<PAGE>
1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
|X| OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1997
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
|_| OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______.
Commission File Number 1-10702
TEREX CORPORATION
(Exact Name of Registrant as Specified in Charter)
Delaware 34-1531521
(State of incorporation) (I.R.S. Employer
Identification No.)
500 Post Road East, Suite 320, Westport, Connecticut 06880
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code: (203) 222-7170
Securities registered pursuant to Section 12(b)of the Act:
Common Stock, $.01 par value
(Title of Class)
New York Stock Exchange
(Name of Exchange on which Registered)
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.
YES X NO____
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |_|
The aggregate market value of the voting and non-voting common equity stock held
by non-affiliates of the Registrant was approximately $462.8 million based on
the last sale price on March 23, 1998.
The number of shares of the Registrant's Common Stock outstanding was
20,642,649 as of March 23, 1998.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the 1998 Terex Corporation Proxy Statement to be filed with the
Securities and Exchange Commission within 120 days after the year covered
by this Form 10-K with respect to the 1998 Annual Meeting of Stockholders
are incorporated by reference into Part III
<PAGE>
2
TEREX CORPORATION AND SUBSIDIARIES
Index to Annual Report on Form 10-K
For the Year Ended December 31, 1997
Page
PART I
Item 1 Business..............................................................3
Item 2 Properties...........................................................13
Item 3 Legal Proceedings....................................................14
Item 4 Submission of Matters to a Vote of Security Holders..................14
PART II
Item 5 Market for Registrant's Common Stock and Related Stockholder Matters.14
Item 6 Selected Financial Data..............................................16
Item 7 Management's Discussion and Analysis of Financial Condition and Results
of Operations......................................................17
Item 8 Financial Statements and Supplementary Data..........................26
Item 9 Changes in and Disagreements With Accountants on Accounting and
Financial Disclosures..............................................26
PART III
Item 10 Directors and Executive Officers of the Registrant....................*
Item 11 Executive Compensation................................................*
Item 12 Security Ownership of Certain Beneficial Owners and Management........*
Item 13 Certain Relationships and Related Transactions........................*
PART IV
Item 14 Exhibits, Financial Statement Schedule and Reports on Form 8-K.......27
* Incorporated by reference from Terex Corporation Proxy Statement.
<PAGE>
3
As used in this Annual Report on Form 10-K, unless otherwise indicated, Terex
Corporation, together with its consolidated subsidiaries, is hereinafter
referred to as "Terex", the "Registrant", or the "Company".
PART I
ITEM 1. BUSINESS
General
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, and related components and replacement parts. The Company's
products are manufactured at 15 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).
Terex Lifting 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 and rough
terrain lift trucks), truck mounted cranes (boom trucks) and related components
and replacement parts. These products are used by construction and industrial
customers, as well as utility companies.
Terex Earthmoving manufactures and sells articulated and rigid off-highway
trucks and high capacity surface mining trucks, and related components and
replacement parts. These products are used primarily by construction, mining and
government customers. As discussed more fully below under the heading "Recent
Developments," the Company has agreed to purchase all of the outstanding shares
of O & K Mining GmbH ("O & K Mining"), whose principal executive offices and
primary manufacturing facility are located in Dortmund, Germany. O & K Mining's
product line includes a full range of large hydraulic excavators and related
parts and components to be sold primarily by O&K Mining's and Terex's combined
sales organization.
Over the past several years, Terex has implemented a series of interrelated
strategic initiatives designed to improve manufacturing efficiency and offer its
products at a lower cost than competitors, thereby increasing sales, earnings
and market share. These include: (i) focusing the Company's business on its core
lifting and earthmoving businesses; (ii) focusing product lines on products
which it can manufacture for low cost relative to its competitors by
rationalizing product lines and simplifying its product designs; (iii) growth in
the size and scope of operations through both acquisitions and new product
development; and (iv) increasing profitability through cost reductions and
improved manufacturing efficiency. The Company has also implemented a strategy
to improve significantly its financial flexibility, strengthen its capital
structure and enhance its liquidity to execute its growth initiatives. In
addition, the Company has, and continues to, seek out acquisitions in the
capital goods industry where aggressive management can achieve substantial
improvements in profitability and cash flow.
For financial information about the Company's industry and geographic segments,
see Note O --- "Business Segment Information" in the Notes to the Consolidated
Financial Statements and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
<PAGE>
4
Terex Lifting
Terex Lifting was established as a separate business segment as a result of an
acquisition (the "PPM Acquisition") in May 1995 of substantially all of the
shares of PPM S.A. and certain of its subsidiaries, including PPM 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 of PPM Cranes, Inc., ("PPM North America" and PPM Europe and PPM
North America 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. The former
division now operates as Koehring Cranes, Inc. ("Koehring"), a wholly owned
subsidiary of Terex Cranes, Inc. Koehring and PPM are part of the Terex Lifting
segment.
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 (collectively referred to herein as the "Simon Access
Companies") for approximately $90 million. 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.
(now named Terex Aerials, Inc.), a Wisconsin corporation and parent company of
Terex RO, (iii) Sim-Tech Management Limited, a private limited company
incorporated under the laws of Hong Kong, (iv) Simon Cella, S.r.l., 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. Baraga Products, Inc.
(now named Terex Baraga Products, Inc.) manufactures the Square Shooter, a rough
terrain telescopic lift truck designed to lift materials to heights where they
are used in construction.
Terex Lifting has eight significant manufacturing operations: (i) PPM S.A.
located in Montceau-les-Mines, France, at which mobile cranes and container
stackers under the brand names TEREX and PPM are manufactured; (ii) PPM SpA,
located in Crespellano, Italy, at which mobile cranes are manufactured under the
TEREX, BENDINI and PPM brand names; (iii) Terex Lifting, located in Conway,
South Carolina, at which mobile cranes are manufactured under the P&H (a
licensed trademark of Harnischfeger Corporation) and TEREX brand names; (iv)
Terex Lifting - Waverly Operations, located in Waverly, Iowa, at which rough
terrain hydraulic telescoping mobile cranes, truck cranes and material handlers
are manufactured under the brand names TEREX, KOEHRING and LORAIN, and aerial
lift equipment is manufactured under the brand names TEREX AERIALS, TEREX AND
MARK; (v) Terex Telelect, Inc., located in Watertown, South Dakota, at which
utility aerial devices and digger derricks are manufactured under the TELELECT
and HI-RANGER brand names, (vi) Terex Aerials, Inc., located in Milwaukee,
Wisconsin, at which aerial platforms are manufactured under the TEREX, SIMON,
MARK and TEREX AERIALS brand names; (vii) Terex RO, Inc., located in Olathe,
Kansas, at which truck mounted cranes are manufactured under the RO-STINGER
brand name; and (viii) Terex Baraga Products, Inc., located in Baraga, Michigan,
at which rough terrain telescopic lift trucks are manufactured under the SQUARE
SHOOTER brand name.
Throughout the world market, mobile cranes are principally sold to rental
companies and dealers with rental fleets. Terex Lifting's mobile crane market
share varies dramatically by geographical area; however, the Company believes it
is the leading manufacturer of mobile cranes in France and Italy and is the
second largest manufacturer in North America. Terex Lifting's principal
worldwide mobile crane competitors are Grove Worldwide and Link Belt (Sumitomo);
Terex Lifting competes with several smaller specialty companies in North America
and with Grove Cranes Ltd., Liebherr Werk Ehingen and DeMag in Europe. Terex
Lifting's major competitors in the container stacker market are Kalmar, Valmet
Belloti and Taylor. The Company believes that it is the fifth largest
manufacturer of aerial work platforms in North America. Currently, the leading
competitors in the aerial lift industry are JLG Industries, Genie, Grove Manlift
(including the recently acquired Krupp Mobil Krane), Skyjack, and Snorkel.
Currently, the leading competitors in the telescopic rough terrain lift truck
industry are OmniQuip and Gradall. The Company believes that it is the second
largest manufacturer in the United States of utility aerial devices behind
Altec.
<PAGE>
5
Terex Earthmoving
Terex Earthmoving currently manufactures and sells articulated and rigid
off-highway trucks and high capacity surface mining trucks, and related
components and replacement parts. These products are used primarily by
construction, mining and government customers. Terex Earthmoving currently has
three manufacturing operations: (i) Terex Equipment Limited ("TEL"), located at
Motherwell, Scotland, which manufactures off-highway rigid haulers and
articulated haulers and scrapers, each sold under the TEREX brand name and to
other truck manufacturers on a private label basis; (ii) the Unit Rig Division,
located in Tulsa, Oklahoma, which manufactures electric rear and bottom dump
haulers principally sold to the copper, gold and coal mining industry customers
in North and South America, Asia, Africa and Australia; and (iii) Payhauler
Corp. ("Payhauler"), located in Batavia, Illinois, which was acquired by Terex
on January 5, 1998 and manufactures all-wheel drive rigid off highway trucks. In
addition, Terex Earthmoving has an interest in North Hauler Limited Liability
Company, a corporation incorporated under the laws of China. In 1987, TEL
entered into a joint venture agreement with Second Inner Mongolia Machinery
Company for the production of haulers in China. The joint venture company, North
Hauler Limited Liability Company, manufactures heavy trucks, principally used in
mining, at a facility in Baotou, Inner Mongolia, People's Republic of China. As
discussed more fully below under the heading "Recent Developments," the Company
has agreed to purchase all of the outstanding shares of O & K Mining GmbH ("O &
K Mining"), whose principal executive offices and primary manufacturing facility
are located in Dortmund, Germany. O & K Mining's product line includes a full
range of large hydraulic excavators and related parts and components to be sold
primarily by O&K Mining's and Terex's combined sales organization.
A "hauler" is an off-road dump truck with a capacity in excess of 25 tons.
Haulers produced by TEL and Payhauler have capacities ranging from 25 to 100
tons. The "scrapers" manufactured by TEL are off-road vehicles, commonly
referred to as "earthmovers," that load, move and unload large quantities of
soil for site preparations, including roadbeds. The Unit Rig hauler is powered
by a diesel engine driving an electric generator that provides power to
individual electric motors in each of the rear wheels. Unit Rig's current LECTRA
HAUL product line consists of a series of rear dump hauler trucks with payload
capacities ranging from 100 to 260 tons, and bottom dump haulers with capacities
ranging from 180 to 270 tons. Unit Rig's products are sold under the Company's
TEREX, UNIT RIG, and LECTRA HAUL trademarks. TEL's North, Central and South
American sales and distribution are managed by Terex Americas, a division of the
Company, located in Tulsa, Oklahoma. Payhauler manufactures 30- and 50-ton
all-wheel drive rigid rear dump haulers under the PAYHAULER trade name.
Terex Earthmoving believes that it is a significant competitor in the market for
large capacity off highway haulers and scrapers. However, the Company is not a
dominant manufacturer in the heavy equipment industry, which is dominated in
most segments by large, diversified firms, such as Caterpillar, Volvo Group and
Komatsu with respect to the TEL products and Caterpillar, Komatsu, Liebherr Werk
Ehingen and Euclid with respect to Unit Rig products.
Recent Developments
Acquisition of O & K Mining GmbH
The Company has agreed to purchase all of the outstanding shares of O&K Mining
from O&K Orenstein & Koppel AG ("Orenstein & Koppel") for net aggregate
consideration of DM 309 million (approximately $172 million), subject to certain
post-closing adjustments. The transaction is scheduled to close on March 31,
1998 and will be financed through the issuance by the Company of its New Senior
Subordinated Notes (defined below) and borrowings under the New Bank Credit
Facility (as defined below). O&K Mining, which will be part of the Terex
Earthmoving segment, is headquartered in Dortmund, Germany, and has operations
in the United States, United Kingdom, Australia, Canada, South Africa and
Singapore. O&K Mining markets a complete range of large hydraulic excavators
serving the global surface mining industry and the global construction and
infrastructure development markets. The Company believes that O&K Mining has the
leading market share for large hydraulic excavator models having machine weights
in excess of 200 tons. The use of O&K Mining's excavators in around the clock
intensive, harsh condition mining operations requires significant higher margin
after-market parts and service, which in the case of the larger hydraulic
excavators can generate revenues of up to 200% of the original sale price over
the expected life of the machines. In 1997, O&K Mining introduced the RH 400,
the world's largest hydraulic excavator with an 800 ton machine weight and 80
ton bucket capacity.
The Company has identified and plans to initiate several programs to increase
sales and reduce costs in connection with the integration of O&K Mining into the
Terex Earthmoving segment. Since 1993, O&K Mining has successfully marketed the
Company's off-highway trucks under private label, primarily in Europe. The
Company believes that additional opportunities exist to offer packages of
off-highway trucks with complementary small hydraulic excavators to the
construction industry outside Europe and of high capacity trucks with
complementary large hydraulic excavators to the global surface mining industry.
The new machine product combinations and the related integrated parts and field
<PAGE>
6
service business will allow the Company to expand on its and O&K Mining's
established customer relationships and position itself as an integrated provider
of surface mining and construction products.
Repurchase of 13-1/4% Senior Secured Notes and New Bank Credit Facility
On March 6, 1998, the Company completed the purchase or defeasance of all of the
$166.7 million in principal amount of its then outstanding 13-1/4% Senior
Secured Notes due 2002 (the "Senior Secured Notes"). Concurrently therewith, the
Company also amended or eliminated certain of the principal restrictive
covenants contained in the Indenture governing the Senior Secured Notes and
refinanced substantially all of its then existing domestic and foreign revolving
credit debt. The proceeds for the offer to purchase and the repayment of its
then existing revolving credit facility were obtained from borrowings under the
Company's new $500 million global bank credit facility (the "New Bank Credit
Facility").
The New Bank Credit Facility consists of a new secured global revolving credit
facility aggregating up to $125 million (the "New Revolving Credit Facility")
and two term loan facilities (collectively, the "Term Loan Facilities")
providing for loans in an aggregate principal amount of up to approximately $375
million. The New Revolving Credit Facility, which is currently undrawn, will be
used for working capital and general corporate purposes, including acquisitions.
Pursuant to the Term Loan Facilities, the Company has borrowed, or may borrow in
the future, (i) up to $175 million in aggregate principal amount pursuant to a
Term Loan A due March 2004 (the "Term A Loan") and (ii) up to $200 million in
aggregate principal amount pursuant to a Term Loan B due March 2005 (the "Term B
Loan"). The outstanding principal amount of the Term A Loan initially bears
interest, at Company's option, at an all-in drawn cost of 2% per annum in excess
of the adjusted eurocurrency rate or, with respect to U.S. dollar denominated
alternate base rate loans, at an all-in drawn cost of 1% per annum in excess of
the prime rate. The outstanding principal amount of the Term B Loan initially
bears interest, at the Company's option, at a rate of 2.5% per annum in excess
of the adjusted eurodollar rate or, with respect to U.S. dollar denominated
alternate base rate loans, 1.5% in excess of the prime rate. The Term A Loan
amortizes on a quarterly basis, in the annual percentages of 0%, 16%, 16%, 21%,
21% and 26%, respectively, during the six year term of the loan. The Term B Loan
amortizes in an annual percentage of 1% during each of the first six years of
the term of the loan and 94% in the seventh year of the term of the loan. The
Term A Loan and Term B Loan are subject to mandatory prepayment under certain
circumstances and is voluntarily prepayable without payment of a premium
(subject to reimbursement of the lenders' costs in case of prepayment of
eurodollar loans other than on the last day of an interest period). The
outstanding principal amount of loans under the New Revolving Credit Facility
initially bears interest, at the Company's option, at an all-in drawn cost of 2%
per annum in excess of the adjusted eurocurrency rate or, with respect to U.S.
dollar denominated alternate base rate loans, at an all-in drawn cost of 1% per
annum in excess of the prime rate. The New Revolving Credit Facility terminates
on March 5, 2004. The Company has entered into certain interest rate protection
agreements with respect to a portion of the principal amount of the New Bank
Credit Facility.
With limited exceptions, the obligations of the Company under the New Bank
Credit Facility are secured by (i) a pledge of all of the capital stock of
domestic subsidiaries of the Company, (ii) a pledge of 65% of the stock of
certain of the foreign subsidiaries of the Company and (iii) a first priority
security interest in, and mortgages on, substantially all of the assets of Terex
and its domestic subsidiaries. The New Bank Credit Facility contains covenants
limiting the Company's activities, including, without limitation, limitations on
dividends and other payments, liens, investments, incurrence of indebtedness,
mergers and asset sales, related party transactions and capital expenditures.
The New Bank Credit Facility also contains certain financial and operating
covenants, including a maximum leverage ratio, a minimum interest coverage ratio
and a minimum fixed charge coverage ratio. If for any reason the Company is
unable to comply with the terms of the New Bank Credit Facility, including the
covenants included therein, such noncompliance would result in an event of
default under the New Bank Credit Facility and could result in acceleration of
the payment of the indebtedness outstanding under the New Bank Credit Facility.
New Senior Subordinated Notes
On March 24, 1998, the Company entered into a Purchase Agreement to issue and
sell $150 million aggregate principal amount of 8.875% Senior Subordinated Notes
Due 2008 (the "New Senior Subordinated Notes"). The New Senior Subordinated
Notes are being issued and sold pursuant to an exemption from registration under
the Securities Act of 1933, as amended, and the closing is expected to occur on
March 31, 1998. The New Senior Subordinated Notes are unsecured and repayment is
guaranteed on an unsecured basis by certain of the Company's domestic
subsidiaries. The proceeds of the issuance and sale of the New Senior
Subordianted Notes will be used to fund a portion of the aggregate consideration
for the acquisition of O&K Mining and for general corporate purposes.
Products
Telescopic Mobile Cranes
Telescopic mobile cranes are used primarily in new industrial, commercial
construction and public works construction industries and in maintenance
applications, to lift equipment or material to heights in excess of 50 feet. The
Company's Terex Lifting segment manufactures the following types of telescopic
mobile cranes:
<PAGE>
7
Rough Terrain Cranes--are designed
to lift materials and equipment on rough or
uneven terrain and are most often located on
a single construction or work site such as a
building site, a highway or a utility
project for long periods of time. Rough
terrain cranes cannot be driven on highways
and accordingly must be transported by truck
to the work site. Rough terrain cranes
manufactured by Terex Lifting have maximum
lifting capacities of up to 90 tons and
maximum tip heights of up to 205 feet. Terex
Lifting manufactures its rough terrain
cranes at its facilities located at Waverly,
Iowa, Conway, South Carolina,
Montceau-les-Mines, France, and Crespellano,
Italy under the brand names TEREX, LORAIN,
P&H, PPM and BENDINI.
Truck Cranes--have two cabs and can
travel rapidly from job site to job site at
highway speeds. In contrast to rough terrain
cranes which are often located for extended
periods at a single work site, truck cranes
are often used for multiple local jobs,
primarily in urban or suburban areas. Truck
cranes manufactured by Terex Lifting have
maximum lifting capacities of up to 75 tons
and maximum tip heights of up to 193 feet.
Terex Lifting manufactures truck cranes at
its Waverly, Iowa and Conway, South Carolina
facilities under the brand names P&H and
LORAIN.
All Terrain Cranes--were developed
in Europe as a cross between rough terrain
and truck cranes in that they are designed
to travel across both rough terrain and
highways. All terrain cranes have two cabs
and are versatile and highly maneuverable.
