Depositary or by a nominee of such Depositary to such Depositary or another
nominee of such Depositary or by the Depositary or any nominee of such
Depositary to a successor Depositary or any nominee of such successor.
The specific terms of the depositary arrangement with respect to a
series of Debt Securities will be described in the applicable Prospectus
Supplement relating to such series. Unless otherwise indicated in the applicable
Prospectus Supplement, the Company anticipates that the following provisions
will apply to depositary arrangements.
Upon the issuance of a Global Security, the Depositary for such Global
Security or its nominee will credit on its book-entry registration and transfer
system the respective principal amounts of the individual Debt Securities
represented by such Global Security to the accounts of persons that have
accounts with such Depositary ("participants"). Such accounts shall be
designated by the underwriters, dealers or agents with respect to such Debt
Securities or by the Company if such Debt Securities are offered and sold
directly by the Company. Ownership of beneficial interests in a Global Security
will be limited to participants or persons that may hold interests through
participants. Ownership of beneficial interests in such Global Security will be
shown on, and the transfer of that ownership will be effected only through,
records maintained by the applicable Depositary or its nominee (with respect to
beneficial interests of participants) and records of participants (with respect
to beneficial interests of persons who hold through participants). The laws of
some states require that certain purchasers of securities take physical delivery
of such securities in definitive form. Such limits and laws may impair the
ability to own, pledge or transfer beneficial interest in a Global Security.
So long as the Depositary for a Global Security or its nominee is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
applicable Indenture. Except as provided below or in the applicable Prospectus
Supplement, owners of a beneficial interest in a Global Security will not be
entitled to have any of the individual Debt Securities of the series represented
by such Global Security registered in their names, will not receive or be
entitled to receive physical delivery of any such Debt Securities of such series
in definitive form and will not be considered the owners or holders thereof
under the applicable Indenture.
<PAGE>
26
Payments of principal of, any premium on, and any interest on, or any
other amounts payable with respect to, individual Debt Securities represented by
a Global Security registered in the name of a Depositary or its nominee will be
made to the Depositary or its nominee, as the case may be, as the registered
owner of the Global Security representing such Debt Securities. None of the
Company, the Trustees, any Paying Agent or the Security Registrar for such Debt
Securities will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in the Global Security for such Debt Securities or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
The Company expects that the Depositary for a series of Debt Securities
or its nominee, upon receipt of any payment of principal, premium or interest in
respect of a permanent Global Security representing any of such Debt Securities,
will immediately credit participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of such Global Security for such Debt Securities as shown on the records of such
Depositary or its nominee. The Company also expects that payments by
participants to owners of beneficial interests in such Global Security held
through such participants will be governed by standing instructions and
customary practices, as is the case with securities held for the account of
customers in bearer form or registered in "street name." Such payments will be
the responsibility of such participants.
If a Depositary for a series of Debt Securities is at any time
unwilling, unable or ineligible to continue as depositary and a successor
depositary is not appointed by the Company within 90 days, the Company will
issue individual Debt Securities of such series in exchange for the Global
Security representing such series of Debt Securities. In addition, the Company
may, at any time and in its sole discretion, subject to any limitations
described in the applicable Prospectus Supplement relating to such Debt
Securities, determine not to have any Debt Securities of such series represented
by one or more Global Securities and, in such event, will issue individual Debt
Securities of such series in exchange for the Global Security or Securities
representing such series of Debt Securities. Individual Debt Securities of such
series so issued will be issued in denominations, unless otherwise specified by
the Company, of $1,000 and integral multiples thereof.
Subordination
Upon any distribution to creditors of the Company in a liquidation,
dissolution or reorganization, the payment of the principal of and interest on
the Subordinated Securities will be subordinated to the extent provided in the
Subordinated Securities Indenture in right of payment to the prior payment in
full of all Senior Debt, but the obligation of the Company to make payment of
the principal and interest on the Subordinated Securities will not otherwise be
affected. No payment of principal or interest may be made on the Subordinated
Securities at any time if a default on Senior Debt exists that permits the
holders of such Senior Debt to accelerate its maturity and the default is the
subject of judicial proceedings or the Company receives notice of the default.
After all Senior Debt is paid in full and until the Subordinated Securities are
paid in full, holders will be subrogated to the rights of holders of Senior Debt
to receive distributions applicable to Senior Debt to the extent that
distributions otherwise payable to holders have been applied to the payment of
Senior Debt. By reason of such subordination, in the event of a distribution of
assets upon insolvency, certain general creditors of the Company may recover
more, ratably, than holders of the Subordinated Securities.
There will be no restrictions in the Subordinated Securities Indenture
upon the creation of additional Senior Debt. However, the Senior Securities
Indenture will contain limitations on incurrence of indebtedness by the Company.
If this Prospectus is being delivered in connection with a series of
Subordinated Securities, the accompanying Prospectus Supplement or the
information incorporated herein by reference will set forth the approximate
amount of Senior Debt outstanding as of the end of the Company's most recent
fiscal quarter.
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DESCRIPTION OF PREFERRED STOCK
The Company's Restated Certificate of Incorporation, as amended (the
"Certificate of Incorporation"), authorizes the Company to issue up to
10,000,000 shares of preferred stock of the Company. The Board of Directors of
the Company is granted the power to authorize the issuance of one or more series
of preferred stock. As of the date hereof, there are not shares of preferred
stock of the Company issued and outstanding.
The following description of the Preferred Stock which may be offered
pursuant to a Prospectus Supplement sets forth certain general terms and
provisions of the Preferred Stock to which any Prospectus Supplement may relate.
The particular terms of the Preferred Stock being offered and the extent to
which such general provisions may or may not apply will be described in a
Prospectus Supplement relating to such Preferred Stock. The statements below
describing the Preferred Stock are in all respects subject to and qualified in
their entirety by reference to the applicable provisions of the Certificate of
Incorporation and the Company's Bylaws, as in effect.
General
Subject to limitations prescribed by Delaware law and the Certificate
of Incorporation, the Board of Directors of the Company is authorized to fix the
number of shares constituting each series of Preferred Stock and the
designations and powers, preferences and the relative participating, optional or
other special rights and qualifications, limitations or restrictions thereof,
including such provisions as may be desired concerning voting, redemption,
distributions, dissolution or the distribution of assets, conversion or
exchange, and such other subjects or matters as may be fixed by resolution of
the Board of Directors of the Company or a duly authorized committee thereof.
The Preferred Stock will, when issued, be fully paid and nonassessable and will
have no preemptive rights. The Register and Transfer Agent for any Preferred
Stock will be set forth in the applicable Prospectus Supplement.
Reference is made to the Prospectus Supplement relating to the
Preferred Stock offered thereby for specific terms, including:
(1) the title and stated value of such Preferred Stock;
(2) the number of shares of such Preferred Stock being offered, the
liquidation preference per share and the offering price of such
Preferred Stock;
(3) the distribution rate(s), period(s) and/or payment date(s) or
method(s) of calculation thereof applicable to such Preferred Stock;
(4) the date from which distributions on such Preferred Stock shall
accumulate, if applicable;
(5) the procedures for any auction and remarketing, if any, for such
Preferred Stock;
(6) the provision for a sinking fund, if any, for such Preferred Stock;
(7) the provisions for redemption, if applicable, of such Preferred Stock;
(8) any listing of such Preferred Stock on any securities exchange;
(9) the terms and conditions, if applicable, upon which such Preferred
Stock will be convertible into Common Stock, including the conversion
price (or manner of calculation thereof);
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(10) a discussion of federal income tax considerations applicable to such
Preferred Stock;
(11) the relative ranking and preferences of such Preferred Stock as to
distribution rights (including whether any liquidation preference as
to the Preferred Stock will be treated as a liability for purposes of
determining the availability of assets of the Company for
distributions to holders of Stock remaining junior to the Preferred
Stock as to distribution rights) and rights upon liquidation,
dissolution or winding up of the affairs of the Company;
(12) any limitations on issuance of any series of preferred stock ranking
senior to or on a parity with such series of Preferred Stock as to
distribution rights and rights upon liquidation, dissolution or
winding up of the affairs of the Company; and
(13) any other specific terms, preferences, rights, limitations or
restrictions of such Preferred Stock.