All terrain cranes manufactured by Terex
Lifting have lifting capacities of up to 130
tons and maximum tip heights of up to 223
feet. Terex Lifting manufactures its all
terrain cranes at its Montceau-les-Mines,
France facility under the brand names TEREX
and PPM.
Truck Mounted Cranes (Boom Trucks)
Terex Lifting manufactures telescopic boom cranes for mounting on
commercial truck chassis. Terex also distributes truck mounted articulated
cranes under the EFFER brand name which are manufactured by Effer SpA. Truck
mounted cranes are used primarily in the construction industry to lift equipment
or materials to various heights. Boom trucks are generally lighter and have a
lower lifting capacity than truck cranes, and are used for many of the same
applications when lower lifting capabilities are required. An advantage of a
boom truck is that the equipment or material to be lifted by the crane can be
transported by the truck which can travel at highway speeds. Applications
include the installation of air conditioners and other roof equipment. The
Company's Terex Lifting segment manufactures the following types of cranes for
installation on truck chassis:
Telescopic Boom Truck Mounted
Cranes--enable an operator to reach heights
of up to 167 feet and have a maximum lifting
capacity of up to 37.5 tons. Terex Lifting
manufactures its telescopic boom truck
mounted cranes at its Olathe, Kansas
facility under the brand name RO-STINGER.
Articulated Boom Truck Mounted
Cranes--are for users who prefer greater
capacities over the greater vertical reach
provided by a telescopic boom truck mounted
crane. At its Olathe, Kansas facility, Terex
Lifting acts as the master distributor for
the EFFER brand line of articulated boom
truck mounted cranes which have maximum
capacities up to 87,305 pounds and
horizontal reach to 66 feet.
Aerial Work Platforms
Aerial work platforms are self propelled devices which position workers
and materials easily and quickly to elevated work areas. These products have
developed over the past 20 years as alternatives to scaffolding and ladders. The
work platform is mounted on either a telescoping and/or articulating boom or on
a vertical lifting scissor mechanism.
<PAGE>
8
Scissor Lifts--are used in open
areas in indoor or outdoor applications in a
variety of construction, industrial and
commercial settings. Scissor lifts
manufactured by Terex Lifting have maximum
working heights of up to 52 feet and maximum
load capacities of up to 2,000 pounds. Terex
Lifting manufactures scissor aerial work
platforms at its Waverly, Iowa and
Milwaukee, Wisconsin facilities under the
brand names TEREX, SIMON and MARK.
Straight Telescopic Boom Lifts--are
used primarily outdoors in residential,
commercial and industrial new construction
and maintenance projects. Straight
telescopic boom lifts manufactured by Terex
Lifting have maximum working heights of up
to 126 feet and maximum load capacities of
up to 650 pounds. Terex Lifting manufactures
its straight telescopic aerial work
platforms at its Waverly, Iowa and
Milwaukee, Wisconsin facilities under the
brand names TEREX, SIMON and MARK.
Articulating Telescopic Boom
Lifts--are generally used in industrial
environments where the articulation allows
the user to access elevated areas over
machines or structural obstacles which
prevent access with a scissor lift or
straight boom. Articulating lifts available
from Terex Lifting have maximum working
heights of up to 70 feet and maximum load
capacities of up to 500 pounds. Terex
Lifting manufactures its articulating
telescopic boom lifts at its Waverly, Iowa
and Milwaukee, Wisconsin facilities under
the brand name TEREX AERIALS.
Utility Aerial Devices
Utility aerial devices are used to set utility poles and move workers
and materials to work areas at the top of utility poles and towers. Utility
aerial devices are mounted on commercial truck chassis which include separately
installed steel cabinets for tool and material storage. Most utility aerial
devices are insulated to permit live wire work.
Articulated Aerial Devices--are used
to elevate workers to work areas at the top
of utility poles or in trees and include one
or two man baskets. Articulated aerial
devices available from Terex Lifting include
telescopic, non-overcenter and overcenter
models and range in working heights from 32
to 203 feet. Articulated aerial devices are
manufactured by Terex Lifting at its
Watertown, South Dakota facility under the
brand names TELELECT and HI-RANGER.
Digger Derricks--are used to set
telephone poles. The digger derricks include
a telescopic boom with an auger mounted at
the tip which digs a hole, and a device to
grasp, manipulate and set the pole. Digger
derricks available from Terex Lifting have
sheave heights exceeding 70 feet and lifting
capacities up to 48,000 pounds. Digger
derricks are manufactured by Terex Lifting
at its Watertown, South Dakota facility
under the brand name TELELECT.
Telescopic Material Handlers
Telescopic material handlers are used to lift containers or other
material from one location to another at the same job site.
Telescopic Container Stackers--are
used to pick up and stack containers at dock
and terminal facilities. At the end of a
telescopic container stacker's boom is a
spreader which enables it to attach to
containers of varying lengths and weights
and to rotate the container up to 360
degrees. Telescopic container stackers are
particularly effective in storage areas
where containers are continually added and
removed, and where the efficient
manipulation of, and access to, specific
containers is required. Telescopic container
stackers manufactured by Terex Lifting have
lifting capacities up to 49.5 tons, can
stack up to six full or nine empty
containers and are able to maneuver through
very narrow areas. Terex Lifting
manufactures its telescopic container
stackers under the brand names PPM and P&H
SUPERSTACKERS at its Conway, South Carolina
and Montceau-les-Mines, France facilities.
<PAGE>
9
Rough Terrain Telescopic Boom
Forklifts--serve a similar function as
smaller size rough terrain telescopic mobile
cranes and are used exclusively to move and
place materials on new residential and
commercial job sites. Terex Lifting
manufactures rough terrain telescopic boom
forklifts with load capacities of up to
10,000 pounds and with a maximum extended
reach of up to 31 feet and lift capabilities
of up to 48 feet. Terex Lifting manufactures
rough terrain telescopic boom forklifts at
its facility in Baraga, Michigan under the
brand name SQUARE SHOOTER.
Rigid and Articulated Off-Highway Trucks
Terex Earthmoving manufactures two distinct types of off-highway trucks
with hauling capacities from 25 to 100 tons: articulated and rigid frame. Terex
Earthmoving manufactures rigid and articulated trucks at its TEL facility in
Motherwell, Scotland. TEL manufactures and markets articulated trucks and rigid
frame trucks under the TEREX brand name and sells to O&K Mining on a private
label basis. Upon consummation of the O&K Acquisition, the Company will continue
to manufacture articulated trucks and rigid frame trucks under the O&K name.
Articulated Off-Highway Trucks--are
three axle, six wheel drive machines with a
capacity range of 25 to 40 tons. Their
differentiating feature is an oscillating
connection between the cab and body which
allows the cab and body to move
independently, thereby enabling all six
tires to maintain ground contact for
improved traction on rough terrain. This
allows the truck to move effectively through
extremely rough or muddy off-road
conditions. Articulated off-highway trucks
are typically used together with an
excavator or wheel loader to move dirt in
connection with road, tunnel or other
infrastructure construction and commercial,
industrial or major residential construction
projects. Terex's articulated trucks are
manufactured in Motherwell, Scotland, under
the brand name TEREX.
Rigid Off-Highway Trucks--are two
axle machines which generally have larger
capacities than articulated trucks but can
operate only on improved or graded surfaces.
The capacities of rigid off-highway trucks
range from 35 to 100 tons, and off-highway
trucks have applications in large
construction or infrastructure projects,
aggregates and smaller surface mines. Terex
Earthmoving's rigid trucks are manufactured
in Motherwell, Scotland, under the TEREX
brand name and in Batavia, Illinois, under
the PAYHAULER brand name.
High Capacity Surface Mining
Trucks--are off road dump trucks with
capacities in excess of 120 tons primarily
for surface mining. Terex Earthmoving's
haulers are powered by a diesel engine
driving an electric generator that provides
power to individual electric motors in each
of the rear wheels. Unit Rig's current
LECTRA HAUL product line consists of a
series of rear dump trucks with payload
capacities ranging from 120 to 260 tons, and
bottom dump trucks with capacities ranging
from 180 to 270 tons. Terex Earthmoving's
high capacity surface mining trucks are
manufactured at Unit Rig, located in Tulsa,
Oklahoma, under the UNIT RIG and LECTRA HAUL
brand names.
Backlog
The Company's backlog as of December 31, 1997 and 1996 was as follows:
December 31,
---------------------------
1997 1996
------------- -------------
Terex Lifting...................... $ 186.5 $ 67.2
Terex Earthmoving.................. 30.3 53.4
============= =============
Total......................... $ 216.8 $ 120.6
============= =============
Substantially all of the Company's backlog orders are expected to be filled
<PAGE>
10
within one year, although there can be no assurance that all such backlog orders
will be filled within that time period. The Company's backlog orders represent
primarily new equipment orders. Parts orders are generally filled on an
as-ordered basis.
Terex Lifting backlog at December 31, 1997 increased $119.3 million to $186.5
million as compared to $67.2 at December 31, 1996. The increase in backlog was
due to the effect of the Simon Access and Square Shooter businesses acquired in
April 1997 (approximately $51 million in backlog) as well as increases in the
businesses other than the 1997 acquisitions. The backlog at Terex Earthmoving
decreased to $30.3 million at December 31, 1997 from $53.4 million at December
31, 1996, principally because of the decline in sales and backlog of Unit Rig
machines during 1997.
Distribution
Terex Lifting distributes its products primarily through a global network of
dealers in over 750 different locations. With respect to telescopic mobile
cranes in North America, Terex Lifting maintains extensive dealer networks. The
geographic strength of Terex Lifting's telescopic mobile cranes marketed under
the LORAIN brand name centers in the midwest and mid-Atlantic regions of the
United States and the geographic strength of telescopic mobile cranes marketed
under the P&H brand name centers in the southern and western regions of the
United States. Terex Lifting's European distribution is carried out primarily
under three brand names, TEREX, PPM and BENDINI, through a single distribution
network comprised of both distributors and a direct sales force. Terex Lifting
sells its utility aerial devices under the SIMON, TEREX and TELELECT brand names
principally through a network of North American distributors. Terex Lifting
sells its aerial work platform products through a distribution network that
includes many of the Aerials Limited and Aerials dealers throughout the world,
but principally in North America and Europe. Terex Lifting's aerial work
platform products are sold under the brand name TEREX AERIALS.
TEL markets machines and replacement parts primarily through worldwide
dealership networks. TEL's truck dealers are independent businesses which
generally serve the construction, mining, timber and/or scrap industries.
Although these dealers carry products of a variety of manufacturers, and may or
may not carry more than one of the Company's products, each dealer generally
carries only one manufacturer's "brand" of each particular type of product. The
Company employs sales representatives who service these dealers from offices
located throughout the world. Payhauler distributes its products primarily
through a dealership network. Unit Rig distributes its products and services
directly to customers primarily through its own distribution system.
Research and Development
The Company maintains engineering staffs at several of its locations which
design new products and improvements in existing product lines. Such costs
incurred in the development of new products or significant improvements to
existing products of continuing operations amounted to $6.2, $6.1 and $5.0
million in 1997, 1996 and 1995, respectively.
Materials
Principal materials used by the Company in its various manufacturing processes
include steel, castings, engines, tires, hydraulic cylinders, electric controls
and motors, and a variety of other fabricated or manufactured items. In the
absence of labor strikes or other unusual circumstances, substantially all
materials are normally available from multiple suppliers. Current and potential
suppliers are evaluated on a regular basis on their ability to meet the
Company's requirements and standards. Electric wheel motors and controls used in
the Unit Rig product line are currently supplied exclusively by General Electric
Company. The Company is endeavoring to develop alternative sources and has
entered into a contract with General Atomics, a former defense contractor, to
develop electric wheel motors for Unit Rig trucks. If the Company is unable to
develop alternative sources, or if there is disruption or termination of its
relationship with General Electric Company (which is not governed by a written
contract), it could have a material adverse effect on Unit Rig's operations.
Working Capital Items
The Company, in the normal course of business, does not provide right of return
on merchandise sold, nor does it provide extended payment terms to customers.
Competition
Telescopic Mobile Cranes--The domestic telescopic mobile crane industry
is comprised primarily of three manufacturers. The Company believes that Terex
Lifting is the second largest domestic manufacturer, with approximately a 36%
market share. The Company believes that the number one domestic manufacturer is
Grove Worldwide, and the number three domestic manufacturer is Link-Belt, a
<PAGE>
11
subsidiary of Sumitomo Corp. The Company's principal markets in Europe are in
France and Italy, where the Company believes it has the largest market shares,
with an estimated 50% market share in each of these countries. In Europe, Terex
Lifting's primary competitors are Grove Cranes Ltd., Liebherr Werk Ehingen and
DeMag. Outside the United States and Europe, the most active new mobile crane
markets are the Middle East and South America. Terex Lifting sells approximately
10% of its newly manufactured telescopic mobile cranes to those markets.
The United States boom truck industry is dominated by four
manufacturers, of which the Company believes Terex RO, with a 25% market share,
is the second largest behind Grove National.
Aerial Work Platforms--The aerial work platform industry in North
America is fragmented, with seven major competitors. The Company believes that
its approximate 7% market share makes it the fifth largest manufacturer of
aerial work platforms in North America, behind JLG, Grove Manlift, Skyjack and
Snorkel. The Company believes that approximately 42,000 aerial platforms were
sold in the United States during 1997, of which approximately 70% were scissor
lifts, 19% were articulated boom lifts, and 11% were straight boom lifts. The
Company believes that its market share in boom lifts is greater than its market
share in scissor lifts.
Utility Aerial Devices--The utility aerial device industry is comprised
primarily of three manufacturers. The Company believes that it has a 20% market
share of that industry and that it is the second largest manufacturer in the
United States of utility aerial devices behind Altec. Outside the United States,
the Company is focusing primarily on the Mexican and Caribbean markets.
Telescopic Container Stackers--The Company believes that three
manufacturers account for approximately 66% of the global market for telescopic
container stackers. The Company believes that it has a global market share of
25% and that it is the second largest manufacturer behind Kalmar. Other
manufacturers include Valmet Belloti and Taylor.
Telescopic Rough Terrain Lift Trucks--OmniQuip and Gradall are the
largest manufacturers of telescopic rough terrain lift trucks. The Company
believes that the Square Shooter Business has approximately a 4% market share.
Off-Highway Trucks--North America and Europe account for greater than
60% of the global market. Four manufacturers dominate the global market. The
Company believes that it is the third largest of these manufacturers (behind
Volvo and Caterpillar), with approximately a 10% global market share.
High Capacity Surface Mining Trucks--The high capacity surface mining
truck industry includes three principal manufacturers: Caterpillar,
Komatsu-Dresser and the Company. The Company believes that it is the third
largest manufacturer with a global market share of approximately 13%.
Employees
As of December 31, 1997, the Company had approximately 2,950 employees. The
Company considers its relations with its personnel to be good. Approximately 35%
of the Company's employees are represented by labor unions which have entered
into or are in the process of entering into various separate collective
bargaining agreements with the Company. The Company experienced a labor strike
at its parts distribution center in Southaven, Mississippi during the second
quarter of 1995 which was settled in February 1997. The strike at Southaven had
no appreciable effect on the conduct of business or financial results of that
operation as a whole, although individual product line sales growth may have
been hindered.
Patents, Licenses and Trademarks
Several of the trademarks and trade names of the Company, in particular the
TEREX, LORAIN, UNIT RIG, MARK, P&H, PPM, SIMON, TELELECT, SQUARE SHOOTER and
PAYHAULER trademarks, are important to the business of the Company. The Company
owns and maintains trademark registrations and patents in countries where it
conducts business, and monitors the status of its trademark registrations and
patents to maintain them in force and renews them as required. The Company also
protects its trademark, trade name and patent rights when circumstances warrant
such action, including the initiation of legal proceedings, if necessary. P&H is
a registered trademark of Harnischfeger Corporation which the Company has the
right to use for certain products pursuant to a license agreement until 2011.
Pursuant to the terms of the acquisition agreements for the Simon Access
Companies, the Company has the right to use the SIMON name (which is a
registered trademark of Simon Engineering plc) for certain products until April
7, 2000. CELLA is a trademark of Sergio Cella. EFFER is a trademark of Effer
SpA. All other trademarks and tradenames referred to in this Annual Report are
registered trademarks of Terex Corporation or its subsidiaries.
<PAGE>
12
Environmental Considerations
The Company generates hazardous and non-hazardous wastes in the normal course of
its operations. As a result, the Company is subject to a wide range of federal,
state, local and foreign environmental laws and regulations, including the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"),
that (i) govern activities or operations that may have adverse environmental
effects, such as discharges to air and water, as well as handling and disposal
practices for hazardous and non-hazardous wastes, and (ii) impose liability for
the costs of cleaning up, and certain damages resulting from, sites of past
spills, disposals or other releases of hazardous substances. Compliance with
such laws and regulations has, and will, require expenditures by the Company on
a continuing basis.
Seasonal Factors
The Company markets a large portion of its products in North America and Europe,
and its sales of heavy equipment and cranes during the fourth quarter of each
year to the construction industry are usually lower than sales of such equipment
during each of the first three quarters of the year because of the normal winter
slowdown of construction activity. However, sales of heavy equipment to the
mining industry are generally less affected by such seasonal factors.
<PAGE>
13
ITEM 2. PROPERTIES
The following table outlines the principal manufacturing, warehouse and office
facilities owned or leased by the Company and its subsidiaries:
Entity Facility Location Type and Size of Facility
Terex
(Corporate Offices)......Westport, Connecticut(1) Office; 14,898 sq.ft.
Terex
(Distribution Center)....Southaven, Mississippi(1) Warehouse and light
manufacturing;
505,000 sq.ft.(2)
Terex Lifting
Terex Lifting -
Waverly Operations.......Waverly, Iowa(3) Office, manufacturing and
warehouse; 383,000 sq.ft.
Terex Lifting -
Conway Operations........Conway, South Carolina(1) Office, manufacturing and
warehouse; 168,716 sq.ft.
PPM S.A..................Montceau-les-Mines, Office, manufacturing and
France warehouse; 419,764 sq.ft.
P.P.M SpA................Crespellano, Italy Office, manufacturing and
warehouse; 79,900 sq.ft.
PPM Europe Subsidiary....Dortmund, Germany (1) Office and warehouse;
129,180 sq.ft.
PPM Europe Subsidiary....Rethel, France Office, manufacturing and
warehouse; 215,300 sq.ft.
Telelect.................Huron, South Dakota Manufacturing; 88,000 sq.ft
Telelect.................Watertown, South Dakota Office, manufacturing and
warehouse; 222,450 sq.ft.
Cella....................Brescia, Italy (1) Office and manufacturing;
64,000 sq.ft.
Aerials Limited..........Cork, Ireland (1) Manufacturing; 80,000 sq.ft
PPM Europe Subsidiary....Hong Kong (1) Office; 830 sq.ft.
Aerials (Terex RO)......Olathe, Kansas Office and manufacturing;
80,400 sq.ft.
Aerials ................Milwaukee, Wisconsin Office, manufacturing and
warehouse; 103,000 sq.ft.
Square Shooter...........Baraga, Michigan Office, manufacturing and
warehouse; 41,152 sq.ft.
Terex Earthmoving
Unit Rig................ Tulsa, Oklahoma Office, manufacturing and
warehouse; 375,587 sq.ft.