Rank
Unless otherwise specified in the applicable Prospectus Supplement, the
Preferred Stock will, with respect to distribution rights and/or rights upon
liquidation, dissolution or winding up of the Company, rank (i) senior to all
classes or series of Common Stock, and to all equity securities ranking junior
to such Preferred Stock with respect to distribution rights and/or rights upon
liquidation, dissolution or winding up of the Company, as the case may be; (ii)
on a parity with all equity securities issued by the Company the terms of which
specifically provide that such equity securities rank on a parity with the
Preferred Stock with respect to distribution rights and/or rights upon
liquidation, dissolution or winding up of the Company, as the case may be; and
(iii) junior to all equity securities issued by the Company the terms of which
specifically provide that such equity securities rank senior to the Preferred
Stock with respect to distribution rights and/or rights upon liquidation,
dissolution or winding up of the Company, as the case may be. As used in the
Certificate of Incorporation, for these purposes, the term "equity securities"
does not include convertible debt securities.
Distributions
Holders of Preferred Stock shall be entitled to receive, when, as and
if authorized by the Board of Directors of the Company, out of assets of the
Company legally available for payment, cash distributions at such rates (or
method of calculation thereof) and on such dates as will be set forth in the
applicable Prospectus Supplement. Each such distribution shall be payable to
holders of record as they appear on the share transfer books of the Company on
such record dates as shall be fixed by the Board of Directors of the Company.
Distributions on any series of the Preferred Stock may be cumulative or
non-cumulative, as provided in the applicable Prospectus Supplement.
Distributions, if cumulative, will be cumulative from and after the date set
forth in the applicable Prospectus Supplement. If the Board of Directors of the
Company fails to authorize a distribution payable on a distribution payment date
on any series of the Preferred Stock for which distributions are noncumulative,
then the holders of such series of the Preferred Stock will have no right to
receive a distribution in respect of the distribution period ending on such
distribution payment date, and the Company will have no obligation to pay the
distribution accrued for such period, whether or not distributions on such
series are authorized for payment on any future distribution payment date.
If any shares of Preferred Stock of any series are outstanding, no full
distributions shall be authorized or paid or set apart for payment on the
preferred stock of the Company of any other series ranking, as to distributions,
on a parity with or junior to the Preferred Stock of such series for any period
unless (i) if such series of Preferred Stock has a cumulative distribution, full
cumulative distributions have been or contemporaneously are authorized and paid
or authorized and a sum sufficient for the payment thereof set apart for such
payment on the Preferred Stock of such series for all past distribution periods
and the then current distribution period or (ii) if such series of Preferred
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29
Stock does not have a cumulative distribution, full distributions for the then
current distribution period have been or contemporaneously are authorized and
paid or authorized and a sum sufficient for the payment thereof set apart for
such payment on the Preferred Stock of such series. When distributions are not
paid in full (or a sum sufficient for such full payment is not so set apart)
upon the Preferred Stock of any series and the shares of any other series of
preferred stock ranking on a parity as to distributions with the Preferred Stock
of such series, all distributions authorized upon the Preferred Stock of such
series and any other series of Preferred Stock ranking on a parity as to
distributions with such Preferred Stock shall be authorized pro rata so that the
amount of distributions authorized per share on the Preferred Stock of such
series and such other series of preferred stock shall in all cases bear to each
other the same ratio that accrued and unpaid distributions per share on the
Preferred Stock of such series (which shall not include any accumulation in
respect of unpaid distributions for prior distribution periods if such shares of
Preferred Stock do not have a cumulative distribution) and such other series of
preferred shares bear to each other. No interest, or sum of money in lieu of
interest, shall be payable in respect of any distribution payment or payments on
Preferred Stock of such series which may be in arrears.
Except as provided in the immediately preceding paragraph, unless (i)
if such series of Preferred Stock has a cumulative distribution, full cumulative
distributions on the Preferred Stock of such series have been or
contemporaneously are authorized and paid or authorized and a sum sufficient for
the payment thereof set apart for payment for all past distribution periods and
the then current distribution period and (ii) if such series of Preferred Stock
does not have a cumulative distribution, full distributions on the Preferred
Stock of such series have been or contemporaneously are authorized and paid or
authorized and a sum sufficient for the payment thereof set apart for payment
for the then current distribution period, no distributions (other than in Common
Stock or other shares of capital stock ranking junior to the Preferred Stock of
such series as to distributions and upon liquidation, dissolution or winding up
of the affairs of the Company) shall be authorized or paid or set aside for
payment or other distribution upon the Common Stock or any other shares of
capital stock of the Company ranking junior to or on a parity with the Preferred
Stock of such series as to distributions or upon liquidation, dissolution or
winding up of the affairs of the Company, nor shall any Common Stock or any
other shares of capital stock of the Company ranking junior to or on a parity
with the Preferred Stock of such series as to distributions or upon liquidation,
dissolution or winding up of the affairs of the Company be redeemed, purchased
or otherwise acquired for any consideration (or any moneys be paid to or made
available for a sinking fund for the redemption of any shares of capital stock )
by the Company (except by conversion into or exchange for other shares of
capital stock of the Company ranking junior to the Preferred Stock of such
series as to distributions and upon liquidation, dissolution or winding up of
the affairs of the Company).
Any distribution payment made on a series of Preferred Stock shall
first be credited against the earliest accrued but unpaid distribution due with
respect to shares of such series which remains payable.
Redemption
If so provided in the applicable Prospectus Supplement, the Preferred
Stock of any series will be subject to mandatory redemption or redemption at the
option of the Company, as a whole or in part, in each case upon the terms, at
the times and at the redemption prices set forth in such Prospectus Supplement.
The Prospectus Supplement relating to a series of Preferred Stock that
is subject to mandatory redemption will specify the number of shares of such
Preferred Stock that shall be redeemed by the Company in each year commencing
after a date to be specified, at a redemption price per share to be specified,
together with an amount equal to all accrued and unpaid distributions thereon
(which shall not, if such Preferred Stock does not have a cumulative
distribution, include any accumulation in respect of unpaid distributions for
prior distribution periods) to the date of redemption. The redemption price may
be payable in cash or other property, as specified in the applicable Prospectus
Supplement. If the redemption price for Preferred Stock of any series is payable
only from the net proceeds of the issuance of shares of capital stock of the
Company, the terms of such Preferred Stock may provide that, if no such shares
of capital stock shall have been issued or to the extent the net proceeds from
any issuance are insufficient to pay in full the aggregate redemption price then
due, such Preferred Stock shall automatically and mandatorily be converted into
shares of the applicable shares of capital stock of the Company pursuant to
conversion provisions specified in the applicable Prospectus Supplement.