TEL......................Motherwell, Scotland Office, manufacturing and
warehouse; 473,000 sq.ft.
Payhauler................Batavia, Illinois Office, manufacturing and
warehouse; 112,000 sq.ft.
- ------------------------------
(1) These facilities are either leased or subleased by the indicated entity.
(2) Includes 239,400 sq. ft. of warehouse space currently leased to others.
(3) The Company also owns a 66,000 sq. ft. facility in Waterloo, Iowa which is
currently leased to others.
Unit Rig also has 10 owned or leased locations for parts distribution and
rebuilding of components, of which two are in the United States, two are in
Canada and six are abroad.
Management believes that the properties listed above are suitable and adequate
for the Company's use. The Company has determined that certain of its properties
exceed its requirements. Such properties may be sold, leased or utilized in
another manner and have been excluded from the above list.
<PAGE>
14
Discontinued Operations
On November 27, 1996, the Company sold substantially all the assets and
liabilities of its worldwide material handling business ("CMHC") for an
aggregate cash purchase price, subject to adjustments, of $139.5 million (the
"Clark Sale"). Prior to the disposition on November 27, 1996, CMHC consisted of
Clark Material Handling Company and certain affiliated companies which were
acquired by the Company in July 1992 from Clark Equipment Company. CMHC
designed, manufactured and marketed a complete line of internal combustion and
electric lift trucks, electric walkies and related components and replacement
parts under the CLARK trademark.
Financial Information about Industry and Geographic Segments, Export Sales
and Major Customers
Information regarding foreign and domestic operations, export sales, segment
information and major customers is included in Note O -- "Business Segment
Information" in the Notes to the Consolidated Financial Statements.
ITEM 3. LEGAL PROCEEDINGS
As described in Note M -- "Litigation and Contingencies" in the Notes to the
Consolidated Financial Statements, the Company is involved in various legal
proceedings, including product liability and workers' compensation liability
matters, which have arisen in the normal course of its operations and to which
the Company is self-insured for up to $2.0 million per incident. Management
believes that the final outcome of such matters will not have a material adverse
effect on the Company's consolidated financial position.
For information concerning other contingencies and uncertainties, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Contingencies and Uncertainties."
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
(a) The Company's Common Stock is listed on the NYSE under the symbol "TEX."
Quarterly Market Prices
The high and low stock prices for the Company's Common Stock on the NYSE
Composite Tape (for the last two completed years) are as follows:
1997 1996
--------------------------------- ---------------------------------
Fourth Third Second First Fourth Third Second First
------ ----- ------ ----- ------ ----- ------ -----
High... $ 25.19 $ 23.75 $ 19.50 $ 13.50 $ 10.13 $ 9.38 $ 9.25 $ 7.13
Low.... 18.94 18.75 13.13 9.50 6.63 6.50 6.38 4.13
No dividends were declared or paid in 1996 or in 1997. Certain of the Company's
debt agreements contain restrictions as to the payment of cash dividends. In
order for the Company to pay dividends, the New Bank Credit Facility requires
that the ratio of the Company's total debt to pro forma earnings before
interest, taxes, depreciation and amortization for the immediately preceding
four fiscal quarters be less than 3.85 to 1.0, and that the amount of dividends
paid by the Company during the entire term of New Bank Credit Facility not
exceed an aggregate of $25 million. The Company intends generally to retain
earnings, if any, to fund the development and growth of its business. The
Company does not plan on paying dividends on the Common Stock in the foreseeable
future. Any future payments of cash dividends will depend upon the financial
condition, capital requirements and earnings of the Company, as well as other
factors that the Board of Directors may deem relevant.
<PAGE>
15
As of March 23, 1998, there were 661 stockholders of record of the Company's
Common Stock.
(b) On December 30, 1997, the Company issued 87,300 shares of Common Stock to
Randolph W. Lenz in connection with the conversion of all of the shares of
Series B Preferred Stock held by him. The issuance of the shares of Common Stock
by the Company to Mr. Lenz was exempt from registration under the Securities Act
of 1933, as amended, pursuant to Section 4(2) thereof. The Company did not
receive any cash proceeds from the issuance of the shares of Common Stock to Mr.
Lenz.
<PAGE>
16
ITEM 6. SELECTED FINANCIAL DATA
(in millions except per share amounts and employees)
<TABLE>
<CAPTION>
As of or for the Year Ended December 31,
------------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
Summary of Operations
<S> <C> <C> <C> <C> <C>
Net sales..................................................$ 842.3 $ 678.5 $ 501.4 $ 314.1 $ 274.7
Operating income (loss) from continuing operations......... 71.1 5.1 12.8 10.4 (8.2)
Income (loss) from continuing operations before
extraordinary items...................................... 30.3 (54.3) (32.1) 4.9 (40.7)
Income (loss) from discontinued operations................. --- 102.0 4.4 (3.7) (24.3)
Income (loss) before extraordinary items................... 30.3 47.7 (27.7) 1.2 (65.0)
Net income (loss).......................................... 15.5 47.7 (35.2) 0.5 (66.5)
Income (loss) applicable to common stock................... 10.7 24.8 (42.5) (5.5) (66.7)
Per Common and Common Equivalent Share:
Basic
Income (loss) from continuing operations...............$ 1.57 $ (6.54)$ (3.79) $ (0.10) $ (4.11)
Income (loss) from discontinued operations............. --- 8.64 0.42 (0.36) (2.44)
Income (loss) before extraordinary items............... 1.57 2.10 (3.37) (0.46) (6.55)
Net income (loss)...................................... 0.66 2.10 (4.09) (0.53) (6.70)
Diluted
Income (loss) from continuing operations...............$ 1.44 $ (5.81)$ (3.79) $ (0.10) $ (4.11)
Income (loss) from discontinued operations............. --- 7.67 0.42 (0.36) (2.44)
Income (loss) before extraordinary items............... 1.44 1.86 (3.37) (0.46) (6.55)
Net income (loss)...................................... 0.60 1.86 (4.09) (0.53) (6.70)
Working Capital
Current assets.............................................$ 426.5 $ 390.2 $ 312.0 $ 278.1 $ 257.3
Current liabilities........................................ 236.1 195.0 196.3 221.6 187.8
Working capital............................................ 190.4 195.2 115.7 56.5 69.5
Property, Plant and Equipment
Net property, plant and equipment..........................$ 47.8 $ 31.7 $ 40.1 $ 86.2 $ 97.5
Capital expenditures....................................... 9.9 8.1 5.2 12.7 11.5
Depreciation............................................... 8.2 7.0 7.4 13.7 12.1
Total Assets.................................................$ 588.5 $ 471.2 $ 478.9 $ 401.6 $ 390.7
Capitalization
Long-term debt and notes payable, including current
maturities...............................................$ 300.1 $ 281.3 $ 329.9 $ 190.9 $ 218.0
Minority interest, including redeemable preferred stock
of a subsidiary......................................... 0.6 10.0 9.4 --- ---
Redeemable convertible preferred stock..................... --- 46.2 24.6 17.3 10.5
Stockholders' equity (deficit)............................. 59.6 (71.7) (96.9) (55.7) (62.3)
Dividends per share of Common Stock........................$ --- $ --- $ --- $ --- $ ---
Shares of Common Stock outstanding at year end............. 20.5 13.2 10.6 10.3 10.3
Employees
Continuing operations...................................... 2,950 2,270 2,614 1,549 1,520
Discontinued operations (Material Handling)................ --- --- 986 1,302 1,410
Total.................................................... 2,950 2,270 3,600 2,851 2,930
</TABLE>
The Selected Financial Data include the results of operations of the Simon
Access Companies, Square Shooter and PPM from April 7, 1997, April 14, 1997 and
May 9, 1995, respectively, the dates of their acquisitions. See Note C --
"Acquisitions" in the Notes to the Consolidated Financial Statements for further
information. The Selected Financial Data for the years ended December 31, 1995
and 1996 include the results of operations of CMHC as discontinued operations.
See Note B -- "Discontinued Operations" in the Notes to the Consolidated
Financial statements for further information.
<PAGE>
17
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The Company currently operates in two industry segments: Terex Lifting and Terex
Earthmoving. The Company previously operated a third industry segment, the
Material Handling segment, the results of which are now accounted for as Income
from Discontinued Operations. The Terex Lifting segment results for periods
prior to April 1997 consist of Terex Lifting - Waverly Operations, Terex Lifting
- - Conway Operations and PPM Europe. Subsequent to that date, Terex Lifting'
results also include the results of the Simon Access and Square Shooter
businesses acquired in April of 1997. Terex Earthmoving consists of TEL and Unit
Rig.
1997 Compared with 1996
The table below is a comparison of net sales, gross profit, engineering, selling
and administrative expenses, income (loss) from operations, and income (loss)
from discontinued operations, by segment, for 1997 and 1996. The 1996 amounts
include $30.0 million in special charges comprised of $18.3 million at Terex
Lifting ($16.8 gross profit; $1.6 million engineering, selling and
administrative expenses), $10.4 million at Terex Earthmoving (gross profit), and
$1.2 million General/Corporate (engineering, selling and administrative
expenses).
<TABLE>
<CAPTION>
Year Ended December 31, Increase
-----------------------
1997 1996 (Decrease)
----------- ---------- ------------
(in millions of dollars)
NET SALES
<S> <C> <C> <C>
Terex Lifting.................................. $ 548.0 $ 363.9 $ 184.1
Terex Earthmoving.............................. 288.4 314.9 (26.5)
General/Corporate/Eliminations................. 5.9 (0.3) 6.2
=========== ========== ============
Total....................................... $ 842.3 $ 678.5 $ 163.8
=========== ========== ============
GROSS PROFIT
Terex Lifting.................................. $ 87.2 $ 38.1 $ 49.1
Terex Earthmoving.............................. 50.7 31.3 19.4
General/Corporate/Eliminations................. 1.7 (0.2) 1.9
=========== =========== ============
Total....................................... $ 139.6 $ 69.2 $ 70.4
=========== =========== ============
ENGINEERING, SELLING AND ADMINISTRATIVE EXPENSES
Terex Lifting.................................. $ 40.0 $ 33.3 $ 6.7
Terex Earthmoving.............................. 26.0 25.7 0.3
General/Corporate.............................. 2.5 5.1 (2.6)
=========== =========== ============
Total....................................... $ 68.5 $ 64.1 $ 4.4
=========== =========== ============
INCOME (LOSS) FROM OPERATIONS
Terex Lifting.................................. $ 47.2 $ 4.8 $ 42.4
Terex Earthmoving.............................. 24.7 5.6 19.1
General/Corporate.............................. (0.8) (5.3) 4.5
----------- ----------- ------------
Total....................................... $ 71.1 $ 5.1 $ 66.0
=========== ============ ============
INCOME FROM DISCONTINUED OPERATIONS
$ --- $ 102.0 $ (102.0)
=========== ============ ============
</TABLE>
<PAGE>
18
Net Sales
Sales increased $163.8 million, or approximately 24.1%, to $842.3 million in
1997 from $678.5 million in 1996, primarily reflecting the Simon Access and
Square Shooter Acquisitions in the second quarter of 1997.
Terex Lifting's sales were $548.0 million for 1997, an increase of $184.1
million, or 50.6%, from $363.9 million in 1996 which did not include the results
of Simon Access and Square Shooter. Machine sales increased $168.7 million to
$460.5 million in 1997. This increase in sales was due primarily to the
inclusion of Simon Access and Square Shooter since their acquisition in April
1997. The increase in Terex Lifting's sales in 1997 as compared to 1996 was also
attributable to an increase of $22.7 million in sales at Terex--Waverly
Operations as compared to 1996. Parts sales increased $8.6 million to $72.9
million in 1997. Terex Lifting's bookings were $613.3 million for 1997, compared
to $356.1 million for 1996, an increase of $257.2 million.
Terex Earthmoving's sales decreased $26.5 million in 1997 to $288.4 million.
This decline in sales resulted from a decrease in sales of Unit Rig machines
which was partially offset by sales increases in the other Terex Earthmoving
businesses. Machine sales at Terex Earthmoving in 1997 decreased $22.2 million
to $189.0 million from $211.2 million in 1996 of which approximately $33 million
was attributable to a decrease in Unit Rig's machine sales partially offset by
increased sales in Terex products primarily in North America. Sales of parts at
Terex Earthmoving in 1997 increased $2.2 million to $96.2 million as compared to
$94.0 million in 1996. The sales mix was approximately 33% parts in 1997
compared to approximately 29% parts in 1996. Terex Earthmoving's bookings for
1997 were $268.0 million, a decrease of $9.9 million, or 3.6%, from 1996.
Backlog decreased to $30.3 million at December 31, 1997 from $53.4 million in
1996 primarily as a result of the decrease in machine sales at Unit Rig.
Gross Profit
Gross profit for 1997 increased $70.4 million to $139.6 million. The increase in
the gross profit was due to the addition of the Simon Access and Square Shooter
businesses, general improvements at most operations and the effect of $27.1
million of non-recurring charges in 1996. The 1996 charges included a $16.8
million write down of goodwill and other long lived assets at Terex Lifting and
$10.4 million of non-recurring charges recorded at Terex Earthmoving, primarily
Unit Rig, in the fourth quarter of 1996. Gross profit as a percentage of net
sales for 1997 increased to 16.6% as compared to 10.2% for 1996 as a result of
the effect of the non-recurring charges in 1996. Excluding these $27.1 million
charges in 1996, gross profit as a percentage of sales in 1997 increased to
16.6% from 14.2% in 1996.
Terex Lifting's gross profit increased $49.1 million to $87.2 million for 1997,
compared to $38.1 million for 1996, reflecting the Simon Access and Square
Shooter acquisitions. The gross profit percentage increased to 15.9% in 1997 as
compared to 10.5% in 1996. Excluding the effect of the Simon Access and Square
Shooter acquisitions and the 1996 impairment charge, Terex Lifting's gross
profit in 1997 increased $3.6 million as compared to 1996.
Terex Earthmoving's gross profit increased $19.4 million to $50.7 million in
1997 compared to $31.3 million for 1996. Excluding the $10.4 million
non-recurring charges in 1996 noted above, Terex Earthmoving's gross profit
increased $9.0 million in 1997 as compared to 1996. Excluding the 1996
non-recurring charges, the gross profit percentage in 1997 increased to 17.6%
from 13.2% in 1996 due to an increase in the proportion of higher margin parts
sales as compared to machine sales, an increase in the gross margin for the
Terex product line, primarily due to cost reduction initiatives, and a decrease
in the percentage of Terex Earthmoving's sales in 1997 comprised of the lower
margin Unit Rig machines.
Engineering, Selling and Administrative Expenses
Engineering, selling and administrative expenses (which include the Company's
research and development expenses) increased to $68.5 million in 1997 from $64.1
million for 1996, reflecting the effects of the acquisition of the Simon Access
Companies and Square Shooter. However, engineering, selling and administrative
expenses as a percentage of net sales decreased to 8.1% for 1997 from 9.4% for
1996. Terex Earthmoving's engineering, selling and administrative expenses
increased $0.3 million to $26.0 million for 1997 due to increased selling
efforts. Terex Lifting's engineering, selling and administrative expenses
increased to $40.0 million for 1997 from $33.3 million for 1996, reflecting the
acquisition of the Simon Access Companies and Square Shooter. Excluding the
effect of the acquired companies, Terex Lifting engineering, selling and
administrative expenses fell by almost 22% year over year. Unallocated corporate
engineering, selling and administrative expenses decreased to $2.5 million in
1997 as compared to $5.1 million in 1996. See "Business--Research and
Development" for a discussion of the Company's engineering expenses.
<PAGE>
19
Income (Loss) from Operations
Terex Lifting's income from operations of $47.2 million for 1997 increased by
$42.4 million over 1996, primarily due to the inclusion of the Simon Access and
Square Shooter businesses ($14.3 million), the 1996 impairment charges, improved
results at the European operations and continued strong performance by Terex
Lifting--Waverly Operations.
Terex Earthmoving's income from operations increased by $19.1 million to $24.7
million for 1997 from $5.6 million in 1996, primarily due to improved profits at
Unit Rig, higher gross margin percentages and the 1996 non-recurring charges
mentioned above under "Gross Profit."
On a consolidated basis, the Company had operating income of $71.1 million for
1997, compared to operating income of $5.1 million for 1996, for the reasons
mentioned above.
Interest Expense
Net interest expense decreased to $38.5 million for 1997 from $43.6 million in
1996 as a result of lower average debt levels and interest rates in 1997. A
portion of the decrease was due to the $139.5 million of cash provided from the
sale of the Company's Materials Handling Segment in November 1996, which allowed
the Company to eliminate borrowings under its revolving credit facility prior to
the acquisition of the Simon Access Companies on April 7, 1997. Furthermore, the
proceeds from the issuance of the Common Stock in July 1997 were used to reduce
the average balance borrowed under the then existing revolving credit facility,
and then on September 4, 1997, the Company redeemed $83.3 million of the Senior
Secured Notes.
Other Income (Expense)
The Company realized gains in 1996 of $3.3 million from the sale of excess
property principally in Scotland and Italy. During 1996, the Company recorded a
provision for income taxes of $12.1 million; in 1997, the Company recorded $0.7
million provision for income taxes. The 1996 provision for income taxes
primarily relates to $11.3 million of tax expense recognized at PPM Europe in
connection with its recapitalization which required the Company to utilize a net
operating loss carryforward. The additional $0.8 million provision relates to
taxes due on the sale of property in Europe.
Income (Loss) from Discontinued Operations
Income from discontinued operations in the Company's Material Handling Segment
("Clark") was $102.0 million for 1996. The income was primarily due to the gain
realized on the Clark Sale of $84.5 million. Gross profit for 1996 (through the
date of the Clark Sale) was $46.0 million.
Extraordinary Items
The Company recorded a charge of $2.6 million in 1997 to recognize a loss on the
early extinguishment of debt in connection with its debt refinancing in April
1997. Additionally, the Company recorded a charge of $12.2 million to recognize
a loss on the early extinguishment of debt in connection with the September 1997
redemption of $83.3 million of the Senior Secured Notes.
1996 Compared with 1995
The table below is a comparison of net sales, gross profit, engineering, selling
and administrative expenses, income (loss) from operations, and income (loss)
from discontinued operations, by segment, for 1996 and 1995. The 1996 amounts
include $30.0 million in special charges comprised of $18.3 million at Terex
Lifting ($16.8 gross profit; $1.6 million engineering, selling and
administrative expenses), $10.4 million at Terex Earthmoving (gross profit), and
$1.2 million General/Corporate (engineering, selling and administrative
expenses).