Notwithstanding the foregoing, unless (i) if such series of Preferred
Stock has a cumulative distribution, full cumulative distributions on all shares
of such series have been or contemporaneously are authorized and paid or
authorized and a sum sufficient for the payment thereof set apart for payment
for all past distribution periods and the then current distribution period and
(ii) if such series of Preferred Stock does not have a cumulative distribution,
full distributions on all shares of such series have been or contemporaneously
are authorized and paid or authorized and a sum sufficient for the payment
thereof set apart for payment for the then current distribution period, no
shares of such series of Preferred Stock shall be redeemed unless all
outstanding Preferred Stock of such series are simultaneously redeemed;
provided, however, that the foregoing shall not prevent the purchase or
acquisition of Preferred Stock of such series pursuant to a purchase or exchange
offer made on the same terms to holders of all outstanding Preferred Stock of
such series, and, unless (i) if such series of Preferred Stock has a cumulative
distribution, full cumulative distributions on all outstanding shares of such
series have been or contemporaneously are authorized and paid or authorized and
a sum sufficient for the payment thereof set apart for payment for all past
distribution periods and the then current distribution period and (ii) if such
series of Preferred Stock does not have a cumulative distribution, full
distributions on all shares of such series have been or contemporaneously are
authorized and paid or authorized and a sum sufficient for the payment thereof
set apart for payment for the then current distribution period, the Company
shall not purchase or otherwise acquire directly or indirectly any Preferred
Stock of such series (except by conversion into or exchange for shares of
capital stock of the Company ranking junior to the Preferred Stock of such
series as to distributions and upon liquidation).
If fewer than all of the outstanding Preferred Stock of any series are
to be redeemed, the number of shares to be redeemed will be determined by the
Company and such shares may be redeemed pro rata from the holders of record of
such shares in proportion to the number of such shares held by such holders
(with adjustments to avoid redemption of fractional shares) or any other
equitable method determined by the Company.
Notice of redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of record of Preferred Stock
of any series to be redeemed at the address shown on the stock transfer books of
the Company. Each notice shall state: (i) the redemption date; (ii) the number
of shares and series of the Preferred Stock to be redeemed; (iii) the redemption
price; (iv) the place or places where certificates for such Preferred Stock are
to be surrendered for payment of the redemption price; (v) that distributions on
the shares to be redeemed will cease to accrue on such redemption date; and (vi)
the date upon which the holder's conversion rights, if any, as to such shares
shall terminate. If fewer than all the Preferred Stock of any series are to be
redeemed, the notice mailed to each such holder thereof shall also specify the
number of shares of Preferred Stock to be redeemed from each such holder. If
notice of redemption of any Preferred Stock has been properly given and if the
funds necessary for such redemption have been irrevocably set aside by the
Company in trust for the benefit of the holders of any Preferred Stock so called
for redemption, then from and after the redemption date distributions will cease
to accrue on such Preferred Stock, such Preferred Stock shall no longer be
deemed outstanding and all rights of the holders of such shares will terminate,
except the right to receive the redemption price. Any moneys so deposited which
remain unclaimed by the holders of such Preferred Stock at the end of two years
after the redemption date will be returned by the applicable bank or trust
company to the Company.
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Liquidation Preference
Upon any voluntary or involuntary liquidation, dissolution or winding
up of the affairs of the Company, then, before any distribution or payment shall
be made to the holders of any Common Stock or any other class or series of
shares of capital stock of the Company ranking junior to any series of Preferred
Stock in the distribution of assets upon any liquidation, dissolution or winding
up of the Company, the holders of such series of Preferred Stock shall be
entitled to receive, after payment or provision for payment of the Company's
indebtedness and other liabilities, out of assets of the Company legally
available for distribution to shareholders, liquidating distributions in the
amount of the liquidation preference per share (set forth in the applicable
Prospectus Supplement), plus an amount equal to all distributions accrued and
unpaid thereon (which shall not include any accumulation in respect of unpaid
distributions for prior distribution periods if such Preferred Stock do not have
a cumulative distribution). After payment of the full amount of the liquidating
distributions to which they are entitled, the holders of such series of
Preferred Stock will have no right or claim to any of the remaining assets of
the Company. In the event that, upon any such voluntary or involuntary
liquidation, dissolution or winding up, the legally available assets of the
Company are insufficient to pay the amount of the liquidating distributions on
all such outstanding Preferred Stock and the corresponding amounts payable on
all shares of other classes or series of shares of capital stock of the Company
ranking on a parity with such series of Preferred Stock in the distribution of
assets upon liquidation, dissolution or winding up, then the holders of such
series of Preferred Stock and all other such classes or series of shares of
capital stock shall share ratably in any such distribution of assets in
proportion to the full liquidating distributions to which they would otherwise
be respectively entitled.
If the liquidating distributions shall have been made in full to all
holders of a series of Preferred Stock, the remaining assets of the Company
shall be distributed among the holders of any other classes or series of shares
of capital stock ranking junior to such series of Preferred Stock upon
liquidation, dissolution or winding up, according to their respective rights and
preferences and in each case according to their respective number of shares. For
purposes of this section, a distribution of assets in any dissolution, winding
up or liquidation will not include (i) any consolidation or merger of the
Company with or into any other corporation, (ii) any dissolution, liquidation,
winding up, or reorganization of the Company immediately followed by
organization of another entity to which such assets are distributed or (iii) a
sale or other disposition of all or substantially all of the Company's assets to
another entity; provided that, in each case, effective provision is made in the
charter of the resulting and surviving entity or otherwise for the recognition,
preservation and protection of the rights of the holders of Preferred Stock.
Voting Rights
Holders of any series of Preferred Stock will not have any voting
rights, except as set forth below or as otherwise from time to time required by
law or as indicated in the applicable Prospectus Supplement.
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Unless provided otherwise for any series of Preferred Stock, so long as
any Preferred Stock remain outstanding, the Company will not, without the
affirmative vote or consent of the holders of a majority of the shares of each
series of Preferred Stock outstanding at the time, given in person or by proxy,
either in writing or at a meeting (such series voting separately as a class),
(i) authorize, create or issue, or increase the authorized or issued amount of,
any class or series of shares of capital stock ranking prior to such series of
Preferred Stock with respect to payment of distributions or the distribution of
assets upon liquidation, dissolution or winding up, or reclassify any authorized
shares of capital stock of the Company into any such shares, or create,
authorize or issue any obligation or security convertible into or evidencing the
right to purchase any such shares; or (ii) amend, alter or repeal the provisions
of the Certificate of Incorporation, including the applicable Certificate of
Designation for such series of Preferred Stock, whether by merger, consolidation
or otherwise, so as to materially and adversely affect any right, preference,
privilege or voting power of such series of Preferred Stock or the holders
thereof; provided, however, that any increase in the amount of the authorized
Preferred Stock or the creation or issuance of any other series of Preferred
Stock, or any increase in the amount of authorized shares of such series or any
other series of Preferred Stock, in each case ranking on a parity with or junior
to the Preferred Stock of such series with respect to payment of distributions
or the distribution of assets upon liquidation, dissolution or winding up, shall
not be deemed to materially and adversely affect such rights, preferences,
privileges or voting powers.
The foregoing voting provisions will not apply if, at or prior to the
time when the act with respect to which such vote would otherwise be required
shall be affected, all outstanding shares of such series of Preferred Stock
shall have been redeemed or called for redemption upon proper notice and
sufficient funds shall have been irrevocably deposited in trust to effect such
redemption.
Whenever distributions on any Preferred Stock shall be in arrears for
six or more consecutive quarterly periods, the holders of such Preferred Stock
(voting together as a class with all other series of Preferred Stock upon which
like voting rights have been conferred and are exercisable) will be entitled to
vote for the election of two additional directors of the Company until, (i) if
such series of Preferred Stock has a cumulative distribution, all distributions
accumulated on such Preferred Stock for the past distribution periods and the
then current distribution period shall have been fully paid or authorized and a
sum sufficient for the payment thereof set aside for payment or (ii) if such
series of Preferred Stock does not have a cumulative distribution, four
consecutive quarterly distributions shall have been fully paid or authorized and
a sum sufficient for the payment thereof set aside for payment. In such case,
the entire Board of Directors of the Company will be increased by two directors.