<PAGE>
20
<TABLE>
<CAPTION>
Year Ended December 31, Increase
------------ ------------
1996 1995 (Decrease)
------------ ------------ ------------
(in millions of dollars)
NET SALES
<S> <C> <C> <C>
Terex Lifting.................................. $ 363.9 $ 252.3 $ 111.6
Terex Earthmoving.............................. 314.9 250.3 64.6
Eliminations................................... (0.3) (1.2) 0.9
============ ============ ============
Total....................................... $ 678.5 $ 501.4 $ 177.1
============ ============ ============
GROSS PROFIT
Terex Lifting.................................. $ 38.1 $ 35.2 $ 2.9
Terex Earthmoving.............................. 31.3 35.9 (4.6)
Eliminations................................... (0.2) (0.7) 0.5
============ ============ ============
Total....................................... $ 69.2 $ 70.4 $ (1.2)
============ ============ ============
ENGINEERING, SELLING AND ADMINISTRATIVE EXPENSES
Terex Lifting.................................. $ 33.3 $ 28.0 $ 5.3
Terex Earthmoving.............................. 25.7 22.9 2.8
General/Corporate.............................. 5.1 6.7 (1.6)
============ ============ ============
Total....................................... $ 64.1 $ 57.6 $ 6.5
============ ============ ============
INCOME (LOSS) FROM OPERATIONS
Terex Lifting.................................. $ 4.8 $ 7.2 $ (2.4)
Terex Earthmoving.............................. 5.6 13.0 (7.4)
General/Corporate.............................. (5.3) (7.4) 2.1
------------ ------------ ------------
Total....................................... $ 5.1 $ 12.8 $ (7.7)
============ ============ ============
INCOME FROM DISCONTINUED OPERATIONS
$ 102.0 $ 4.4 $ 97.6
============ ============ ============
</TABLE>
Net Sales
Sales increased $177.1 million, or approximately 35.3%, to $678.5 million in
1996 from $501.4 million in 1995, reflecting the PPM Acquisition in the second
quarter of 1995.
Terex Lifting's sales were $363.9 million for 1996, an increase of $111.6
million, or 44.2%, from $252.3 million in 1995 which did not include PPM prior
to the PPM Acquisition. Machine sales increased $94.9 million to $291.8 million
in 1996. This increase in sales was due primarily to the inclusion of PPM Europe
and Terex Lifting--Conway Operations for all of 1996, as compared to 1995 when
the results of these operations were not included prior to May 9, 1995. The
increase in Terex Lifting's sales in 1996 as compared to 1995 was also
attributable to an increase of $34.3 million in sales at Terex--Waverly
Operations as compared to 1995 and, to a lesser extent, to growth in sales at
PPM Europe and Terex Lifting--Conway Operations during such period. Parts sales
increased $11.4 million to $64.3 million in 1996. Terex Lifting's bookings were
$356.1 million for 1996, compared to $236.7 million for 1995, an increase of
$119.4 million.
Terex Earthmoving's sales increased $64.6 million in 1996 to $314.9 million.
Machines sales increased 36.2% primarily due to increased presence in the Asian
market and the United States rental market, and parts sales increased 8.5% in
1996. The sales mix was approximately 29% parts in 1996 compared to 34.6% parts
in 1995. Terex Earthmoving's bookings for 1996 were $277.9 million, a decrease
of $3.0 million, or 1.1%, from 1995. Backlog decreased to $53.4 million at
December 31, 1996 from $88.8 million in 1995 as a result of a large order which
was placed late in 1995. However, the average backlog increased slightly to
$68.1 million for 1996 as compared to $57.0 million for 1995.
<PAGE>
21
Gross Profit
Gross profit for 1996 decreased $1.2 million to $69.2 million. The decline in
the gross profit was primarily due to the $16.8 million write down of goodwill
and other long lived assets at Terex Lifting and $10.4 million of non-recurring
charges recorded at Terex Earthmoving in the fourth quarter of 1996. These
charges substantially offset the increased gross profit from increased net sales
during 1996 as compared to 1995. Gross profit as a percentage of net sales for
1996 decreased to 10.2% as compared to 14.0% for 1995 as a result of the
non-recurring charges. However, excluding these $27.1 million charges in 1996,
gross profit as a percentage of sales increased to 14.2% and increased from
$70.4 million to $96.3 million.
Terex Lifting's gross profit increased $2.9 million to $38.1 million for 1996,
compared to $35.2 million for 1995, reflecting the PPM Acquisition, the effect
of cost reduction actions put in place at PPM Europe and Terex Lifting--Conway
Operations, and improved performance at Terex Lifting--Waverly Operations. These
improvements were substantially offset by an impairment charge which resulted
from a detailed analysis of future cash flows from operations primarily at Terex
Lifting--Conway Operations facility. Excluding the impairment charge, Terex
Lifting's gross profit in 1996 increased $19.7 million as compared to 1995 and
the gross profit percentage increased to 15.1% as compared to 14.0% in 1995.
Terex Earthmoving's gross profit decreased $4.6 million to $31.3 million in 1996
compared to $35.9 million for 1995. Excluding the $10.4 million non-recurring
charges noted above, Terex Earthmoving's gross profit increased $5.8 million in
1996 as compared to 1995. The $10.4 million non-recurring charges are comprised
mainly of $8.6 million at Unit Rig for the reduction in value of the Unit Rig
Tulsa facility due to changes in production methods, and $1.9 million of
goodwill associated with TEL's acquisition of its UK distributor, Terex (UK)
Limited, which was written off and recorded as an impairment charge in 1996.
Exclusive of these non-recurring charges, the gross profit percentage in 1996
decreased to 13.2% from 14.3% in 1995 due to an increase in the proportion of
machine sales as compared to parts sales. Parts sales have higher margins than
machine sales.
Engineering, Selling and Administrative Expenses
Engineering, selling and administrative expenses (which include the Company's
research and development expenses) increased to $64.1 million in 1996 from $57.6
million for 1995, reflecting the effects of the PPM Acquisition. However,
engineering, selling and administrative expenses as a percentage of net sales
decreased to 9.4% for 1996 from 11.5% for 1995. Terex Earthmoving's engineering,
selling and administrative expenses increased to $25.7 million for 1996 from
$22.9 million for 1995 primarily due to costs associated with a new parts sales
office and a new U.K. dealership. Terex Lifting's engineering, selling and
administrative expenses increased to $33.3 million for 1996 from $28.0 million
for 1995, reflecting the PPM Acquisition and non-recurring charges of $1.6
million. See "Business--Research and Development" for a discussion of the
Company's engineering expenses.
Income (Loss) from Operations
Terex Lifting's income from operations of $4.8 million for 1996 decreased by
$2.4 million over 1995, primarily due to the impairment charges at the Terex
Lifting--Conway Operations facility, which were offset somewhat by the increased
net sales and the effect of cost control initiatives implemented at all PPM
operations since they were acquired by the Company, and continued strong
performance by Terex Lifting--Waverly Operations.
Terex Earthmoving's income from operations decreased by $7.4 million to $5.6
million for 1996 from $13.0 million in 1995, primarily due to the non-recurring
charges mentioned above under "Gross Profit." Excluding these charges, income
from operations increased to $16.0 million.
On a consolidated basis, the Company had operating income of $5.1 million for
1996, compared to operating income of $12.8 million for 1995, for the reasons
mentioned above.
Interest Expense
Net interest expense increased to $43.6 million for 1996 from $38.0 million in
1995 as a result of incremental borrowings associated with the PPM Acquisition.
Other Income (Expense)
The Company realized gains in 1996 of $3.3 million from the sale of excess
property principally in Scotland and Italy. During 1996, the Company recorded a
provision for income taxes of $12.1 million; in 1995, the Company recorded no
<PAGE>
22
provision for income taxes. The 1996 provision for income taxes primarily
relates to $11.3 million of tax expense recognized at PPM Europe in connection
with its recapitalization which required the Company to utilize a net operating
loss carryforward. The additional $0.8 million provision relates to taxes due on
the sale of property in Europe.
In 1995, the Company had a gain of $1.0 million from the sale of stock of a
former subsidiary and recorded a charge of $0.5 million to recognize the
impairment in value of certain properties held for sale.
Income (Loss) from Discontinued Operations
Income from discontinued operations in the Company's Material Handling Segment
increased $97.6 million to $102.0 million for 1996 as compared to $4.4 million
in 1995. The increased income was primarily due to the gain realized on the
Clark Sale of $84.5 million. Gross profit for 1996 (through the date of the
Clark Sale) increased $1.2 million to $46.0 million as compared to 1995 even
though net sales decreased $124.2 million or 23%. Additionally, in 1995 the
Clark Material Handling Segment recorded charges of $6.0 million related to
severance costs, exit costs and the impairment in value of certain properties
held for sale.
Extraordinary Items
The Company recorded a charge of $7.5 million in 1995 to recognize a loss on the
early extinguishment of debt in connection with its debt refinancing in May
1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company's businesses are working capital intensive and require funding for
purchases of production and replacement parts inventories, capital expenditures
for repair, replacement and upgrading of existing facilities as well as
financing of receivables from customers and dealers. The Company has significant
debt service requirements.
Debt reduction and an improved capital structure are major focal points for the
Company. In this regard, the Company regularly reviews its alternatives to
improve its capital structure and to reduce debt through debt refinancings,
issuances of equity, asset sales, including the sale of business units, or any
combination thereof. As part of its strategy the Company has consummated several
transactions over the past 18 months which have strengthened its capital
structure and significantly reduced its cost of funds.
On November 27, 1996, the Company completed the Clark Sale for an aggregate cash
purchase price of approximately $139.5 million. Upon closing, the Company
initially used the proceeds to pay down its then existing domestic credit
facility. Then, on December 30, 1996, the Company called all of its issued and
outstanding Series A Preferred Stock for redemption on January 29, 1997 (the
"Series A Redemption Date"). The Series A Preferred Stock was accreting
initially at a rate of 13% per annum, which was to increase to 18% per annum at
the end of 1998. All 1,200,000 shares of the Series A Preferred Stock
outstanding on the Series A Redemption Date were redeemed at a redemption price
of $37.80 per share, or approximately $45.4 million in aggregate.
On July 28, 1997 and August 7, 1997, the Company issued an additional 5,000,000
shares and 700,000 shares, respectively, of its Common Stock in an underwritten
public stock offering. The shares were issued at a price to the public of $19.50
per share. The net proceeds received by the Company were $104.6 million. A
portion of the proceeds from the stock offering were initially used to reduce
borrowings under the Company's then existing domestic revolving credit facility.
On September 4, 1997, the Company used a portion of the proceeds from the stock
offering to redeem $83.3 million of the Senior Secured Notes. The total funds
paid at the redemption were $94.6 million ($83.3 million principal, $7.9 million
redemption premium and $3.4 million accrued interest). As a result of the
redemption of a portion of the Senior Secured Notes, the annual interest
payments on the Senior Secured Notes decreased from $33.1 million to $22.1
million, a savings of $11.0 million per year.
In December 1997, two additional transactions were completed that further
improved the Company's capital structure. On December 10, 1997, the Company
eliminated all of the issued and outstanding shares of Series A Redeemable
Exchangeable Preferred Stock of its subsidiary, Terex Cranes, Inc. (the
"Subsidiary Preferred Stock"), by merging Terex Cranes, Inc. with the Company
and exchanging the Subsidiary Preferred Stock (originally issued in connection
with the PPM Acquisition) into 705,969 shares of Common Stock of the Company. On
December 30, 1997, all of the Company's issued and outstanding shares of Series
B Cumulative Redeemable Convertible Preferred Stock, which was accreting
initially at a rate of 13% per annum, and was to increase to 18% per annum at
the end of 1998, were converted by the holder thereof into 87,300 shares of
Common Stock of the Company.
<PAGE>
23
On March 6, 1998, the Company consummated the New Bank Credit Facility, the
refinancing of substantially all of its domestic and foreign revolving credit
facilities, and the purchase or defeasance of all of the Company's outstanding
Senior Secured Notes. The New Bank Credit Facility consists of the New Revolving
Credit Facility aggregating up to $125 million and the Term Loan Facilities
providing for loans in an aggregate principal amount of up to approximately $375
million. Borrowings under the Term Loan Facilities were used by the Company to
(i) finance the purchase of the $166.7 million of its then outstanding Senior
Secured Notes and pay the premium and accrued interest in connection therewith
and (ii) repay in full the outstanding indebtedness and related fees and
expenses under certain of the Company's then existing credit facilities. In
connection with these actions, the Company will incur an extraordinary loss of
$38.4 million in the first quarter of 1998. Borrowings under the Term Loan
Facilities will also be used to fund a portion of the aggregate consideration
for the acquisition of O&K Mining. The New Revolving Credit Facility, which is
currently undrawn, will be used for working capital and general corporate
purposes.
On March 24, 1998, the Company entered into a Purchase Agreement to issue and
sell $150 million aggregate principal amount of 8.875% Senior Subordinated Notes
Due 2008 (the "New Senior Subordinated Notes"). The New Senior Subordinated
Notes are being issued and sold pursuant to an exemption from registration under
the Securities Act of 1933, as amended, and the closing is expected to occur on
March 31, 1998. The New Senior Subordinated Notes are unsecured and repayment is
guaranteed on an unsecured basis by certain of the Company's domestic
subsidiaries. The proceeds of the issuance and sale of the New Senior
Subordinated Notes will be used to fund a portion of the aggregate consideration
for the acquisition of O&K Mining and for general corporate purposes.
Net cash of $0.3 million was used by operating activities during 1997. $85.4
million was provided by operating results plus depreciation and amortization,
and approximately $9.8 million was invested in working capital during the period
to support the increase in business activity at Terex Lifting and TEL. The
remaining effect on cash from operations for the period was due to the costs of
financing. Net cash used in investing activities was $98.6 million during 1997,
primarily related to the purchase of the Simon Access Companies and Baraga
Products, Inc. Net cash provided by financing activities was $64.2 million
during 1997. Cash was provided by the net proceeds from the public offering of
common stock and additional borrowings primarily related to the purchase of the
Simon Access Companies. Cash was used for the redemption of the Series A
Preferred Stock and the redemption of a portion of the Senior Secured Notes.
Cash and cash equivalents totaled $28.7 million at December 31, 1997.
Factors Affecting Future Liquidity
The Company's debt service obligations for 1998 include quarterly interest and
principal payments on the Term Loan Facilities and variable periodic payments on
the New Revolving Credit Facility and will include semi-annual interest payments
due on the Senior Subordinated Notes issued in connection with the O&K Mining
acquisition. Management believes that with cash generated from operations,
together with borrowings under the New Revolving Credit Facility (which is
currently undrawn), the Company has adequate liquidity to meet the Company's
operating and debt service requirements for the foreseeable future.
The New Bank Credit Facility places certain limits on the Company's ability,
among other things, to incur indebtedness and liens, pay dividends and make
other payments, consummate mergers and asset acquisitions and sales, enter into
related party transactions and make capital expenditures and investments. The
New Bank Credit Facility also contains certain financial and operating
covenants, including a maximum leverage ratio, a minimum interest coverage ratio
and a minimum fixed charge coverage ratio.
Foreign Currencies and Interest Rate Risk
The Company's products are sold in over 50 countries around the world and,
accordingly, revenues of the Company are generated in foreign currencies, while
the costs associated with those revenues are only partly incurred in the same
currencies. The major foreign currencies, among others, in which the Company
does business are the Pound Sterling and the French Franc. Following
consummation of the O&K Mining acquisition, the Company will also conduct
significant business in Deutsche Marks. The Company may, from time to time,
hedge specifically identified committed cash flows in foreign currencies using
forward currency sale or purchase contracts. Such foreign currency contracts
have not historically been material in amount.
Because certain of the Company's obligations, including indebtedness under the
New Bank Credit Facility, will bear interest at floating rates, an increase in
interest rates could adversely affect, among other things, the ability of the
Company to meet its debt service obligations. The Company has entered into
interest protection arrangements with respect to approximately $220 million of
the principal amount of its indebtedness under the New Bank Credit Facility
fixing interest at various rates between 6.6% and 8.3%.
Contingencies and Uncertainties
The Internal Revenue Service (the "IRS") is currently examining the Company's
Federal tax returns for the years 1987 through 1989. In December 1994, the
Company received an examination report from the IRS proposing a substantial tax
deficiency. The examination report raised a variety of issues, including the
Company's substantiation for certain deductions taken during this period, the
Company's utilization of certain net operating loss carryovers ("NOLs") and the
availability of such NOLs to offset future taxable income. The Company filed an
administrative appeal to the examination report in April 1995. In June 1996, the
Company was advised that the matter was being referred back to the audit
division of the IRS. The IRS is currently reviewing information provided by the
Company. The ultimate outcome of this matter is subject to the resolution of
significant legal and factual issues. Given the stage of the audit, and the
<PAGE>
24
number and complexity of the legal and administrative proceedings involved in
reaching a resolution of this matter, it is unlikely that the ultimate outcome,
if unfavorable to the Company, will be determined for at least several years. If
the IRS were to prevail on all the issues raised, the amount of the tax
assessment would be approximately $56 million plus penalties of approximately
$12.8 million and interest through December 31, 1997 of approximately $94.5
million. The penalties asserted by the IRS are calculated as 20% of the amount
of the tax assessed for fiscal year 1987 and 25% of the tax assessed for each of
fiscal years 1988 and 1989. Interest on the amount of tax assessed and penalties
is currently accruing at a rate of 11% per annum. The applicable annual rate of
interest has historically varied from 7% to 12%.
If the Company were required to pay a significant portion of the assessment with
related interest and penalties, such payment might exceed the Company's
resources. In such event, the viability of the Company would be placed in
jeopardy, and it is uncertain that the Company could, through financing or
otherwise, obtain the funds required to pay such assessment, interest, and
applicable penalties. Management believes, however, that the Company will be
able to provide adequate documentation for a substantial portion of the
deductions questioned by the IRS and that there is substantial support for the
Company's past and future utilization of the NOLs. Based upon consultation with
its tax advisors, management believes that the Company's position will prevail
on the most significant issues. Accordingly, management believes that the
outcome of the examination will not have a material adverse effect on its
financial condition or results of operations, but may result in some reduction
in the amount of the NOLs available to the Company. No additional accruals have
been made for any amounts which might be due as a result of this matter because
the possible loss ranges from zero to $56 million plus interest and penalties,
and the ultimate outcome cannot be determined or estimated at this time. No
reserves are being expensed to cover the potential liability.
As of December 31, 1997, the Company had federal NOLs of approximately $290.5
million. The Company would be subject to an annual limitation (described below)
on its ability to utilize its NOLs to offset future taxable income if the
Company undergoes an ownership change (an "Ownership Change") within the meaning
of Section 382 of the Internal Revenue Code of 1986, as amended ("Section 382").
Generally, an Ownership Change is deemed to occur if the aggregate cumulative
increase in the percentage ownership of the capital stock of the Company (which
generally includes for this purpose, but is not limited to, the common stock and
certain options and warrants) by persons owning 5% or more of such capital stock
and certain public groups (within the meaning of Section 382) is more than 50
percentage points in any three-year testing period. In the event of an Ownership
Change, the Company's utilization of its NOLs would be limited to an annual
amount (without extending the applicable 15-year carryforward period for NOLs)
equal to the product of the fair market value of the Company immediately before
such Ownership Change (as determined pursuant to Section 382, which may provide
for certain reductions in value) multiplied by the long-term tax-exempt rate,
which is an interest-indexed rate that is published monthly by the IRS and which
is approximately 5.23% as of the date of this Annual Report. NOLs arising after
the date that any Ownership Change occurs will be unaffected by such Ownership
Change.
It is impossible for the Company to ensure that an Ownership Change will not
occur in the future, in part because the Company has no ability to restrict the
acquisition or disposition of the Company's capital stock by persons whose
ownership could cause an Ownership Change. In addition, the Company may in the
future take certain actions which, alone or coupled with other events, could
give rise to an Ownership Change, if in the exercise of the business judgment of
the Company such actions (which may include future issuances of equity
securities) are necessary or desirable. If an Ownership Change were to occur,
the NOL annual limitation under Section 382 could substantially reduce the
Company's future after-tax earnings and cash flow.