Conversion Rights
The terms and conditions, if any, upon which any series of Preferred
Stock are convertible into Common Stock will be set forth in the applicable
Prospectus Supplement relating thereto. Such terms will include the number of
shares of Common Stock into which the Preferred Stock are convertible, the
conversion price (or manner of calculation thereof), the conversion period,
provisions as to whether conversion will be at the option of the holders of the
Preferred Stock or the Company, the events requiring an adjustment of the
conversion price and provisions affecting conversion in the event of the
redemption of such Preferred Stock.
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DESCRIPTION OF COMMON STOCK
General
As of March 31, 1998, the Company had outstanding 20,644,649 shares of
Common Stock. The following description of the Common Stock sets forth certain
general terms and provisions of the Common Stock to which any Prospectus
Supplement may relate, including a Prospectus Supplement providing that Common
Stock will be issuable upon conversion of Debt Securities or Preferred Stock or
upon the exercise of Warrants or Rights. The statements below describing the
Common Stock are in all respects subject to and qualified in their entirety by
reference to the applicable provisions of the Certificate of Incorporation and
the Company's Bylaws.
Holders of Common Stock will be entitled to receive distributions when,
as and if authorized and declared by the Board of Directors of the Company, out
of funds legally available therefor. Upon any liquidation, dissolution or
winding up of the Company, holders of Common Stock will be entitled to share
equally and ratably in any assets available for distribution to them, after
payment or provision for payment of the indebtedness and other liabilities of
the Company and the preferential amounts owing with respect to any outstanding
Preferred Stock. The Common Stock will possess ordinary voting rights for the
election of directors and in respect of other corporate matters, each share
entitling the holder thereof to one vote. Holders of Common Stock will not have
cumulative voting rights in the election of directors, which means that holders
of more than 50% of all of the outstanding shares of Common Stock voting for the
election of directors can elect all of the directors if they choose to do so and
the holders of the remaining shares cannot elect any directors. Approval of the
following matters requires the affirmative vote of the holders of a majority of
all outstanding shares of Common Stock: certain amendments to the Certificate of
Incorporation, termination of the Company, removal of a director, certain
mergers, reorganizations or consolidations of the Company or the sale,
conveyance, exchange or other disposition of all or substantially all of the
Company's property. Holders of Common Stock will not have preemptive rights,
which means they have no right to acquire any additional shares of Common Stock
that may be issued by the Company at a subsequent date. The Common Stock will,
when issued, be fully paid and nonassessable.
The Registrar and Transfer Agent for the Company's Common Stock is
American Stock Transfer Company.
Delaware Anti-Takeover Statute
The Company is a Delaware corporation and is subject to Section 203 of
the General Corporation Law of Delaware ("Delaware Law"). In general, Section
203 prevents an "interested stockholder" (defined generally as a person owing
15% or more of the Company's outstanding voting stock) from engaging in a
"business combination" (as defined in Section 203) with the Company for three
years following the date that person becomes an interested stockholder unless
(a) before that person became an interested stockholder, the Company's Board of
Directors approved the transaction in which the interested stockholder became an
interested stockholder or approved the business combination, (b) upon completion
of the transaction that resulted in the interested stockholder's becoming an
interested stockholder, the interested stockholder owns at least 85% of the
Company's voting stock outstanding at the time the transaction commenced
(excluding stock held by directors who are also officers of the Company and by
employee stock plans that do not provide employees with the right to determine
confidentially whether shares held subject to the plan will be tendered in a
tender or exchange offer), or (c) following the transaction in which that person
became an interested stockholder, the business combination is approved by the
Company's Board of Directors and authorized at a meeting of stockholders by the
affirmative vote of the holders of at least two-thirds of the outstanding
Company voting stock not owned by the interested stockholder.
Under Section 203, these restrictions also do not apply to certain
business combinations proposed by an interested stockholder following the
announcement or notification of one of certain extraordinary transactions
involving the Company and a person who was not an interested stockholder during
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the previous three years or who became an interested stockholder with the
approval of a majority of the Company's directors, if that extraordinary
transaction is approved or not opposed by a majority of the directors who were
directors before any person became an interested stockholder in the previous
three years or who were recommended for election or elected to succeed such
directors by a majority of such directors then in office.
DESCRIPTION OF WARRANTS
The Company may issue Warrants for the purchase of Debt Securities,
Preferred Stock or Common Stock. Warrants may be issued independently or
together with any Offered Securities and may be attached to or separate from
such securities. Each series of Warrants will be issued under a separate warrant
agreement (each, a "Warrant Agreement") to be entered into between the Company
and a warrant agent ("Warrant Agent"). The Warrant Agent will act solely as an
agent of the Company in connection with the Warrants of such series and will not
assume any obligation or relationship of agency or trust for or with any holders
or beneficial owners of Warrants. The following sets forth certain general terms
and provisions of the Warrants offered hereby. Further terms of the Warrants and
the applicable Warrant Agreement will be set forth in the applicable Prospectus
Supplement.
The applicable Prospectus Supplement will describe the following terms,
where applicable, of the Warrants in respect of which this Prospectus is being
delivered: (1) the title of such Warrants; (2) the aggregate number of such
Warrants; (3) the price or prices at which such Warrants will be issued; (4) the
currencies in which the price of such Warrants may be payable; (5) the
designation, aggregate principal amount and terms of the securities purchasable
upon exercise of such Warrants; (6) the designation and terms of the Offered
Securities with which such Warrants are issued and the number of such Warrants
issued with each such security; (7) the currency or currencies, including
composite currencies, in which the principal of or any premium or interest on
the securities purchasable upon exercise of such Warrants will be payable; (8)
if applicable, the date on and after which such Warrants and the related
securities will be separately transferable; (9) the price at which and currency
or currencies, including composite currencies, in which the securities
purchasable upon exercise of such Warrants may be purchased; (10) the date on
which the right to exercise such Warrants shall commence and the date on which
such right shall expire; (11) the minimum or maximum amount of such Warrants
which may be exercised at any one time; (12) information with respect to
book-entry procedures, if any; (13) a discussion of certain Federal income tax
considerations; and (14) any other terms of such Warrants, including terms,
procedures and limitations relating to the exchange and exercise of such
Warrants.
DESCRIPTION OF RIGHTS
The Company may issue Rights to its stockholders for the purchase of
shares of Preferred Stock or Common Stock. Each series of Rights will be issued
under a separate rights agreement (a "Rights Agreement") to be entered into
between the Company and a bank or trust company, as Rights agent, all as set
forth in the Prospectus Supplement relating to the particular issue of Rights.
The Rights agent will act solely as an agent of the Company in connection with
the certificates relating to the Rights and will not assume any obligation or
relationship of agency or trust for or with any holders of Rights certificates
or beneficial owners of Rights. The Rights Agreement and the Rights certificates
relating to each series of Rights will be filed with the Commission and
incorporated by reference as an exhibit to the Registration Statement of which
this Prospectus is a part at or prior to the time of the issuance of such series
of Rights.