In March 1994, the Securities and Exchange Commission (the "Commission")
initiated a private investigation, which included the Company and certain of its
present and former officers and affiliates, to determine whether violations of
certain aspects of the Federal securities laws had occurred. To date, the
<PAGE>
25
inquiry of the Commission has primarily focused on accounting treatment and
reporting matters relating to various transactions which took place in the late
1980s and early 1990s. The Company is cooperating with the Commission in its
investigation. The Company has recently been advised by the Staff of the
Commission that it has been authorized by the Commission to institute an
administrative proceeding against the Company and certain of its present and
former officers and affiliates. Based on information currently available to the
Company, it is the Company's understanding that if a proceeding were to be
brought, the Staff intends to seek an order to cease and desist violations of
the Federal securities laws (without monetary penalties) based on claims
relating to accounting treatment and reporting matters with respect to the
Company's financial statements for the years ended December 31, 1990 and 1991,
as well as the Company's Proxy Statement covering the 1992 fiscal year. It is
not possible at this time to determine the outcome of the Commission's
investigation.
During 1997, in connection with the Commission's investigation, the Company
incurred $0.2 million of legal fees and expenses on behalf of the Company,
directors and executives of the Company, and KCS. In general, under the
Company's by-laws, the Company is obligated to indemnify officers and directors
for all liabilities arising in the course of their duties on behalf of the
Company. To date, no officer or director has had legal representation separate
from the Company's legal representation, and no allocation of the legal fees for
such representation has been made.
The Company is subject to a number of contingencies and uncertainties including
product liability claims, self-insurance obligations, tax examinations and
guarantees. Many of the exposures are unasserted or proceedings are at a
preliminary stage, and it is not presently possible to estimate the amount or
timing of any cost to the Company. However, management does not believe that
these contingencies and uncertainties will, in the aggregate, have a material
adverse effect on the Company. When it is probable that a loss has been incurred
and possible to make reasonable estimates of the Company's liability with
respect to such matters, a provision is recorded for the amount of such estimate
or for the minimum amount of a range of estimates when it is not possible to
estimate the amount within the range that is most likely to occur.
The Company generates hazardous and non-hazardous wastes in the normal course of
its manufacturing operations. As a result, the Company is subject to a wide
range of federal, state, local and foreign environmental laws and regulations,
including CERCLA, that (i) govern activities or operations that may have adverse
environmental effects, such as discharges to air and water, as well as handling
and disposal practices for hazardous and non-hazardous wastes, and (ii) impose
liability for the costs of cleaning up, and certain damages resulting from,
sites of past spills, disposals or other releases of hazardous substances.
Compliance with such laws and regulations has, and will, require expenditures by
the Company on a continuing basis. The Company does not expect that these
expenditures will have a material adverse effect on its financial condition or
results of operations.
Forward-Looking Information
Certain information in this Annual Report includes forward looking statements
regarding future events or the future financial performance of the Company that
involve certain contingencies and uncertainties, including those discussed above
in the section entitled Contingencies and Uncertainties. In addition, when
included in this Annual Report or in documents incorporated herein by reference,
the words "may," "expects," "intends," "anticipates," "plans," "projects,"
"estimates" and the negatives thereof and analogous or similar expressions are
intended to identify forward-looking statements. Such statements are inherently
subject to a variety of risks and uncertainties that could cause actual results
to differ materially from those reflected in such forward-looking statements.
Such risks and uncertainties, many of which are beyond the Company's control,
include, among others, the sensitivity of construction and mining activity to
interest rates, government spending and general economic conditions; the success
of the integration of acquired businesses; the retention of key management;
foreign currency fluctuations; pricing, product initiatives and other actions
taken by competitors; the effects of changes in laws and regulations; continued
use of net operating loss carryovers and other factors. Actual events or the
actual future results of the Company may differ materially from any forward
looking statement due to these and other risks, uncertainties and significant
factors. The forward-looking statements contained herein speak only as of the
date of this Annual Report and the forward-looking statements contained in
documents incorporated herein by reference speak only as of the date of the
respective documents. The Company expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to any forward-looking
statement contained or incorporated by reference in this Annual Report to
reflect any change in the Company's expectations with regard thereto or any
change in events, conditions or circumstances on which any such statement is
based.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable.
<PAGE>
26
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
Unaudited Quarterly Financial Data
Summarized quarterly financial data for 1997 and 1996 are as follows (in
millions, except per share amounts):
1997 1996
------------------------------------- -------------------------------------
Fourth Third Second First Fourth Third Second First
------------------------------------- -------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales.................................... $ 219.7 $ 214.1 $ 232.2 $ 176.3 $ 156.8 $ 165.7 $ 182.8 $ 173.2
Gross profit................................. 36.8 37.0 38.3 27.5 (4.9) 23.7 27.0 23.4
Income (loss) from continuing operations
before extraordinary items................. 10.0 8.7 7.7 3.9 (46.5) (3.4) (1.7) (2.7)
Income (loss) from discontinued operations... --- --- --- --- 87.8 4.8 6.2 3.2
Income (loss) before extraordinary items.... 10.0 8.7 7.7 3.9 41.3 1.4 4.5 0.5
Net income (loss)............................ 10.0 (3.5) 5.1 3.9 41.3 1.4 4.5 0.5
Income (loss) applicable to common stock..... 6.4 (3.9) 4.7 3.5 24.4 (0.9) 2.6 (1.4)
Per share:
Basic
Income (loss) before extraordinary items. $ 0.32 $ 0.47 $ 0.35 $ 0.26 $ 1.85 $ (0.07) $ 0.19 $ (0.13)
Net income (loss)........................ 0.32 (0.21) 0.33 0.26 1.85 (0.07) 0.19 (0.13)
Diluted
Income (loss) before extraordinary items. $ 0.30 $ 0.43 $ 0.48 $ 0.24 $ 1.71 $ (0.06) $ 0.18 $ (0.13)
Net income (loss)........................ 0.30 (0.20) 0.31 0.24 1.71 (0.06) 0.18 (0.13)
</TABLE>
The accompanying unaudited quarterly financial data of the Company have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with Item 302 of Regulation S-K. In the opinion of
management, all adjustments considered necessary for a fair presentation have
been made and were of a normal recurring nature except for those discussed
below.
The results of the Company's Material Handling Segment have been accounted for
as discontinued operations for all periods presented. See Item 1. - Business.
In 1997, the Company recognized an extraordinary loss on the early
extinguishment of debt -- $2.6 million in connection with the refinancing of its
then existing revolving credit in the second quarter and $12.2 million in
connection with the redemption of $83.3 million of its Senior Secured Notes in
the third quarter.
In 1996, the Company recognized a gain of $2.4 million in the first quarter from
the sale of excess property in Scotland. In 1996 Income (loss) from discontinued
operations includes the gain, net of income taxes, of $84.5 million on the sale
of CMHC in the fourth quarter. In the fourth quarter of 1996 the Company
recorded special charges of $45.1 million, including impairment charges of $18.7
million (see Note D -- "Impairment of Long Lived Assets and Other Special
Charges"), a reduction in the value of certain assets of $8.6 million, $2.0
million related to pre-purchase tax contingencies at PPM, $3.0 million of other
one time accruals, and income tax expense of $12.1 million (see Note I --
"Income Taxes"). Net income (loss) has been reduced by Preferred Stock accretion
for purposes of calculating earnings per share amounts. See Note J -- "Preferred
Stock" in the Notes to the Company's Consolidated Financial Statements. In the
fourth quarter of 1996 preferred stock accretion was $16.9 million, which
included $14.5 of additional accretion due to the redemption of the Series A
Preferred Stock on January 29, 1997.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
Not applicable.
<PAGE>
27
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Items 10 through 13 is incorporated by reference to
the definitive Terex Corporation Proxy Statement to be filed with the Securities
and Exchange Commission not later than 120 days after the end of the fiscal year
covered by this Annual Report on Form 10-K.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) and (2) Financial Statements and Financial Statement Schedules.
See "Index to Consolidated Financial Statements and Financial Statement
Schedule" on Page F-1.
(3) Exhibits
See "Index to Exhibits" on Page E-1.
(b) Reports on Form 8-K
A report on form 8-K dated December 8, 1997 was filed December 8, 1997 reporting
that the Company had entered into an underwriting agreement with Credit Suisse
First Boston Corporation (the "Underwriter") and Legris Industries S.A. and
Potain S.A. (collectively, the "Selling Shareholders"), providing for the
purchase by the Underwriter from the Selling Stockholders of 705,969 shares of
the Company's Common Stock.
A report on Form 8-K dated December 15, 1997 was filed December 29, 1997
reporting the Company's announcement of an agreement to acquire the shares of
O&K Mining GmbH.
<PAGE>
28
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
TEREX CORPORATION
By: /s/ Ronald M. DeFeo March 27, 1998
----------------------------------
Ronald M. DeFeo,
Chairman, Chief Executive Officer
and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Name Title Date
/s/ Ronald M. DeFeo Chairman, Chief Executive Officer, March 27, 1998
- ---------------------- and Director
Ronald M. DeFeo (Principal Executive Officer)
/s/ David J. Langevin Executive Vice President March 27, 1998
- ---------------------- (Acting Principal Financial Officer)
David J. Langevin
/s/ Joseph F. Apuzzo Vice President Finance and Controller March 27, 1998
- ---------------------- (Principal Accounting Officer)
Joseph F. Apuzzo
/s/ G. Chris Andersen Director March 27, 1998
- ----------------------
G. Chris Andersen
/s/ William H. Fike Director March 27, 1998
- ----------------------
William H. Fike
/s/ Bruce I. Raben Director March 27, 1998
- ----------------------
Bruce I. Raben
/s/ Marvin B. Rosenberg Director March 27, 1998
- ------------------------
Marvin B. Rosenberg
/s/ David A. Sachs Director March 27, 1998
- ------------------------
David A. Sachs
/s/ Adam E. Wolf Director March 27, 1998
- ------------------------
Adam E. Wolf
<PAGE>
29
THIS PAGE IS INTENTIONALLY BLANK
NEXT PAGE IS NUMBERED "F-1"
<PAGE>
F-1
TEREX CORPORATION AND SUBSIDIARIES
Index to Consolidated Financial Statements and Financial Statement Schedules
Page
TEREX CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 1997
AND 1996 AND FOR EACH OF THE THREE YEARS
IN THE PERIOD ENDED DECEMBER 31, 1997
Report of independent accountants.......................................F - 2
Consolidated statement of operations ...................................F - 3
Consolidated balance sheet..............................................F - 4
Consolidated statement of changes in stockholders' equity (deficit).....F - 5
Consolidated statement of cash flows....................................F - 6
Notes to consolidated financial statements..............................F - 7
FINANCIAL STATEMENT SCHEDULES
Schedule II -- Valuation and Qualifying Accounts and Reserves...........F - 28
Schedule IV -- Indebtedness of and to Related Parties -- Not Current....F - 29
All other schedules for which provision is made in the applicable regulations of
the Securities and Exchange Commission are not required under the related
instructions or are not applicable, and therefore have been omitted.
<PAGE>
F-2
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Stockholders of Terex Corporation
In our opinion, the Terex Corporation consolidated financial statements listed
in the accompanying index on page F-1 present fairly, in all material respects,
the financial position of Terex Corporation and its subsidiaries at December 31,
1997 and 1996, and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 1997, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Stamford, Connecticut
March 6, 1998
<PAGE>
F-3
<TABLE>
<CAPTION>
TEREX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(in millions except per share amounts)
Year Ended December 31,
------------------------------------
1997 1996 1995
----------- ----------- ------------
<S> <C> <C> <C>
NET SALES............................................... $ 842.3 $ 678.5 $ 501.4
COST OF GOODS SOLD...................................... 702.7 609.3 431.0
----------- ----------- ------------
Gross Profit......................................... 139.6 69.2 70.4
ENGINEERING, SELLING AND ADMINISTRATIVE EXPENSES........ 68.5 64.1 57.6
----------- ----------- ------------
Income from operations............................... 71.1 5.1 12.8
OTHER INCOME (EXPENSE)
Interest income...................................... 0.9 1.2 0.7
Interest expense..................................... (39.4) (44.8) (38.7)
Amortization of debt issuance costs.................. (2.6) (2.6) (2.3)
Other income (expense) - net......................... 1.0 (1.1) (4.6)
----------- ----------- ------------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES AND EXTRAORDINARY ITEMS............... 31.0 (42.2) (32.1)
PROVISION FOR INCOME TAXES.............................. (0.7) (12.1) ---
----------- ----------- ------------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE
EXTRAORDINARY ITEMS.................................. 30.3 (54.3) (32.1)
INCOME FROM DISCONTINUED OPERATIONS
(net of tax expense of $2.6, in 1996................. --- 102.0 4.4
----------- ----------- ------------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS.............. 30.3 47.7 (27.7)
EXTRAORDINARY LOSS ON RETIREMENT OF DEBT................ (14.8) --- (7.5)
----------- ----------- ------------
NET INCOME (LOSS).................................... 15.5 47.7 (35.2)
LESS PREFERRED STOCK ACCRETION.......................... (4.8) (22.9) (7.3)
----------- ----------- ------------
INCOME (LOSS) APPLICABLE TO COMMON STOCK............. $ 10.7 $ 24.8 $ (42.5)
=========== =========== ============
PER COMMON AND COMMON EQUIVALENT SHARE:
Basic
Income (loss) from continuing operations.......... $ 1.57 $ (6.54) $ (3.79)
Income from discontinued operations............... --- 8.64 0.42
----------- ----------- ------------
Income (loss) before extraordinary items....... 1.57 2.10 (3.37)
Extraordinary loss on retirement of debt.......... (0.91) --- (0.72)
=========== =========== ============
Net income (loss).................................. $ 0.66 $ 2.10 $ (4.09)
=========== =========== ============
Diluted
Income (loss) from continuing operations.......... $ 1.44 $ (5.81) $ (3.79)
Income from discontinued operations............... --- 7.67 0.42
---------- ------------ -----------
Income (loss) before extraordinary items...... 1.44 1.86 (3.37)
Extraordinary loss on retirement of debt.......... (0.84) --- (0.72)
----------- ----------- ------------
Net income (loss)................................. $ 0.60 $ 1.86 $ (4.09)
=========== =========== ============
AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT SHARES
OUTSTANDING IN PER SHARE CALCULATION:
Basic........................................... 16.2 11.8 10.4
Diluted......................................... 17.7 13.3 10.4
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
F-4
<TABLE>
<CAPTION>
TEREX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in millions, except par value)
December 31,
------------------------
1997 1996
----------- ------------
CURRENT ASSETS
<S> <C> <C>
Cash and cash equivalents............................................................. $ 28.7 $ 72.0
Trade receivables (less allowance of $4.5 in 1997 and $7.0 in 1996)................... 139.3 110.3
Net inventories....................................................................... 232.1 190.6
Other current assets.................................................................. 26.4 17.3
------------- -----------
Total Current Assets............................................... 426.5 390.2
LONG-TERM ASSETS
Property, plant and equipment - net................................................... 47.8 31.7
Goodwill - net........................................................................ 88.4 32.4
Other assets - net.................................................................... 25.8 16.9
------------- -----------
TOTAL ASSETS............................................................................. $ 588.5 $ 471.2
============= ===========
CURRENT LIABILITIES
Notes payable and current portion of long-term debt................................... $ 26.6 $ 19.2
Trade accounts payable................................................................ 138.1 104.4
Accrued compensation and benefits..................................................... 16.4 15.8
Accrued warranties and product liability.............................................. 25.3 19.4
Other current liabilities............................................................. 29.7 36.2
------------- -----------
Total Current Liabilities........................................... 236.1 195.0
NON CURRENT LIABILITIES
Long-term debt, less current portion.................................................. 273.5 262.1
Other................................................................................. 18.7 29.6
MINORITY INTEREST, INCLUDING REDEEMABLE PREFERRED STOCK OF A SUBSIDIARY
Liquidation preference $0 in 1997 and $21.4 in 1996................................... 0.6 10.0
REDEEMABLE CONVERTIBLE PREFERRED STOCK
Liquidation preference $0 in 1997 and $46.2 in 1996................................... --- 46.2
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT)
Warrants to purchase common stock..................................................... 0.8 3.2
Equity rights.......................................................................... 3.2 ---
Common Stock, $0.01 par value --
authorized 30.0 shares; issued and outstanding 20.5 in 1997 and 13.2 in 1996....... 0.2 0.1
Additional paid-in capital............................................................ 178.7 55.8
Accumulated deficit................................................................... (115.4) (126.1)
Pension liability adjustment.......................................................... (1.8) (2.0)
Cumulative translation adjustment..................................................... (6.1) (2.7)
------------- -----------
Total Stockholders' Equity (Deficit).................................. 59.6 (71.7)
------------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)..................................... $ 588.5 $ 471.2
============= ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
F-5
<TABLE>
<CAPTION>
TEREX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
(in millions)
Unrealized
Additional Accumu- Pension Holding Cumulative
Equity Common Paid-in lated Liability Gain Translation
Warrants Rights Stock Capital Deficit Adjustment (Loss) Adjustment Total
---------- --------- --------- ----------- --------- ----------- --------- ----------- --------
BALANCE AT DECEMBER 31,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994....................$ 17.6 $ --- $ 0.1 $ 40.1 $ (108.4)$ (1.8)$ 1.8 $ (5.1) $ (55.7)
Conversion of Warrants... (0.4) --- --- 0.4 --- --- --- --- ---
Net loss................. --- --- --- --- (35.2) --- --- --- (35.2)
Accretion of carrying
value of redeemable
preferred stock to
redemption value........ --- --- --- --- (7.3) --- --- --- (7.3)
Pension liability
adjustment.............. --- --- --- --- --- (0.9) --- --- (0.9)
Unrealized holding loss
on equity securities.... --- --- --- --- --- --- (0.8) --- (0.8)
Translation adjustment... --- --- --- --- --- --- --- 3.0 3.0
---------- ---------- ---------- --------- ---------- --------- ---------- ---------- ---------
BALANCE AT DECEMBER 31,
1995.................... 17.2 --- 0.1 40.5 (150.9) (2.7) 1.0 (2.1) (96.9)
Conversion of Warrants... (14.0) --- --- 14.0 --- --- --- --- ---
Issuance of common stock. --- --- --- 1.3 --- --- --- --- 1.3
Net income............... --- --- --- --- 47.7 --- --- --- 47.7
Accretion of carrying
value of redeemable
preferred stock to --- --- --- --- (22.9) --- --- --- (22.9)
redemption value........
Pension liability --- --- --- --- --- 0.7 --- --- 0.7
adjustment..............
Unrealized holding loss
on equity securities.... --- --- --- --- --- --- (1.0) --- (1.0)
Translation adjustment... --- --- --- --- --- --- --- (0.6) (0.6)
---------- ---------- ---------- ---------- --------- --------- ---------- ---------- ---------
BALANCE AT DECEMBER 31,
1996.................... 3.2 --- 0.1 55.8 (126.1) (2.0) --- (2.7) (71.7)
Conversion of Warrants... (2.4) --- --- 2.4 --- --- --- --- ---
Issuance of Common Stock. --- --- 0.1 106.1 --- --- --- --- 106.2
Net income............... --- --- --- --- 15.5 --- --- --- 15.5
Accretion of carrying
value of redeemable
preferred stock to
redemption value........ --- --- --- --- (4.8) --- --- --- (4.8)
Reclassification of
equity rights from
non-current liabilities. --- 3.2 --- --- --- --- --- --- 3.2
Exchange of Preferred
Stock of a subsidiary
for common stock........ --- --- --- 13.4 --- --- --- --- 13.4
Conversion of Series B
preferred stock......... --- --- --- 1.0 --- --- --- --- 1.0
Pension liability
adjustment.............. --- --- --- --- --- 0.2 --- --- 0.2
Translation adjustment... --- --- --- --- --- --- --- 3.4 (3.4)
---------- ---------- ---------- ----------- -------- ---------- --------- ---------- --------
BALANCE AT DECEMBER 31,
1997....................$ 0.8 $ 3.2 $ 0.2 $ 178.7 $ (115.4) $ (1.8) $ --- $ (6.1) $ 59.6
========== ========== ========== ========== ========= ========= ========= =========== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
F-6
<TABLE>
<CAPTION>
TEREX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
Year Ended December 31,
------------------------------------------
1997 1996 1995
------------- ------------- --------------
OPERATING ACTIVITIES
<S> <C> <C> <C>
Net Income (Loss)...................................................$ 15.5 $ 47.7 $ (35.2)
Adjustments to reconcile net income (loss) to cash used
in operating activities:
Depreciation .................................................... 8.2 7.0 7.4
Amortization .................................................... 6.1 6.7 5.5
Extraordinary loss on retirement of debt......................... 14.8 --- 7.5
Gain on sale of discontinued operations.......................... --- (84.5) ---
Impairment charges and asset writedowns.......................... --- 33.8 ---
Deferred taxes................................................... --- 11.3 ---
Other............................................................ 0.1 (2.9) (0.9)
Changes in operating assets and liabilities
(net of effects of acquisitions):
Trade receivables............................................ (4.8) (23.7) 7.0
Net inventories.............................................. (11.5) (12.7) (7.9)
Net assets of discontinued operations........................ --- (5.4) 2.0
Trade accounts payable....................................... 6.5 4.9 (2.3)
Accrued compensation and benefits............................ (2.6) 3.3 5.6
Other, net................................................... (32.6) (3.1) (17.3)
------------- ------------- -------------
Net cash used in operating activities...................... (0.3) (17.6) (28.6)
------------- ------------- -------------
INVESTING ACTIVITIES
Net proceeds from sale of discontinued operations ............... --- 137.2 ---
Acquisition of businesses, net of cash acquired.................. (97.2) --- (92.4)
Capital expenditures............................................. (9.9) (8.1) (5.2)
Proceeds from sale of excess assets.............................. 8.5 6.5 3.3
Other............................................................ --- 0.1 0.2
------------- ------------- -------------
Net cash provided by (used in) investing activities........ (98.6) 135.7 (94.1)
------------- ------------- -------------
FINANCING ACTIVITIES
Redemption of preferred stock.................................... (45.4) --- ---
Issuance of common stock......................................... 104.6 --- ---
Net borrowings (repayments) under revolving line of credit
agreements..................................................... 99.7 (55.0) 35.9
Principal repayments of long-term debt........................... (83.7) (1.0) (153.9)
Proceeds from issuance of long-term debt, net of issuance costs.. --- --- 239.8
Other............................................................ (11.0) 5.6 ---
------------- ------------- -------------
Net cash provided by (used in) financing activities........ 64.2 (50.4) 121.8
------------- ------------- -------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS........ (8.6) (2.7) (0.3)
------------- ------------- -------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS................ (43.3) 65.0 (1.2)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD.................... 72.0 7.0 8.2
============= ============= =============
CASH AND CASH EQUIVALENTS AT END OF PERIOD..........................$ 28.7 $ 72.0 $ 7.0
============= ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
F-7
TEREX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1997
(dollar amounts in millions, unless otherwise noted, except per share amounts)
NOTE A -- SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation. As set forth in Note B below, the Company sold its Clark
Material Handling business on November 27, 1996. The sale resulted in a gain of
$84.5. The Clark Material Handling business is accounted for as a discontinued
operation in the consolidated statement of operations for the years ended
December 31, 1996 and 1995.
Generally accepted accounting principles permit, but do not require, the
allocation of interest expense between continuing and discontinued operations.
Because the methods allowed under generally accepted accounting principles for
calculating interest expense to be allocated to discontinued operations are not
necessarily indicative of the use of proceeds from the sale of the Clark
Material Handling business by the Company, and the effect on interest expense of
the continuing operations of the Company, the Company has elected not to
allocate interest expense to discontinued operations. The results of this
election is that loss from continuing operations includes substantially all of
the interest expense of the Company, and income from discontinued operations
does not include any material interest expense.
Principles of Consolidation. The Consolidated Financial Statements include the
accounts of Terex Corporation and its majority owned subsidiaries ("Terex" or
the "Company"). All material intercompany balances, transactions and profits
have been eliminated. The equity method is used to account for investments in
affiliates in which the Company has an ownership interest between 20% and 50%.
Investments in entities in which the Company has an ownership interest of less
than 20% are accounted for on the cost method or at fair value in accordance
with Statement of Financial Accounting Standards ("SFAS") No. 115 "Accounting
for Certain Investments in Debt and Equity Securities."
Use of Estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents. Cash equivalents consist of highly liquid investments
with original maturities of three months or less. The carrying amount of cash
and cash equivalents approximates their fair value.
Inventories. Inventories are stated at the lower of cost or market value. Cost
is determined by the first-in, first-out ("FIFO") method.
Debt Issuance Costs. Debt issuance costs incurred in securing the Company's
financing arrangements are capitalized and amortized over the term of the
associated debt. Capitalized debt issuance costs related to debt that is retired
early are charged to expense at the time of retirement. Debt issuance costs
before amortization totaled $12.6 and $16.9 at December 31, 1997 and 1996,
respectively. During 1997, 1996 and 1995, the Company amortized $2.6, $2.6 and
$2.3, respectively, of capitalized debt issuance costs; in addition, $4.1 and
$7.5 of such costs were charged to extraordinary loss on retirement of debt in
1997 and 1995, respectively.
Intangible Assets. Intangible assets include purchased patents and trademarks.
Costs allocated to patents, trademarks and other specifically identifiable
assets arising from business combinations are amortized on a straight-line basis
over the respective estimated useful lives not exceeding seven years.
Goodwill. Goodwill, representing the difference between the total purchase price
and the fair value of assets (tangible and intangible) and liabilities at the
date of acquisition, is being amortized on a straight-line basis over between
fifteen and forty years. Accumulated amortization is $8.9 and $5.6 at December
31, 1997 and 1996, respectively.
Property, Plant and Equipment. Property, plant and equipment are stated at cost.
Expenditures for major renewals and improvements are capitalized while
expenditures for maintenance and repairs not expected to extend the life of an
asset beyond its normal useful life are charged to expense when incurred. Plant
and equipment are depreciated over the estimated useful lives of the assets
<PAGE>
F-8
under the straight-line method of depreciation for financial reporting purposes
and both straight-line and other methods for tax purposes.
Impairment of Long Lived Assets. The Company's policy is to assess the
realizability of its long lived assets and to evaluate such assets for
impairment whenever events or changes in circumstances indicate that the
carrying amount of such assets (or group of assets) may not be recoverable.
Impairment is determined to exist if the estimated future undiscounted cash
flows is less than its carrying value. The amount of any impairment then
recognized would be calculated as the difference between estimated future
discounted cash flows and the carrying value of the asset. (See Note D --
"Impairment of Long Lived Assets and Other Special Charges.")
Revenue Recognition. Revenue and costs are generally recorded when products are
shipped and invoiced to either independently owned and operated dealers or to
customers. Certain new units may be invoiced prior to the time customers take
physical possession. Revenue is recognized in such cases only when the customer
has a fixed commitment to purchase the units, the units have been completed,
tested and made available to the customer for pickup or delivery, and the
customer has requested that the Company hold the units for pickup or delivery at
a time specified by the customer in the sales documents. In such cases, the
units are invoiced under the Company's customary billing terms, title to the
units and risks of ownership pass to the customer upon invoicing, the units are
segregated from the Company's inventory and identified as belonging to the
customer and the Company has no further obligations under the order.
Accrued Warranties and Product Liability. The Company records accruals for
potential warranty and product liability claims based on the Company's claim
experience. Warranty costs are accrued at the time revenue is recognized. The
Company provides self-insurance accruals for estimated product liability
experience on known claims and for claims anticipated to have been incurred
which have not yet been reported. The Company's product liability accruals are
presented on a gross settlement basis.
Non Pension Postretirement Benefits. The Company provides postretirement
benefits to certain former salaried and hourly employees and certain hourly
employees covered by bargaining unit contracts that provide such benefits and
has elected the delayed recognition method of adoption of the new standard
related to the benefits. (See Note L -- "Retirement Plans.")
Foreign Currency Translation. Assets and liabilities of the Company's
international operations are translated at year-end exchange rates. Income and
expenses are translated at average exchange rates prevailing during the year.
For operations whose functional currency is the local currency, translation
adjustments are accumulated in the Cumulative Translation Adjustment component
of Stockholders' Equity (Deficit). Gains or losses resulting from foreign
currency transactions are included in Other income (expense) -- net.
Foreign Exchange Contracts. The Company uses foreign exchange contracts to hedge
recorded balance sheet amounts related to certain international operations and
firm commitments that create currency exposures. The Company does not enter into
speculative contracts. Gains and losses on hedges of assets and liabilities are
recognized in income as offsets to the gains and losses from the underlying
hedged amounts. Gains and losses on hedges of firm commitments are recorded on
the basis of the underlying transaction. At December 31, 1997 and 1996 the
Company had foreign exchange contracts, which were hedges of firm commitments,
totaling $13.8 and $29.4, respectively, fair value of which approximates their
carrying value.
Environmental Policies. Environmental expenditures that relate to current
operations are either expensed or capitalized depending on the nature of the
expenditure. Expenditures relating to conditions caused by past operations that
do not contribute to current or future revenue generation are expensed.
Liabilities are recorded when environmental assessments and/or remedial actions
are probable, and the costs can be reasonably estimated. Such amounts were not
material at December 31, 1997 and 1996.
Research and Development Costs. Research and development costs are expensed as
incurred. Such costs incurred in the development of new products or significant
improvements to existing products are included in Engineering, Selling and
Administrative Expenses.
Income Taxes. The Company records deferred tax assets and liabilities based upon
the difference between the tax bases of assets and liabilities and their
carrying amounts for financial reporting purposes. The Company records a
valuation allowance for deferred tax assets if realization of such assets is
dependent on future taxable income. (See Note I -- "Income Taxes.")
<PAGE>
F-9
Earnings Per Share. Effective with the fourth quarter of 1997, Terex implemented
SFAS No. 128 "Earnings per Share", which establishes new standards for computing
and presenting earnings per share and requires the disclosure of basic and
diluted amounts. Earnings per share amounts for all prior periods have been
restated. Basic earnings per share is computed by dividing net income for the
period by the weighted average number of Terex common shares outstanding.
Diluted earnings per share, which is consistent with the Company's previously
disclosed amounts, is computed by dividing net income for the period by the
weighted average number of Terex common shares outstanding and dilutive common
stock equivalents.
NOTE B -- DISCONTINUED OPERATIONS
The Company sold its worldwide Clark Material Handling business ("CMHC") on
November 27, 1996 for $139.5 in cash. The sale resulted in a $84.5 gain net of
$2.6 of income taxes. CMHC comprised the Company's Material Handling Segment.
The accompanying Consolidated Statement of Operations for the years ended
December 31, 1996 and 1995 include the results of CMHC in "Income from
Discontinued Operations." Please refer to Note A - Basis of Presentation for a
discussion of allocation of interest expense. Summary operating results of
discontinued operations are as follows:
Year Ended
December 31,
-------------------------
1996 1995
----------- -----------
Net sales................................... $ 404.6 $ 528.8
Income before income taxes.................. 17.5 4.4
Provision for income taxes.................. --- ---
Income from operations of discontinued
operations................................ $ 17.5 $ 4.4
Gain on sale of discontinued operations..... 84.5 ---
=========== ===========
Income from discontinued operations......... $ 102.0 $ 4.4
=========== ===========
NOTE C -- ACQUISITIONS
Simon Access and Baraga - On April 7, 1997, the Company completed the purchase
of the industrial businesses of Simon Access division ("Simon Access") of Simon
Engineering plc for $90 in cash, subject to adjustment. Simon Access consists
principally of several business units in the United States and Europe which are
engaged in the manufacture and sale of access equipment designed to position
people and materials to work at heights. Simon Access products include truck
mounted aerial devices, aerial work platforms and truck mounted cranes (boom
trucks) which are sold to utility companies as well as to customers in the
industrial and construction markets. 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. (now
named Terex Aerials, Inc.), a Wisconsin corporation, (iii) Sim-Tech Management
Limited, a private limited company incorporated under the laws of Hong Kong,
(iv) Simon-Cella, S.r.l., 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. Not included in the businesses acquired were
Simon Access' fire fighting equipment business. The Company obtained the funds
necessary to complete the transaction from its cash on hand and borrowings under
a new revolving credit facility. (See Note G - "Long-Term Obligations").
On April 14, 1997 the Company completed the purchase of Baraga Products, Inc.
and M&M Enterprises of Baraga, Inc. (collectively, "Baraga", or the "Square
Shooter Business"). Baraga manufactures rough terrain telescopic boom forklifts.
The Simon Access and Baraga (the "Acquired Businesses") acquisitions are being
accounted for using the purchase method, with the purchase price allocated to
the assets acquired and the liabilities assumed based upon their respective
estimated fair values at the date of acquisition. The excess of purchase price
over the net assets acquired (approximately $54.5) is being amortized on a
straight-line basis over 40 years.
<PAGE>
F-10
The estimated fair values of assets and liabilities acquired in the Simon Access
and Baraga businesses are summarized as follows:
Accounts receivable..................................$ 23.1
Inventories.......................................... 38.8
Other current assets................................. 0.9
Property, plant and equipment........................ 21.1
Goodwill............................................. 54.5
Other assets......................................... 11.8
Accounts payable and other current liabilities....... (42.1)
Long-term debt....................................... (4.9)
Other non-current liabilities........................ (4.5)
---------------
$ 98.7
===============
The Company is in the process of completing evaluations and estimates for
purposes of determining certain values. The Company has also estimated costs
related to plans to integrate the activities of the Acquired Businesses into the
Company, including plans to exit certain activities and consolidate and
restructure certain functions. The Company may revise the estimates as
additional information is obtained.
The operating results of the Acquired Businesses are included in the Company's
consolidated results of operations since April 7, 1997 and April 14, 1997,
respectively. The following pro forma summary presents the consolidated results
of operations as though the Company completed the acquisition of the Acquired
Businesses on January 1, 1996, after giving effect to certain adjustments,
including amortization of goodwill, interest expense and amortization of debt
issuance costs on the New Credit Facility:
Unaudited Pro Forma
for the Year Ended
December 31,
-------------------------
1997 1996
----------- -----------
Net sales.........................................$ 893.3 $ 887.1
Income from operations............................ 71.4 20.2
Income (loss) before discontinued operations
and extraordinary items......................... 29.2 (45.3)
Income (loss) before discontinued operations
and extraordinary items, per share
Basic.......................................$ 1.80 $ (3.84)
Diluted..................................... 1.65 (3.41)
The pro forma information is not necessarily indicative of what the actual
results of operations of the Company would have been for the periods indicated,
nor does it purport to represent the results of operations for future periods.
PPM - On May 9, 1995, the Company, through Terex Cranes, Inc., a wholly owned
subsidiary of the Company ("Terex Cranes, Inc."), completed the acquisition (the
"PPM Acquisition") of substantially all of the shares of P.P.M. S.A. ("PPM
Europe"), from Potain S.A., and all of the capital stock of Legris Industries,
Inc., which owns 92.4% of the capital stock of PPM Cranes, Inc. ("PPM North
America;" and PPM North America together with PPM Europe collectively referred
to as "PPM") from Legris Industries S.A. PPM designs, manufactures and markets
mobile cranes and container stackers primarily in North America and Western
Europe under the brand names of PPM, P&H (trademark of Harnischfeger
Corporation) and BENDINI. Concurrently with the completion of the PPM
Acquisition, the Company contributed the assets (subject to liabilities) of its
Koehring Cranes and Excavators and Marklift division to Terex Cranes. The former
division now operates as Koehring Cranes, Inc., a wholly owned subsidiary of
Terex Cranes Inc. ("Koehring").
The purchase price of PPM, including acquisition costs, was approximately
$104.5. Approximately $92.6 of the purchase price was paid in cash, including
the repayment of certain indebtedness of PPM required to be repaid in connection
with the acquisition. The remainder of the purchase price consisted of the
issuance of redeemable preferred stock of Terex Cranes having an aggregate
liquidation preference of approximately $21.4, subject to adjustment. On
December 10, 1997, the Company issued 706.0 thousand shares of Terex Common
Stock in exchange for the outstanding preferred stock of Terex Cranes. At the
time of the exchange Terex recorded an additional $3.2 preferred stock accretion
to reflect the difference between the fair market value of the Common Stock
issued and the carrying value of the Terex Cranes preferred stock.
<PAGE>
F-11
The PPM Acquisition was accounted for as a purchase, with the purchase price
allocated to the assets acquired and liabilities assumed based upon their
respective estimated fair values at the date of acquisition. The excess of
purchase price over the net assets acquired is being amortized on a
straight-line basis over 15 years. The estimated fair values of assets and
liabilities acquired in the PPM Acquisition were:
Cash............................................... $ 1.0
Accounts receivable................................ 33.8
Inventories........................................ 69.1
Other current assets............................... 11.9
Property, plant and equipment...................... 20.5
Other assets....................................... 0.3
Goodwill........................................... 68.0
Accounts payable and other current liabilities..... (86.6)
Other liabilities.................................. (13.5)
------------
$ 104.5
============
The operating results of PPM are included in the Company's consolidated results
of operations since May 9, 1995. The following pro forma summary presents the
consolidated results of operations as though the Company completed the PPM
Acquisition on January 1, 1994, after giving effect to certain adjustments,
including amortization of goodwill, interest expense and amortization of debt
issuance costs on the debt issued in the Refinancing:
Unaudited Pro
Forma for the Year Ended
December 31, 1995
-----------------------
Net sales...................................... $ 566.3
Income (loss) from operations.................. (3.7)
Loss before discontinued operations and
extraordinary items........................ (53.0)
Loss before discountinued operations and
extraordinary items, per share:
Basic.................................. $ (5.89)
Diluted................................ (5.89)
The pro forma information is not necessarily indicative of what the actual
results of operations of the Company would have been for the periods indicated,
nor does it purport to represent the results of operations for future periods.
NOTE D -- IMPAIRMENT OF LONG LIVED ASSETS AND OTHER SPECIAL CHARGES
As required by generally accepted accounting principles, goodwill was allocated
in the PPM Acquisition to various operating units. After eighteen months of
continuous rationalization, estimated future undiscounted cash flows for certain
operations would not be sufficient to recover the goodwill and fixed assets
recorded for these operations. Thus, in the fourth quarter of 1996 the Company
recorded an impairment charge of $16.8 ($13.3 related to goodwill and $3.5
related to fixed assets). Similarly, in the fourth quarter of 1996 the Company
wrote off $1.9 of goodwill related to its IMACO unit in the United Kingdom.