The applicable Prospectus Supplement will describe the terms of the
Rights to be issued, including the following where applicable: (i) the date for
determining the stockholders entitled to the Rights distribution; (ii) the
aggregate number of shares of Preferred Stock or Common Stock purchasable upon
exercise of such Rights and the exercise price; (iii) the aggregate number of
Rights being issued; (iv) the date, if any, on and after which such Rights may
be transferable separately; (v) the date on which the right to exercise such
Rights shall commence and the date on which such right shall expire; (vi) any
special Federal income tax consequences; and (vii) any other terms of such
Rights, including terms, procedures and limitations relating to the
distribution, exchange and exercise of such Rights.
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PLAN OF DISTRIBUTION
The Company may sell the Offered Securities to one or more underwriters
for public offering and sale by them or may sell the Offered Securities to
investors directly or through agents or through a combination of any such
methods of sale. Any such underwriter or agent involved in the offer and sale of
the Offered Securities will be named in the applicable Prospectus Supplement.
Underwriters may offer and sell the Offered Securities at a fixed price
or prices, which may be changed, at prices related to the prevailing market
prices at the time of sale or at negotiated prices. The Company also may offer
and sell the Offered Securities in exchange for one or more of its then
outstanding issues of indebtedness or convertible debt securities. The Company
also may, from time to time, authorize underwriters acting as the Company's
agents to offer and sell the Offered Securities upon the terms and conditions as
are set forth in the applicable Prospectus Supplement. In connection with the
sale of Offered Securities, underwriters may be deemed to have received
compensation from the Company in the form of underwriting discounts or
commissions and may also receive commissions from purchasers of Offered
Securities for whom they may act as agent. Underwriters may sell Offered
Securities to or through dealers, and such dealers may receive compensation in
the form of discounts, concessions or commissions from the underwriters and/or
commissions from the purchasers for whom they may act as agent.
Any underwriting compensation paid by the Company to underwriters or
agents in connection with the offering of Offered Securities, and any discounts,
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in the applicable Prospectus Supplement. Underwriters, dealers
and agents participating in the distribution of the Offered Securities may be
deemed to be underwriters, and any discounts and commissions received by them
and any profit realized by them on resale of the Offered Securities may be
deemed to be underwriting discounts and commissions, under the Securities Act.
Underwriters, dealers and agents may be entitled, under agreements entered into
with the Company, to indemnification against and contribution toward certain
civil liabilities, including liabilities under the Securities Act. In the
opinion of the Commission, such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
Unless otherwise specified in the applicable Prospectus Supplement,
each series of Offered Securities will be a new issue with no established
trading market, other than the Common Stock which is listed on the New York
Stock Exchange. Any shares of Common Stock sold pursuant to a Prospectus
Supplement will be listed on the NYSE, subject to official notice of issuance.
The Company may elect to list the Offered Securities on an exchange, but is but
is not obligated to do so. It is possible that one or more underwriters may make
a market in the Offered Securities, but will not be obligated to do so and may
discontinue any market making at any time without notice. Therefore, no
assurance can be given as to the liquidity of, or the trading market for, the
Offered Securities.
If so indicated in a Prospectus Supplement, the Company will authorize
agents, underwriters or dealers to solicit offers by certain institutional
investors to purchase Offered Securities of the series to which such Prospectus
Supplement relates providing for payment and delivery on a future date specified
in such Prospectus Supplement. There may be limitations on the minimum amount
which may be purchased by any such institutional investor or on the portion of
the aggregate principal amount of the particular Offered Securities which may be
sold pursuant to such arrangements. Institutional investors to which such offers
may be made, when authorized, include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and such other institutions as may be approved by the Company. The
obligations of any such purchasers pursuant to such delayed delivery and payment
arrangements will not be subject to any conditions except that (i) the purchase
by an institution of the particular Offered Securities shall not at the time of
delivery be prohibited under the laws of any jurisdiction in the United States
to which such institution is subject, and (ii) if the particular Offered
Securities are being sold to underwriters, the Company shall have sold to such
underwriters the total principal amount of such Offered Securities or number of
Warrants less the principal amount or number thereof, as the case may be,
covered by such arrangements. Underwriters will not have any responsibility in
respect of the validity of such arrangements or the performance of the Company
or such institutional investors thereunder.
<PAGE>
35
Certain of the underwriters and their affiliates may be customers of,
engage in transactions with and perform services for the Company and its
subsidiaries in the ordinary course of business.
In order to comply with the securities laws of certain states, if
applicable, the Offered Securities offered hereby will be sold in such
jurisdictions only through registered or licensed brokers or dealers. In
addition, in certain states Offered Securities may not be sold unless they have
been registered or qualified for sale in the applicable state or an exemption
from the registration or qualification requirement is available and is complied
with.
ERISA MATTERS
The Company may be considered a "party in interest" within the meaning
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and a "disqualified person" under corresponding provisions of the Code with
respect to certain employee benefit plans. Certain transactions between an
employee benefit plan and a party in interest or disqualified person may result
in "prohibited transactions" within the meaning of ERISA and the Code, unless
such transactions are effected pursuant to an applicable exemption. Any employee
benefit plan or other entity subject to such provisions of ERISA or the Code
proposing to invest in the Offered Securities should consult with its legal
counsel.
LEGAL OPINIONS
Certain legal matters will be passed upon for the Company by Robinson
Silverman Pearce Aronsohn & Berman LLP, New York, New York.
INDEPENDENT ACCOUNTANTS
The financial staements incorporated in this Prospectus by reference to
the Annual Report on Form 10-K for the year ended December 31, 1997, have been
so incorporated in reliance on the report of Price Waterhouse LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
<PAGE>
36
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table itemizes the expenses incurred by the Company in
connection with the offering of the Offered Securities being registered. All the
amounts shown are estimates except the Securities and Exchange Commission
registration fee.
Item Amount
Registration Fee -- Securities and
Exchange Commission........................ $ 88,500
New York Stock Exchange Listing Fee.......... 35,000*
Rating Agency Fees........................... 75,000*
Legal Fees and Expenses...................... 10,000*
Accounting Fees and Expenses................. 10,000*
Blue Sky Fees and Expenses................... 5,000*
Miscellaneous Expenses....................... 10,000*
-----------
Total........................ $ 233,500*
===========
- ---------------------
* Estimated
Item 15. Indemnification of Trustees and Officers.
Section 145 of the Delaware General Corporation Law ("DGCL") and
Article IX of the Company's Amended and Restated By-laws provide for the
indemnification of the Company's directors and officers in a variety of
circumstances, which may include liabilities under the Securities Act of 1933,
as amended (the "Securities Act").
Article IX of the Company's Amended and Restated By-laws generally
requires the Company to indemnify its officers and directors against all
liabilities (including judgments, settlements, fines and penalties) and
reasonable expenses incurred in connection with the investigation, defense,
settlement or appeal of certain actions, whether instituted by a third party or
a stockholder (either directly or indirectly) and including specifically, but
without limitation, actions brought under the Securities Act, and/or the
Exchange Act; except that no such indemnification will be permitted if such
director or officer was not successful in defending against any such action and
it is determined that the director or officer breached or failed to perform his
or her duties to the Company, and such breach or failure constitutes (i) a
willful breach of his or her "duty of loyalty", (ii) acts or omissions not in
good faith or involving intentional misconduct or a knowing violation of the
law, (iii) a violation of Section 174 of the Delaware General Corporation Law,
relating to prohibited dividends or distributions or the repurchase or
redemption of stock or (iv) a transaction where such individual derived an
improper financial profit (unless it is deemed that such profit is immaterial in
light of all of the circumstances) (collectively, "Breach of Duty").
Notwithstanding the foregoing, subject to certain exceptions, the Amended and
Restated By-laws provide that directors or officers initiating an action, are
not entitled to indemnification.