These 1996 impairment charges totaling $18.7 are included in "Cost of Goods
Sold."
In addition to the impairment charges described above, the Company recorded
special charges of $8.6 to reduce the value of assets at Unit Rig, $2.0 related
to 1993 tax matters at PPM Europe, and $3.0 of other one-time charges during the
fourth quarter of 1996.
<PAGE>
F-12
NOTE E -- INVENTORIES
Inventories consist of the following:
December 31,
-------------------------
1997 1996
----------- -----------
Finished equipment..................... $ 54.1 $ 46.5
Replacement parts...................... 82.8 68.0
Work-in-process........................ 22.4 19.8
Raw materials and supplies............. 72.8 56.3
----------- -----------
Net inventories...................... $ 232.1 $ 190.6
=========== ===========
NOTE F -- PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
December 31,
-----------------------
1997 1996
----------- ------------
Property......................................... $ 13.6 $ 0.2
Plant............................................ 43.8 14.0
Equipment........................................ 25.6 51.2
----------- ------------
83.0 65.4
Less: Accumulated depreciation.................. (35.2) (33.7)
=========== ============
Net property, plant and equipment.............. $ 47.8 $ 31.7
=========== ============
NOTE G -- LONG-TERM OBLIGATIONS
See Note P -- "Subsequent Events" for a discussion regarding the refinancing of
substantially all of the Company's debt in the first quarter of 1998. Long-term
debt is summarized as follows:
December 31,
------------------------
1997 1996
----------- -----------
13.25% Senior Secured Notes due May 15, 2002
("Senior Secured Notes")........................ $ 165.1 $ 247.3
Credit Facility maturing April 7, 2000.............. 94.9 ---
Note payable........................................ 4.7 5.0
Capital lease obligations........................... 12.1 14.7
Other............................................... 23.3 14.3
------------ -----------
Total long-term debt.............................. 300.1 281.3
Current portion of long-term debt................. 26.6 19.2
------------ -----------
Long-term debt, less current portion.............. $ 273.5 $ 262.1
============ ===========
The Senior Secured Notes
On May 9, 1995, the Company issued $250 of 13.25% Senior Secured Notes due May
15, 2002. The Senior Secured Notes were issued in conjunction with the PPM
Acquisition and a refinancing of 13.0% Senior Secured Notes due August 1, 1996
("Old Senior Secured Notes"), and 13.5% Secured Senior Subordinated Notes due
July 1, 1997 ("Subordinated Notes"). Except in the event of certain asset sales,
there are no principal repayment or sinking fund requirements prior to maturity.
Interest on the Notes is payable semi-annually on May 15 and November 15 of each
year to holders of record on the immediately preceding May 1 and November 1,
respectively. The Notes bear interest at 13.25% per annum. Prior to the
consummation of an exchange offer on November 5, 1996, the interest rate on the
Notes was 13.75% per annum. Interest is computed on the basis of a 360-day year
comprised of twelve 30-day months.
<PAGE>
F-13
The Senior Secured Notes are senior obligations of the Company, pari passu in
right of payment with all existing and future senior indebtedness and senior to
all subordinated indebtedness. Repayment of the Senior Secured Notes is
guaranteed by certain domestic subsidiaries of the Company (the "Guarantors").
The Senior Secured Notes are secured by a first priority security interest on
substantially all of the assets of the Company and the Guarantors, other than
cash and cash equivalents, except that as to accounts receivable and inventory
and proceeds thereof, and certain related rights, such security shall be
subordinated to liens securing obligations outstanding under any working capital
or revolving credit facility secured by such accounts receivable and inventory,
including the Credit Facility. The Senior Secured Notes are also secured by a
lien on certain assets of the Company's foreign subsidiaries. The indenture for
the 13.25% Senior Secured Notes (the "Indenture") places certain limits on the
Company's ability to incur additional indebtedness; permit the existence of
liens; issue, pay dividends on or redeem equity securities; sell assets;
consolidate, merge or transfer assets to another entity; and enter into
transactions with affiliates.
As required by the Indenture, the Company, following the sale of CMHC, offered
to repurchase (the "Offer") $100 principal amount of the Senior Secured Notes.
The Offer expired on December 27, 1996, with no Senior Secured Notes being
tendered for repurchase. As a result, the $100 of sale proceeds was available
for other corporate purposes.
On July 28, 1997 and August 7, 1997, the Company issued an additional five
million shares and 700 thousand shares, respectively, of its Common Stock in a
public stock offering. The shares were issued at a price to the public of $19.50
per share. The net proceeds received by the Company after deduction of
underwriting discounts, commissions and other expenses was $104.6. On September
4, 1997, the Company used a portion of the proceeds to redeem $83.3 in principal
of the Secured Senior Notes. In accordance with the terms of the Indenture, the
redemption of the Senior Secured Notes was at a 9.46% redemption premium. The
redemption premium plus the pro-rata share of unamortized debt origination costs
totaled $12.2 and have been reflected as extraordinary items in the third
quarter of 1997.
The 1997 Credit Facility
On April 7, 1997, the Company and certain of its domestic subsidiaries
(collectively, the "Borrowers") entered a Revolving Credit Agreement with a
financial institution, as agent (the "Agent"), pursuant to which the Agent and
other financial institutions party thereto have provided the Borrowers with a
line of credit of up to $125 secured by accounts receivable and inventory (the
"1997 Credit Facility"). The 1997 Credit Facility replaced the Company's $100
revolving credit facility (the "Old Credit Facility").
Loans made under the 1997 Credit Facility (a) bear interest, based on the
Company's fixed charge coverage ratio, at a rate between 0.5% and 1.5% per annum
in excess of the prime rate or at a rate between 2.0% and 3.0% per annum in
excess of the eurodollar rate, at the election of the Company, (b) mature on
April 7, 2000, (c) were used by the Borrowers to repay the Old Credit Facility,
and (d) are to be used for working capital and other general corporate purposes,
including acquisitions.
The Old Credit Facility
The Old Credit Facility was terminated in April 1997 in conjunction with the
Simon Access acquisition and entering into the 1997 Credit Facility. The Company
paid a fee of $2.0 upon termination of the Old Credit Facility. Additionally,
$0.6 of unamortized debt acquisition costs related to the Old Credit Facility
were written off at the termination of the Old Credit Facility. These expenses
have been reflected as extraordinary items in the second quarter of 1997.
The Company had the option to base the interest rate on prime or the Eurodollar
rate. The outstanding principal amount of prime rate loans was at the rate of
1.75% per annum in excess of the prime rate. The outstanding principal amount of
Eurodollar rate loans was at the rate of 3.75% per annum in excess of the
adjusted Eurodollar rate.
Old Senior Secured Notes and Subordinated Notes
The Old Senior Secured Notes and Subordinated Notes were retired on May 9, 1995
in conjunction with the PPM Acquisition and the issuance of the 13.25% Senior
Secured Notes. The Company realized an extraordinary loss of $5.7 and $1.6 on
the early extinguishment of the Old Senior Secured Notes and the Subordinated
Notes, respectively.
<PAGE>
F-14
Old TEL Facility
In 1995, the Company's subsidiary, Terex Equipment Limited ("TEL") located in
Motherwell, Scotland, entered into a bank facility (the "TEL Facility") which
provides up to (pound)47.0 ($80.5) including up to (pound)10.0 ($17.1)
non-recourse discounting of accounts receivable which meet certain credit
criteria, plus additional facilities for tender and performance bonds, letters
of credit discounting and foreign exchange contracts. Interest rates vary
between 1.0% - 1.5% above the financial institution's Published Base Rate or
LIBOR. The TEL Facility is collateralized primarily by the related accounts
receivable. The TEL Facility requires no performance covenants. Proceeds from
the TEL Facility are primarily used for working capital purposes. Amounts
discounted under this and the prior facility were $12.7, $6.9 and $11.7 at
December 31, 1997, 1996, and 1995, respectively.
Schedule of Debt Maturities
See Note P - "Subsequent Events" for a discussion regarding the refinancing of
substantially all of the debt of the Company in the first quarter of 1998.
Prior to the refinancing in the first quarter of 1998, scheduled annual
maturities of long-term debt outstanding at December 31, 1997 in the successive
five-year period are summarized below. Amounts shown are exclusive of minimum
lease payments disclosed in Note H -- "Lease Commitments":
1998................................... $ 21.9
1999................................... 1.8
2000................................... 96.3
2001................................... 0.9
2002................................... 165.6
Thereafter............................. 1.5
-----------
Total............................ $ 288.0
===========
Based on quoted market values, the Company believes that the fair value of the
Senior Secured Notes was approximately $190.4 as of December 31, 1997. The
Company believes that, based on quoted market values, the carrying value of its
other borrowings approximates fair market value, based on discounting future
cash flows using rates currently available for debt of similar terms and
remaining maturities.
The Company paid $39.8, $45.3 and $43.0 of interest in 1997, 1996 and 1995,
respectively.
The weighted average interest rate on short term borrowings outstanding was 8.3%
at December 31, 1997 and 10.0% at December 31, 1996.
NOTE H -- LEASE COMMITMENTS
The Company leases certain facilities, machinery and equipment, and vehicles
with varying terms. Under most leasing arrangements, the Company pays the
property taxes, insurance, maintenance and expenses related to the leased
property. Certain of the equipment leases are classified as capital leases and
the related assets have been included in Property, Plant and Equipment. Net
assets under capital leases were $21.9 and $8.2 at December 31, 1997 and 1996,
respectively, net of accumulated amortization of $8.2 and $9.6 at December 31,
1997 and 1996, respectively.
<PAGE>
F-15
Future minimum capital and noncancelable operating lease payments and the
related present value of capital lease payments at December 31, 1997 are as
follows:
Capital Operating
Leases Leases
------------- -------------
1998............................................ $ 5.4 $ 5.2
1999............................................ 2.7 3.9
2000............................................ 2.9 3.1
2001............................................ 1.3 2.6
2002............................................ 0.3 2.2
Thereafter...................................... 0.6 3.3
------------- -------------
Total minimum obligations .................. 13.2 $ 20.3
=============
Less amount representing interest............... 1.1
-------------
Present value of net minimum obligations.... 12.1
Less current portion............................ 4.7
-------------
Long-term obligations....................... $ 7.4
=============
Most of the Company's operating leases provide the Company with the option to
renew the leases for varying periods after the initial lease terms. These
renewal options enable the Company to renew the leases based upon the fair
rental values at the date of expiration of the initial lease. Total rental
expense under operating leases was $6.8, $4.7 and $3.9 in 1997, 1996, and 1995,
respectively.
NOTE I -- INCOME TAXES
The components of Income (Loss) From Continuing Operations Before Income Taxes
and Extraordinary Items are as follows:
<TABLE>
<CAPTION>
Year ended December 31,
--------------------------------
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
United States...................................... $ 16.1 $ (40.6) $ (36.1)
Foreign............................................ 14.9 (1.6) 4.0
========== ========== ==========
Income (loss) from continuing operations before
income taxes and extraordinary items........... $ 31.0 $ (42.2) $ (32.1)
========== ========== ==========
</TABLE>
The major components of the Company's provision for income taxes are summarized
below:
Year ended December 31,
-------------------------------
1997 1996 1995
---------- --------- --------
Current:
Federal...................................... $ --- $ --- $ ---
State........................................ --- --- ---
Foreign...................................... 5.2 12.1 3.8
Utilization of foreign net operating loss
("NOL") carryforward..................... (4.5) (11.3) (3.8)
---------- --------- --------
Current income tax provision............. 0.7 0.8 ---
Deferred:
Deferred foreign income tax.................. --- 11.3 ---
---------- --------- --------
Total provision for income taxes......... $ 0.7 12.1 ---
========== ========= ========
As a result of the recapitalization of PPM Europe, certain NOL benefit
carryforwards which were fully provided for at the acquisition were utilized
resulting in a deferred tax charge of $11.3 in the fourth quarter of 1996.
<PAGE>
F-16
Deferred tax assets and liabilities result from differences in the basis of
assets and liabilities for tax and financial statement purposes. A valuation
allowance has been recognized for the full amount of the deferred tax assets as
it is not more likely than not that they will be fully utilized. The tax effects
of the basis differences and net operating loss carryforward as of December 31,
1997 and 1996 are summarized below for major balance sheet captions:
1997 1996
----------- -----------
Intangibles................................ $ (0.4) $ ---
Accrued liabilities........................ (1.6) ---
Other...................................... (0.8) (0.8)
----------- -----------
Total deferred tax liabilities........ (2.8) (0.8)
----------- -----------
Receivables................................ 0.6 0.6
Net inventories............................ 4.0 4.6
Fixed assets............................... 0.7 2.4
Warranties and product liability........... 7.8 5.8
All other items............................ 7.8 6.2
Benefit of net operating loss carryforward. 140.2 96.2
----------- -----------
Total deferred tax assets............. 161.1 115.8
----------- -----------
Deferred tax assets valuation allowance.... (158.3) (115.0)
----------- -----------
Net deferred tax liabilities.......... $ --- $ ---
=========== ===========
The valuation allowance for deferred tax assets as of January 1, 1996 was
$149.6. The net change in the total valuation allowance for the years ended
December 31, 1996 and 1997 were a decrease of $34.6 and an increase of $43.3,
respectively.
The Company's Provision for Income Taxes is different from the amount which
would be provided by applying the statutory federal income tax rate to the
Company's Income (Loss) From Continuing Operations Before Income Taxes and
Extraordinary Items. The reasons for the difference are summarized below:
<TABLE>
<CAPTION>
Year ended December 31,
--------------------------------
1997 1996 1995
----------- --------- ----------
<S> <C> <C> <C>
Statutory federal income tax rate................................. $ 10.9 $ (14.8) $ (11.2)
Recognition of fully reserved preacquisition deferred tax asset... --- 11.3 ---
Change in valuation allowance relating to NOL..................... (6.6) 7.8 11.4
Foreign tax differential on income/losses of foreign subsidiaries. (4.5) 1.4 (1.4)
Goodwill.......................................................... 0.9 6.3 1.1
Other............................................................. --- 0.1 0.1
---------- --------- ----------
Total provision for income taxes............................. $ 0.7 $ 12.1 $ ---
========== ========== ==========
</TABLE>
The effective tax rate for discontinued operations differs from the statutory
rate due primarily to utilization of NOLs and foreign tax differential on the
income of foreign subsidiaries.
The Company has not provided for U.S. federal and foreign withholding taxes on
$37.8 of foreign subsidiaries' undistributed earnings as of December 31, 1997,
because such earnings are intended to be reinvested indefinitely. Any income tax
liability that would result had such earnings actually been repatriated would
likely be offset by utilization of NOLs. On repatriation, certain foreign
countries impose withholding taxes. The amount of withholding tax that would be
payable on remittance of the entire amount of undistributed earnings would
approximate $6.6.
At December 31, 1997, the Company had domestic federal net operating loss
carryforwards of $290.5. Approximately $66.6 of the remaining net operating loss
carryforwards are subject to special limitations under the Internal Revenue
Code, and the NOLs may be affected by the current Interal Revenue Service (the
"IRS") examination discussed below.
<PAGE>
F-17
The tax basis net operating loss carryforwards expire as follows:
Tax Basis Net
Operating Loss
Carryforwards
----------------
1998................................. $ 8.1
1999................................. 11.9
2000................................. 0.1
2001................................. 4.8
2002................................. 0.5
2003................................. 0.9
2004................................. 22.4
2005................................. 0.8
2006................................. 14.8
2007................................. 41.1
2008................................. 100.4
2009................................. 34.2
2010................................. 42.3
2012................................. 8.2
----------
Total............................ $ 290.5
==========
The Company also has various state net operating loss and tax credit
carryforwards expiring at various dates through 2012 available to reduce future
state taxable income and income taxes. In addition, the Company's foreign
subsidiaries have approximately $78.4 of loss carryforwards, $33.6 in the United
Kingdom, $23.1 in France, and $21.7 in other countries, which are available to
offset future foreign taxable income. The tax loss carryforwards in the United
Kingdom and other countries are available without expiration. Tax loss
carryforwards in France of $6.7 expire in 2000 and 2002, with the remaining
$16.4 available without expiration.
The IRS is currently examining the Company's Federal tax returns for the years
1987 through 1989. In December 1994, the Company received an examination report
from the IRS proposing a substantial tax deficiency. The examination report
raised a variety of issues, including the Company's substantiation for certain
deductions taken during this period, the Company's utilization of certain NOLs
and the availability of such NOLs to offset future taxable income. The Company
filed an administrative appeal to the examination report in April 1995. As a
result of a meeting with the Manhattan division of the IRS in July 1995, in June
1996 the Company was advised that the matter was being referred back to the
Milwaukee audit division of the IRS. The Milwaukee audit division of the IRS is
currently reviewing information provided by the Company. The ultimate outcome of
this matter is subject to the resolution of significant legal and factual
issues. Given the stage of the audit, and the number and complexity of the legal
and administrative proceedings involved in reaching a resolution of the matter,
it is unlikely that the ultimate outcome, if unfavorable to the Company, will be
determined for at least several years. If the IRS were to prevail on all the
issues raised, the amount of the tax assessment would be approximately $56 plus
penalties of approximately $12.8 and interest through December 31, 1997 of
approximately $94.5. The penalties asserted by the IRS are calculated as 20% of
the amount of the tax assessed for fiscal year 1987 and 25% of the tax assessed
for each of fiscal years 1988 and 1989. Interest on the amount of tax assessed
and penalties is currently accruing at a rate of 11% per annum. The applicable
annual rate of interest has historically carried from 7% to 12%.
If the Company were required to pay a significant portion of the assessment with
related interest and penalties, such payment might exceed the Company's
resources. In such event, the viability of the Company would be placed in
jeopardy, and it is uncertain that the Company could, through financing or
otherwise, obtain the funds required to pay such assessment, interest, and
applicable penalties. Management believes, however, that the Company will be
able to provide adequate documentation for a substantial portion of the
deductions questioned by the IRS and that there is substantial support for the
Company's past and future utilization of the NOLs. Based upon consultation with
its tax advisors, management believes that the Company's position will prevail
on the most significant issues. Accordingly, management believes that the
outcome of the examination will not have a material adverse effect on its
financial condition or results of operations, but may result in some reduction
in the amount of the NOLs available to the Company. No additional accruals have
been made for any amounts which might be due as a result of this matter because
the possible loss ranges from zero to $56 million plus interest and penalties,
<PAGE>
F-18
and the ultimate outcome cannot be determined or estimated at this time. No
reserves are being expensed to cover the potential liability.
The Company made income tax payments of $1.8 in 1997. No income tax payments
were made in 1996 and 1995.
NOTE J -- PREFERRED STOCK
The Company's certificate of incorporation was amended in October 1993 to
authorize 10.0 million shares of preferred stock, $.01 par value per share. As
of December 31, 1997, no shares of preferred stock are outstanding as described
below.
Series A Cumulative Redeemable Convertible Preferred Stock
As of December 31, 1996, the Company had 1.2 million issued and outstanding
shares of Series A Cumulative Redeemable Convertible Preferred Stock (the
"Series A Preferred Stock"). The Liquidation Preference totaled $45.4 at
December 31, 1996. On December 30, 1996, the Company called all of its Series A
Preferred Stock for redemption and subsequently redeemed the stock in January
1997 at an aggregate redemption price of $45.4.