The Amended and Restated By-laws also establish certain procedures by
which (i) a director or officer may request an advance on his or her reasonable
expenses, prior to the final disposition of an action, (ii) the Company may
withhold an indemnification payment from a director or officer, (iii) a director
or officer may be entitled to partial indemnification and (iv) a director or
officer may challenge the Company's denial to furnish him or her with requested
indemnification. Additionally, the Amended and Restated By-laws provide that the
adverse termination of an action against an officer or director, is not in and
of itself sufficient to create a presumption that a director or officer engaged
in conduct constituting a Breach of Duty.
Finally, the Company's Amended and Restated 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
II-1
<PAGE>
37
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" (as further defined therein) to the
Company or its stockholders, (ii) for acts or omissions not in "good faith" (as
further defined therein) or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the DGCL, relating in general to
the willful or negligent payment of an illegal dividend or the authorization of
an unlawful stock repurchase or redemption, or (iv) for any transaction from
which the director derived an improper personal profit to the extent of such
profit. This provision of the Restated Certificate of Incorporation 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.
Although the validity and scope of Section 145 of the DGCL has not been tested
in court, 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 16. Exhibits
1.1 Form of Underwriting Agreement(s).*
4.1 Warrant Agreement dated as of December 20, 1993 between Terex
Corporation and Mellon Securities Trust Company, as Warrant Agent
(incorporated by reference to Exhibit 4.40 to the Form S-1 Registration
Statement of Terex Corporation, Registration No. 33-52297).
4.2 Form of Series A Warrant (incorporated by reference to Exhibit
4.41 to the Form S-1 Registration Statement of Terex Corporation,
Registration No. 33-52297).
4.3 Certificate of Elimination with respect to the Series B Preferred
Stock.
4.4 Indenture dated as of May 9, 1995 among Terex Corporation, the
Guarantors named therein and United States Trust Company of New York,
as Trustee (incorporated by reference to Exhibit 4.7 of Amendment No. 1
to the Form S-1 Registration Statement of Terex Corporation,
Registration No. 33-52711).
4.5 Fifth Supplemental Indenture dated as of February 18, 1998 among Terex
Corporation, the Guarantors named therein and United States Trust
Company of New York, as Trustee (incorporated by reference to Exhibit
4.5 of the 1997 Annual Report on Form 10-K, Commission File No.
1-10702.
4.6 Indenture, dated as of March 31, 1998, between Terex Corporation, each
of the subsidiaries of Terex Corporation listed therein, as Issuer and
United States Trust Company of New York, as Trustee, for $150,000,000
of 8-7/8% Senior Subordinated Notes due 2008 (incorporated by reference
to Exhibit 10.9 of the Form 8-K Current Report, Commission File No.
1-10702, dated March 31, 1998 and filed with the Commission on April 7,
1998).
4.7 Form of Indenture relating to Senior Securities to be entered into
by the Company and a trustee to be selected by the Company.*
4.8 Form of Senior Security.*
4.9 Form of Indenture relating to Subordinated Securities to be entered
into by the Company and a trustee to be selected by the Company.*
II-2
<PAGE>
38
4.10 Form of Subordinated Security.*
4.11 Form of Certificate of Designation for the Preferred Stock.*
4.12 Form of Preferred Stock Certificate.*
4.13 Form of Common Stock Certificate.*
4.14 Form of Common Stock Warrant Agreement.*
4.15 Form of Preferred Stock Warrant Agreement.*
4.16 Form of Rights Agreement.*
5.1 Opinion of Robinson Silverman Pearce Aronsohn & Berman LLP re: legality
of the Offered Securities.**
12.1 Ratio of earnings to fixed charges.**
23.1 Independent Accountants' Consent of Price Waterhouse LLP, Stamford,
Connecticut.**
23.2 Consent of Robinson Silverman Pearce Aronsohn & Berman LLP (included as
part of Exhibit 5.1).
24.1 Power of attorney (included on signature page).
25.1 Statement of Eligibility of Senior Securities Trustee on Form T-1.*
25.2 Statement of Eligibility of Subordinated Securities Trustee on
Form T-1.*
- -----------------
* To be filed by amendment, Current Report of Form 8-K, or incorporated
by reference in connection with the offering of Offered Securities.
** Filed herewith.
Item 17. Undertakings.
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 or any material change to
such information in the registration statement;
II-3
<PAGE>
39
provided, however, that paragraphs (1)(i) and
(1)(ii) do not apply if the registration statement
is on Form S-3 or Form S-8, and the information
required to be included in a post-effective
amendment by those paragraphs is contained in
periodic reports filed or furnished to the
Commission by the registratrant pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference 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.
The undersigned Registrant hereby further undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby further undertakes to file an
application for the purpose of determining the eligibility of the trustee to act
under subsection (a) of Section 310 of the Trust Indenture Act in accordance
with the rules and regulations prescribed by the Commission under Section
305(b)(2) of the Act.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant 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 Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issues.
II-4
<PAGE>
40
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing a Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Westport, Connecticut, on May 18, 1998.
TEREX CORPORATION
By: /s/ Ronald M. DeFeo
Ronald M. DeFeo
Chairman of the Board, President
and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Ronald M. DeFeo or Eric I Cohen,
his true and lawful attorney-in-fact and agent, with full power of substitution
and resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this registration statement, and to file the same, with exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or either of them, or their or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
/s/ Ronald M. DeFeo Chairman, Chief Executive Officer May 18, 1998
- --------------------- and Director
Ronald M. DeFeo (Principal Executive Officer)
/s/ David J. Langevin Executive Vice President May 18, 1998
- --------------------- (Acting Principal Financial Officer)
David J. Langevin
/s/ Joseph F. Apuzzo Vice President Finance May 18, 1998
- --------------------- and Controller
Joseph F. Apuzzo (Principal Accounting Officer)
/s/ G. Chris Andersen Director May 18, 1998
- ----------------------
G. Chris Andersen
/s/ William H. Fike Director May 18, 1998
- ----------------------
William H. Fike
/s/ Bruce I. Raben Director May 18, 1998
- ----------------------
Bruce I. Raben
/s/ Marvin B. Rosenberg Director May 18, 1998
- -----------------------
Marvin B. Rosenberg
/s/ David A. Sachs Director May 18, 1998
- -----------------------
David A. Sachs
/s/ Adam E. Wolf Director May 18, 1998
- -----------------------
Adam E. Wolf
<PAGE>
41
EXHIBIT INDEX
Exhibit No. Description Page No.
1.1 Form of Underwriting Agreement(s).*
4.1 Warrant Agreement dated as of December 20, 1993
between Terex Corporation and Mellon Securities Trust
Company, as Warrant Agent (incorporated by reference to
Exhibit 4.40 to the Form S-1 Registration Statement of Terex
Corporation, Registration No. 33-52297).
4.2 Form of Series A Warrant (incorporated by reference to Exhibit
4.41 to the Form S-1 Registration Statement of Terex Corporation,
Registration No. 33-52297).
4.3 Certificate of Elimination with respect to the Series B
Preferred Stock.
4.4 Indenture dated as of May 9, 1995 among Terex
Corporation, the Guarantors named therein and United States
Trust Company of New York, as Trustee (incorporated by
reference to Exhibit 4.7 of Amendment No. 1 to the Form
S-1 Registration Statement of Terex Corporation,
Registration No. 33-52711).
4.5 Fifth Supplemental Indenture dated as of February 18, 1998
among Terex Corporation, the Guarantors named therein and
United States Trust Company of New York, as Trustee
(incorporated by reference to Exhibit 4.5 of the 1997
Annual Report on Form 10-K, Commission File No. 1-10702).
4.6 Indenture, dated as of March 31, 1998, between Terex
Corporation, each of the subsidiaries of Terex Corporation
listed therein, as Issuer and United States Trust Company
of New York, as Trustee, for $150,000,00 of 8-7/8% Senior
Subordinated Notes due 2008 (incorporated by reference to
Exhibit 10.9 of the Form 8-K Current Report, Commission
File No. 1-10702, dated March 31, 1998 and filed with the
Commission on April 7, 1998).
4.7 Form of Indenture relating to Senior Securities to be
entered into by the Company and a trustee to be selected
by the Company.*
4.8 Form of Senior Security.*
4.9 Form of Indenture relating to Subordinated Securities to
be entered into by the Company and a trustee to be selected
by the Company.*
4.10 Form of Subordinated Security.*
4.11 Form of Certificate of Designation for the Preferred Stock.*
4.12 Form of Preferred Stock Certificate.*
4.13 Form of Common Stock Certificate.*
4.14 Form of Common Stock Warrant Agreement.*
4.15 Form of Preferred Stock Warrant Agreement.*
<PAGE>
42
4.16 Form of Rights Agreement.*
5.1 Opinion of Robinson Silverman Pearce Aronsohn & Berman
LLP re: legality of the Offered Securities.**
12.1 Ratio of Earnings to Fixed Charges.**
23.1 Independent Accountants' Consent of Price Waterhouse
LLP, Stamford, Connecticut.**
23.2 Consent of Robinson Silverman Pearce Aronsohn & Berman LLP
(included as part of Exhibit 5.1).
24.1 Power of attorney (included on signature page).
25.1 Statement of Eligibility of Senior Securities Trustee on
Form T-1.*
25.2 Statement of Eligibility of Subordinated Securities Trustee
on Form T-1.*
- ---------------------
* To be filed by amendment, Current Report on Form 8-K or incorporated by
reference in connection with the offering of Offered Securities.
** Filed herewith.
<PAGE>
43
EXHIBIT 12.1
<TABLE>
<CAPTION>
TEREX CORPORATION
CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES
(amounts in millions)
Three Months Ended
Year Ended December 31, March 31,
-------------------------------------------------- -------------------
Proforma
1997 1996 1995 1994 1993 1998 1997
------- -------- -------- ------- ------- -------- --------
Earnings
Income (loss) before taxes and minority
<S> <C> <C> <C> <C> <C> <C> <C>
interest....................................$ 30.3 $ (54.3) $ (32.1) $ 4.9 $ (40.7) $ 14.4 $ 3.9
Adjustments:
Minority interest in losses of
consolidated subsidiaries................. --- --- --- --- --- --- ---
Undistributed (income) loss of less
than 50% owned investments............... --- --- --- --- --- --- ---
Distributions from less than 50%
owned investments........................ --- --- --- --- --- --- ---
Fixed charges............................... 49.0 72.2 50.4 39.7 33.6 9.8 11.4
-------- -------- -------- ------- ------- -------- --------
Earnings...................................... 79.3 17.9 18.3 44.6 (6.4) 24.2 15.3
-------- -------- -------- ------- ------- -------- --------
Combined fixed charges, including
preferred accretion
Interest expense, including debt
discount amortization....................... 39.4 45.2 39.5 30.5 31.2 8.8 9.8
Accretion of redeemable convertible........... 4.8 22.9 7.3 5.9 0.2 0.0 0.4
Amortization/writeoff of debt issuance
costs....................................... 2.6 2.6 2.5 2.3 1.3 0.5 0.7
Portion of rental expense representative
of interest factor (assumed to be 33%)..... 2.2 1.5 1.3 1.0 0.9 0.5 0.5
-------- -------- -------- -------- ------- -------- --------
Fixed charges.................................$ 49.0 $ 72.2 $ 50.4 $ 39.7 $ 33.6 9.8 11.4
-------- -------- -------- -------- ------- -------- --------
Ratio of earnings to combined fixed charges..... 1.6x (1) (1) 1.1x (1) 2.5x 1.3x
======== ======== ======== ======== ======= ======== ========
Amount of earnings deficiency for coverage
of combined fixed charges....................$ --- $ 54.3 $ 32.1 $ --- $ 40.0 0.0 0.0
========= ======== ======== ======== ======= ======== ========
</TABLE>
(1) Less than 1.0x
<PAGE>
May 18, 1998
Terex Corporation
500 Post Road East
Westport, CT 06880
Ladies and Gentlemen:
We have served as counsel to Terex Corporation, a Delaware
corporation (the "Company"), in connection with the Registration Statement on
Form S-3 (the "Registration Statement") filed by the Company on the date hereof
with the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Act"), relating to (i) unsecured debt
securities ("Debt Securities"), which may be either senior or subordinated Debt
Securities, (ii) shares of preferred stock, par value $.01 per share ("Preferred
Stock"), (iii) shares of common stock, par value $.01 per share ("Common
Stock"), (iv) warrants to purchase Debt Securities, Preferred Stock or Common
Stock (collectively, "Warrants") and (v) rights to purchase Preferred Stock and
Common Stock ("Rights," and together with the Debt Securities, Preferred Stock,
Common Stock and Warrants, the "Securities"), to be offered by the Company from
time to time pursuant to Rule 415 under the Act for an aggregate initial
offering price not to exceed $300,000,000. Capitalized terms used and not
otherwise defined herein have the respective meanings ascribed to such terms in
the Registration Statement.
In connection with our representation of the Company, we have
examined the Restated Certificate of Incorporation (the "Charter") and Amended
and Restated By-Laws of the Company, each as amended to date (together, the
"Charter Documents"), certificates of public officials, originals or copies,
certified or otherwise identified to our satisfaction, of such other corporate
records, documents, certificates, and other instruments as we considered
appropriate as a basis for the opinions hereafter expressed.
In connection with this opinion, we have assumed that (i) the
Registration Statement, and any amendments thereto (including post-effective
amendments), will have become effective; (ii) a Prospectus Supplement will have
been prepared and filed with the Commission describing the Securities offered
thereby; (iii) all Securities will be issued and sold in compliance with
applicable federal and state securities laws and in the manner described in the
<PAGE>
Terex Corporation
May 18, 1998
Page 2
Registration Statement and the appropriate Prospectus Supplement; (iv) a
definitive purchase, underwriting or similar agreement with respect to any
Securities offered will have been duly authorized and validly executed and
delivered by the Company and the other parties thereto; (v) any securities
issuable upon conversion, exchange, redemption or exercise of any Securities
being offered will have been duly authorized, created and, if appropriate,
reserved for issuance upon such conversion, exchange, redemption or exercise and
(vi) with respect to shares of Common Stock or Preferred Stock offered, there
will be sufficient shares of Common Stock or Preferred Stock authorized under
the Company's Charter Documents and not otherwise reserved for issuance.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Company is a corporation duly incorporated and validly existing in
good standing under the laws of the State of Delaware.
2. With respect to Debt Securities to be issued under the Senior Securities
Indenture, when (i) the Senior Securities Indenture has been duly qualified
under the Trust Indenture Act of 1939, as amended (the "TIA"); (ii) the Board of
Directors of the Company or, to the extent permitted by the Delaware General
Corporation Law (the "DGCL") and the Charter Documents, a duly constituted and
acting committee thereof (such Board of Directors or committee being hereinafter
referred to as the "Board") has taken all necessary corporate action to approve
and establish the terms of such Debt Securities, to approve the issuance thereof
and the terms of the offering thereof and related matters; (iii) the terms of
such Debt Securities and of their issuance and sale have been established so as
not to violate any applicable law or result in a default under or breach of any
agreement or instrument binding upon the Company and so as to comply with any
requirement or restriction imposed by any court or governmental body having
jurisdiction over the Company; and (iv) such Debt Securities have been duly
executed, authenticated, issued and delivered in accordance with both the
provisions of the Senior Debt Indenture and either (a) the provisions of the
applicable definitive purchase, underwriting or similar agreement approved by
the Board upon payment of the consideration therefor provided for therein or (b)
upon conversion, exchange, redemption or exercise of any other Security, in
accordance with the terms of such Security or the instrument governing such
Security providing for such conversion, exchange, redemption or exercise as
approved by the Board, for the consideration approved by the Board, such Debt
Securities will be legally issued and will constitute valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except as such enforcement is subject to the effect of (i)
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other laws relating to or affecting creditors' rights generally and (ii) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
<PAGE>
Terex Corporation
May 18, 1998
Page 3
3. With respect to Debt Securities to be issued under the Subordinated
Securities Indenture, when (i) the Subordinated Securities Indenture has been
duly qualified under the TIA; (ii) the Board has taken all necessary corporate
action to approve and establish the terms of such Debt Securities, to approve
the issuance thereof and the terms of the offering thereof and related matters;
(iii) the terms of such Debt Securities and of their issuance and sale have been
established so as not to violate any applicable law or result in a default under
or breach of any agreement or instrument binding upon the Company and so as to
comply with any requirement or restriction imposed by any court or governmental
body having jurisdiction over the Company; and (iv) such Debt Securities have
been duly executed, authenticated, issued and delivered in accordance with both
the provisions of the Subordinated Debt Indenture and either (a) in accordance
with the provisions of the applicable definitive purchase, underwriting or
similar agreement approved by the Board upon payment of the consideration
therefor provided for therein or (b) upon conversion, exchange, redemption or
exercise of any other Security, in accordance with the terms of such Security or
the instrument governing such Security providing for such conversion, exchange,
redemption or exercise as approved by the Board, for the consideration approved
by the Board, such Debt Securities will be legally issued and will constitute
valid and binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as such enforcement is subject to the effect
of (i) bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance
or other laws relating to or affecting creditors' rights generally and (ii)
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
4. Pursuant to the Charter, the Company is authorized to issue up to
10,000,000 shares of Preferred Stock. Assuming that the aggregate number of
shares of Preferred Stock issued and sold pursuant to the Registration Statement
by the Company, along with all other shares of Preferred Stock issued by the
Company or reserved for issuance, does not exceed 10,000,000 shares (or such
other number of shares of Preferred Stock as may then be authorized for issuance
under the Charter), when (i) the Board has taken all necessary corporate action
to approve and establish the terms of the shares of Preferred Stock, to approve
the issuance thereof and the terms of the offering thereof and related matters,
including the adoption of a Certificate of Designation relating to such
Preferred Stock (a "Certificate of Designation") and the filing of such
Certificate of Designation with the Secretary of State of the State of Delaware
in accordance with the DGCL, and (ii) certificates representing the shares of
Preferred Stock have been duly executed, countersigned, registered and delivered
either (a) in accordance with the applicable definitive purchase, underwriting
or similar agreement approved by the Board upon payment of the consideration
therefor (not less than the par value of the Preferred Stock) provided for
therein, or (b) upon conversion, exchange, redemption or exercise of any other
Security, in accordance with the terms of such Security or the instrument
governing such Security providing for such conversion, exchange, redemption or
exercise as approved by the Board, for the consideration approved by the Board
(not less than the par value of the Preferred Stock), the shares of Preferred
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Terex Corporation
May 18, 1998
Page 4
Stock will be duly authorized, validly issued, fully paid and non-assessable.
5. Pursuant to the Charter, the Company is authorized to issue up to
30,000,000 shares of Common Stock. Assuming that the aggregate number of shares
of Common Stock issued and sold pursuant to the Registration Statement by the
Company, along with all other shares of Common Stock from time to time issued
and outstanding or reserved for issuance, does not exceed 30,000,000 shares (or
such other number of shares of Common Stock as may then be authorized for
issuance under the Charter), when (i) the Board has taken all necessary
corporate action to approve the issuance thereof and the terms of the offering
of shares of Common Stock and related matters, and (ii) certificates
representing the shares of Common Stock have been duly executed, countersigned,
registered and delivered either (a) in accordance with the applicable definitive
purchase, underwriting or similar agreement approved by the Board upon payment
of the consideration therefor (not less than the par value of the Common Stock)
provided for therein, or (b) upon conversion, exchange, redemption or exercise
of any other Security, in accordance with the terms of such Security or the
instrument governing such Security providing for such conversion, exchange,
redemption or exercise as approved by the Board, for the consideration approved
by the Board (not less than the par value of the Common Stock and, in the case
of shares of Common Stock issued upon the conversion, exchange or exercise of
another security, the consideration specified in the DGCL), the shares of Common
Stock will be duly authorized, validly issued, fully paid and non-assessable.
6. With respect to Warrants, when (i) the Board has taken all necessary
corporate action to approve and establish the terms of such Warrants, to approve
the issuance thereof and the terms of the offering thereof and related matters;
(ii) the terms of such Warrants and of their issuance and sale have been
established so as not to violate any applicable law or result in a default under
or breach of any agreement or instrument binding upon the Company and so as to
comply with any requirement or restriction imposed by any court or governmental
body having jurisdiction over the Company; (iii) the warrant agreement relating
to the Warrants has been duly authorized and validly executed and delivered by
the Company and the warrant agent appointed by the Company; and (iv) the
Warrants or certificates representing the Warrants have been duly executed,
countersigned, registered and delivered in accordance with the appropriate
warrant agreement and the applicable definitive purchase, underwriting or
similar agreement approved by the Board and upon payment of the consideration
therefor provided for therein, the Warrants will be validly issued.
7. With respect to Rights, when (i) the Board has taken all necessary
corporate action to approve and establish the terms of such Rights, to approve
the issuance thereof and the terms of the offering thereof and related matters;
(ii) the terms of such Rights and of their issuance and sale have been
established so as not to violate any applicable law or result in a default under
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Terex Corporation
May 18, 1998
Page 5
or breach of any agreement or instrument binding upon the Company and so as to
comply with any requirement or restriction imposed by any court or governmental
body having jurisdiction over the Company; (iii) the rights agreement relating
to the Rights has been duly authorized and validly executed and delivered by the
Company and the rights agent appointed by the Company; and (iv) the Rights or
certificates representing the Rights have been duly executed, countersigned,
registered and delivered in accordance with the appropriate rights agreement and
the applicable definitive purchase, underwriting or similar agreement approved
by the Board and upon payment of the consideration therefor provided for
therein, the Rights will be validly issued.
The foregoing opinions are limited in all respects to the laws of the state
of New York, the DGCL and federal laws.
We assume no obligation to supplement this opinion if any applicable law
changes after the date hereof or if we become aware of any fact that might
change the opinions expressed herein after the date hereof.
We hereby consent to the filing of this opinion of counsel as an exhibit to
the Registration Statement. We also consent to the reference of the name of our
firm under the heading "Legal Matters" in the Prospectus forming a part of the
Registration Statement. In giving this consent, we do not hereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Act.
Very truly yours,
/s/ Robinson, Silverman, Pearce, Aronsohn,
& Berman LLP
Exhibit 23.1
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
March 6, 1998 appearing on page F-2 of Terex Corporation's Annual Report on Form
10-K for the year ended December 31, 1997. We also consent to the refernce to us
under the heading "Experts" in such Prospectus.
PRICE WATERHOUSE LLP
Stamford, Connecticut
May 18, 1998