The aggregate net proceeds to the Company for the Series A Preferred Stock and
the Series A Warrants issued on December 20, 1993 were $27.2. The Company
allocated $10.3 and $16.9 of this amount to the Series A Preferred Stock and the
Series A Warrants, respectively, based on management's estimate of the relative
fair values of these securities at the time of their issuance, using information
provided by the Company's investment bankers. The difference between the
initially recorded amount and the redemption amount was accreted to the carrying
value of the Series A Preferred Stock using the interest method over the period
from issuance to the mandatory redemption date, December 31, 2000. As a result
of calling all of the stock for redemption on December 30, 1996, the carrying
value of the Series A Preferred Stock was further adjusted for increases in the
Liquidation Preference. There was no accretion recorded in 1997. The total
accretion recorded in 1996 and 1995 was $22.9 and $7.3, respectively.
Series B Cumulative Redeemable Convertible Preferred Stock
As of December 31, 1996, the Company had 38.8 thousand issued and outstanding
shares of Series B Cumulative Redeemable Convertible Preferred Stock (the
"Series B Preferred Stock"). These shares constituted the remaining balance
outstanding of the Series B Preferred Stock issued to certain individuals on
December 9, 1994 in consideration for the early termination of a contract
between the Company and KCS Industries, L.P., a Connecticut limited partnership
("KCS"), a related party. On December 30, 1997 all 38.8 thousand outstanding
shares of Series B Preferred Stock were converted by the holder thereof into
87.3 thousand shares of common stock.
NOTE K -- STOCKHOLDERS' EQUITY (DEFICIT)
Common Stock. The Company's certificate of incorporation was amended in October
1993 to increase the number of authorized shares of common stock, par value $.01
(the "Common Stock"), to 30.0 million. As of December 31, 1997, there were 20.5
million shares issued and outstanding. Of the 9.5 million unissued shares at
that date, $1.7 million shares were reserved for issuance for the exercise of
stock options and Series A Warrants.
Equity Rights. On May 9, 1995, the Company sold one million equity rights
securities (the "Equity Rights") along with $250 of the Senior Secured Notes. A
portion of the proceeds ($3.2) of the sale of the Senior Secured Notes and the
Equity Rights was allocated to the Equity Rights. The portion of the proceeds
related to the Equity Rights has been reclassified from other non-current
liabilities to the stockholders' equity (deficit) section of the balance sheet,
because they can be satisfied in Common Stock or cash at the option of the
Company. The Equity Rights entitle the holders, upon exercise at any time on or
prior to May 15, 2002, to receive cash or, at the election of the Company,
Common Stock in an amount equal to the average closing sale price of the Common
Stock for the 60 consecutive trading days prior to the date of exercise (the
"Current Price"), less $7.288 per share, subject to adjustment in certain
circumstances. Changes in the Current Price do not affect the net income or loss
reported by the Company; however, changes in the Current Price vary the amount
of cash that the Company would have to pay or the number of Shares of Common
Stock that would have to be issued in the event holders exercise the Equity
Rights. As of December 31, 1997, the Current Price of the Common Stock was
$21.891, which would have required the Company to either pay $14.6 or issue
<PAGE>
F-19
621.4 thousand shares of Common Stock, at the Company's option, in the event
that all of the holders had exercised their Equity Rights.
Series A Warrants. In connection with the private placement of the Series A
Preferred Stock (see Note J -- "Series A Preferred Stock"), the Company issued
1.3 million Series A Warrants of which 66.4 thousand warrants were outstanding
at December 31, 1997. Each Series A Warrant may be exercised, in whole or in
part, at the option of the holder at any time before the expiration date on
December 31, 2000 and is redeemable by the Company under certain circumstances.
As of December 31, 1997, upon the exercise or redemption of a Warrant, the
holder thereof was entitled to receive 2.41 shares of Common Stock. The exercise
price for the Warrants is $.01 for each share of Common Stock. The number of
shares of Common Stock issuable upon exercise or redemption of the Warrants is
subject to adjustment in certain circumstances.
Series B Warrants. In connection with the issuance of the Series B Preferred
Stock (see Note J -- "Series B Preferred Stock"), the Company issued 107.0
thousand Series B Warrants. At December 31, 1997, all Series B Warrants had been
exercised. The exercise price for the Warrants was $.01 for each share of Common
Stock.
Stock Options. The Company maintains a qualified incentive stock option ("ISO")
plan covering certain officers and key employees. The exercise price of the ISO
is the fair market value of the shares at the date of grant. The ISO allows the
holder to purchase shares of Common Stock, commencing one year after grant. ISO
expire after ten years. At December 31, 1997, 11.1 thousand stock options were
available for grant under the ISO.
Long-Term Incentive Plans. In May 1996, the shareholders approved, the 1996
Terex Corporation Long-Term Incentive Plan (the "1996 Plan"). The 1996 Plan
authorizes the granting of (i) options ("Stock Option Awards") to purchase
shares of Common Stock, including Restricted Stock, (ii) shares of Common Stock,
including Restricted Stock ("Stock Awards"), and (iii) cash bonus awards based
upon a participant's job performance ("Performance Awards"). Subject to
adjustment as described below under "Adjustments," the aggregate number of
shares of Common Stock (including Restricted Stock, if any) optioned or granted
under the 1996 Plan was not to exceed 300 thousand shares. In May 1997, the
shareholders approved that the aggregate number of shares available under the
1996 Plan be increased to 1.0 million shares. At December 31, 1997, 489.5
thousand shares were available for grant under the 1996 Plan. The 1996 Plan
provides that a committee (the "Committee") of the Board of Directors consisting
of two or more members thereof who are non-employee directors, shall administer
the 1996 Plan and has provided the Committee with the flexibility to respond to
changes in the competitive and legal environments, thereby protecting and
enhancing the Company's current and future ability to attract and retain
directors and officers and other key employees and consultants. The 1996 Plan
also provides for automatic grants of Stock Option Awards to non-employee
directors.
In 1994, the shareholders approved a Long-Term Incentive Plan (the "Plan")
covering certain managerial, administrative and professional employees and
outside directors. The Plan provides for awards to employees, from time to time
and as determined by a committee of outside directors, of cash bonuses, stock
options, stock and/or restricted stock. The total number of shares of the
Company's common stock available to be awarded under the Plan is 750 thousand,
subject to certain adjustments. At December 31, 1997, 15.6 thousand shares were
available for grant under the Plan.
<PAGE>
F-20
The following table is a summary of stock options under all three of the
Company's plans.
Weighted
Exercise
Number of Average Price
Options per Share
------------- --------------
Outstanding at December 31, 1994.......... 423,966 $ 6.60
448,300 4.85
--- ---
(74,166) 6.21
------------- --------------
Outstanding at December 31, 1995.......... 798,100 $ 5.65
Granted................................ 108,500 6.57
Exercised.............................. (18,075) 5.70
Canceled or expired.................... (45,100) 6.32
------------- --------------
Outstanding at December 31, 1996.......... 843,425 $ 5.73
Granted................................ 176,750 13.93
Exercised.............................. (184,988) 6.04
Canceled or expired.................... (103,600) 5.69
------------- --------------
Outstanding at December 31, 1997.......... 731,587 $ 7.64
============= ==============
Exercisable at December 31, 1997.......... 473,340 $ 6.92
============= ==============
Exercisable at December 31, 1996.......... 479,364 $ 6.08
============= ==============
Exercisable at December 31, 1995.......... 269,893 $ 6.31
============= ==============
The following table summarizes information about stock options outstanding at
December 31, 1997:
Weighted Exercise
Range of Number of Average Life Price per
Exercise Prices Options (in years) Share
- ------------------------- ------------- ------------ ------------
$ 3.50 - $ 6.00 382,187 7.0 $ 4.70
$ 6.01 - $ 10.00 147,150 7.6 $ 6.68
$ 10.01 - $ 15.00 179,500 8.4 $ 12.90
$ 15.01 - $ 24.13 22,750 9.6 $ 21.67
-------------
731,587 7.5 $ 7.64
=============
The Company has adopted SFAS No. 123, "Accounting for Stock-Based Compensation."
In accordance with the provisions of SFAS 123, the Company applies APB Opinion
No. 25, "Accounting for Stock Issued to Employees," and related interpretations
in accounting for its plans and does not recognize compensation expense for its
stock-based compensation plans other than for restricted stock. If the Company
had elected to recognize compensation expense based upon the fair value at the
grant date for awards under these plans consistent with the methodology
prescribed by SFAS No. 123, the Company's net income would have been reduced by
$1.1 ($0.07 (basic) and $0.06 (diluted) per share), $0.6 ($0.05 (basic) and 0.04
(diluted) per share) and $0.6 ($0.06 (basic and diluted) per share) in 1997,
1996 and 1995, respectively.
<PAGE>
F-21
The fair value for these options was estimated at the date of grant using the
Black-Scholes option-pricing model with the following weighted-average
assumptions for 1997, 1996 and 1995, respectively: dividend yields of 0%, 0% and
0%; expected volatility of 57.50%, 58.72% and 63.76%; risk-free interest rates
of 6.34%, 6.42% and 5.57%; and expected life of 8.1 years, 6.6 years and 8.6
years. The weighted average fair value of options granted during 1997, 1996 and
1995 for which the exercise price equals the market price on the grant date was
$1.7, $0.4 and $1.6, respectively.
The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. Because
the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.
NOTE L -- RETIREMENT PLANS
Pension Plans
US Plans - The Company maintains four defined benefit pension plans covering
certain domestic employees. The benefits for the plans covering the salaried
employees are based primarily on years of service and employees' qualifying
compensation during the final years of employment. Participation in the plan for
salaried employees was frozen as of May 7, 1993, and no participants will be
credited with service following such date except that participants not fully
vested will be credited with service for purposes of determining vesting only.
The benefits for the plans covering the hourly employees are based primarily on
years of service and a flat dollar amount per year of service. It is the
Company's policy generally to fund these plans based on the minimum requirements
of the Employee Retirement Income Security Act of 1974 (ERISA). Plan assets
consist primarily of common stocks, bonds, and short-term cash equivalent funds.
Pension expense includes the following components for 1997, 1996 and 1995:
Year ended December 31,
----------------------------
1997 1996 1995
--------- --------- --------
Service cost for benefits earned during period.... $ 0.2 $ 0.2 $ 0.1
Interest cost on projected benefit obligation..... 2.4 2.3 2.2
Actual (return) loss on plan assets............... (4.0) (5.0) (3.8)
Net amortization and deferral..................... 2.2 3.4 2.0
--------- --------- --------
Net pension expense.......................... $ 0.8 $ 0.9 $ 0.5
========= ========= ========
The following table sets forth the US plans' funded status and the amounts
recognized in the Company's financial statements at December 31:
<TABLE>
<CAPTION>
1997 1996 1995
------------------------- --------------------------- --------------------------
Overfunded Underfunded Overfunded Underfunded Overfunded Underfunded
Plans Plan Plans Plans Plans Plans
----------- ------------- ------------ ------------- ----------- -------------
Actuarial present value of:
<S> <C> <C> <C> <C> <C> <C>
Vested benefits....................$ 24.9 $ 9.3 $ 9.8 $ 21.8 $ 9.4 $ 20.9
=========== ============ ============ ============= =========== =============
Accumulated benefits...............$ 25.4 $ 9.3 $ 10.2 $ 21.8 $ 9.9 $ 20.9
=========== ============ ============ ============= =========== =============
Projected benefits.................$ 25.4 $ 9.3 $ 10.2 $ 21.8 $ 9.9 $ 20.9
Fair value of plan assets............ 25.8 6.1 11.5 18.6 10.2 16.5
----------- ------------ ------------ ------------- ----------- -------------
Projected benefit obligation
(in excess of) less than 0.5 (3.2) 1.3 (3.2) 0.4 (4.4)
plan assets........................
Unrecognized net loss from past
experience different than assumed.. 1.7 1.8 1.4 2.0 2.6 2.7
Unrecognized prior service cost...... 0.8 --- 0.8 --- 0.9 ---
Adjustment to recognize minimum
liability.......................... --- (1.8) --- (2.0) --- (2.7)
----------- ------------ ------------ ------------- ----------- -------------
Pension asset (liability)
recognized in the balance sheet....$ 3.0 $ (3.2) $ 3.5 $ (3.2) $ 3.9 $ (4.4)
=========== ============ ============ ============= =========== =============
</TABLE>
<PAGE>
F-22
The expected long-term rate of return on plan assets was 9% for the periods
presented. The discount rate assumption was 7.0% for 1997, 7.5% for 1996 and
7.5% for 1995.
In accordance with the provisions of the SFAS No. 87, "Employers' Accounting for
Pensions," the Company has recorded an adjustment of $1.8 and $2.0 to recognize
a minimum pension liability at December 31, 1997 and 1996, respectively. This
liability is offset by a direct reduction of stockholders' equity (deficit).
In December 1993, Terex contributed 350.0 thousand shares of Terex Common Stock
to the Master Trust for the benefit of two of the Terex plans, which were valued
by the Company at $2.3 based upon 96.5% of the market value of Terex Common
Stock as quoted on the New York Stock Exchange on the day of contribution. The
market value of this investment was $8.2 at December 31, 1997.
International Plans - TEL maintains a government-required defined benefit plan
(which includes certain defined contribution elements) covering substantially
all of its management employees. This plan is fully funded. Pension expense
relating to this plan was approximately $0.5, $0.4 and $0.3 for the years ended
December 31, 1997, 1996 and 1995, respectively.
Terex Aerials Limited (Ireland) maintains a voluntary, defined pension plan
covering its employees. Pension expense relating to this plan was approximately
$0.1 for the year ended December 31, 1997.
Saving Plans
The Company sponsors various tax deferred savings plans into which eligible
employees may elect to contribute a portion of their compensation. The Company
may, but is not obligated to, contribute to certain of these plans.
Other Postemployment Benefits
The Company provides postemployment health and life insurance benefits to
certain former salaried and hourly employees of Terex Cranes - Waverly
Operations. The Company adopted SFAS No. 106, "Employers' Accounting for
Postretirement Benefits Other than Pensions," on January 1, 1993. This statement
requires accrual of postretirement benefits (such as health care benefits)
during the years an employee provides service.
Terex adopted the provisions of SFAS No. 106 using the delayed recognition
method, whereby the amount of the unrecognized transition obligation at January
1, 1993 is recognized prospectively as a component of future years' net periodic
postretirement benefit expense. The unrecognized transition obligation at
January 1, 1993 was $4.5. Terex is amortizing this transition obligation over 12
years, the average remaining life expectancy of the participants. The liability
of the Company, as of December 31, was as follows:
1997 1996
------------ ------------
Actuarial present value of accumulated
postretirement benefit obligation of:
Retirees....................................... $ 2.6 $ 2.8
Active participants............................ --- ---
------------ ------------
Total accumulated postretirement benefit
obligation................................... 2.6 2.8
Unamortized transition obligation................. (2.2) (3.0)
------------ ------------
Liability (asset) recognized in the
balance sheet................................ $ 0.4 $ (0.2)
============ ============
Health care trend rates used in the actuarial assumptions range from 9.0% to
11.5% These rates decrease to 5.5% over a period of 8 to 9 years. The effect of
a one percentage-point change in the health care cost trend rates would change
the accumulated postretirement benefit obligation approximately 4.8%. The
discount rate used in determining the accumulated postretirement benefit
obligation was 7.5% for the years ended December 31, 1997 and 1996.
<PAGE>
F-23
Net periodic postretirement benefit expense includes the following components
for 1997 and 1996:
Year ended December 31,
-----------------------
1997 1996
---------- ----------
Service cost..................... $ --- $ ---
Interest cost.................... 0.2 0.2
Net amortization................. 0.2 0.2
========== ==========
Total....................... $ 0.4 $ 0.4
========== ==========
The Company's postretirement benefit obligations are not funded. Net periodic
postretirement benefit expense for the years ended December 31, 1997, 1996 and
1995 was approximately $0.1, $0.3 and $0.6 greater on the accrual basis than it
would have been on the cash basis.
NOTE M -- LITIGATION AND CONTINGENCIES
In the Company's lines of business numerous suits have been filed alleging
damages for accidents that have arisen in the normal course of operations
involving the Company's products. The Company is self-insured, up to certain
limits, for these product liability exposures, as well as for certain exposures
related to general, workers' compensation and automobile liability. Insurance
coverage is obtained for catastrophic losses as well as those risks required to
be insured by law or contract. The Company has recorded and maintains an
estimated liability in the amount of management's estimate of the Company's
aggregate exposure for such self-insured risks.
The Company is involved in various other legal proceedings which have arisen in
the normal course of its operations. The Company has recorded provisions for
estimated losses in circumstances where a loss is probable and the amount or
range of possible amounts of the loss is estimable.
The Company's outstanding letters of credit totaled $13.8. The letters of credit
generally serve as collateral for certain liabilities included in the
Consolidated Balance Sheet. Certain of the letters of credit serve as collateral
guaranteeing the Company's performance under contracts.
As described in Note I -- "Income Taxes," the Internal Revenue Service is
currently examining the Company's federal tax returns for the years 1987 through
1989.
The Company has agreed to indemnify certain outside parties for losses related
to a former subsidiary's worker compensation obligations. Some of the claims for
which Terex is contingently obligated are also covered by bonds issued by an
insurance company. The Company recorded liabilities for these contingent
obligations representing management's estimate of the potential losses which the
Company might incur.
NOTE N -- RELATED PARTY TRANSACTIONS
On August 28, 1995, the Company announced that its Chairman had retired from his
position with the Company and its Board of Directors. In connection with his
retirement, the Company (upon the recommendation of a committee comprised of its
independent Directors and represented by independent counsel) and the former
chairman have executed a retirement agreement providing certain benefits to the
former chairman and the Company. The agreement provides, among other things, for
a five-year consulting engagement requiring the former chairman to make himself
available to the Company to provide consulting services for certain portions of
his time. The former chairman, or his designee, received a fee for consulting
services which included payments in an amount, and a rate, equal to his 1995
base salary until December 31, 1996. The agreement also provides for the (i)
granting of a five-year $1.8 million loan bearing interest at 6.56% per annum
which is subject to being forgiven in increments over the five-year term of the
agreement upon certain conditions, and (ii) equity grants having a maximum
potential of 200.0 thousand shares of Terex Common Stock conditioned upon the
Company achieving certain financial performance objectives in the future. During
1997 the former chairman received 150.0 thousand shares of common stock in
accordance with this agreement. In contemplation of the execution of this
retirement agreement, the Company advanced to the former chairman the principal
amount of the forgivable loan. During 1997 and 1996, the Company forgave $0.6
<PAGE>
F-24
and $0.4, respectively, of principal on the loan along with the current
interest. The former chairman has also agreed not to compete with the Company,
to vote his Terex shares in the manner recommended by the Company's Board of
Directors and not to acquire any additional shares of the Company's Common
Stock.
The Company, certain directors and executives of the Company, and KCS, have been
named parties in various legal proceedings. During 1997, 1996 and 1995, the
Company incurred $0.2, $0.3 and $0.3, respectively, of legal fees and expenses
on behalf of the Company, directors and executives of the Company, and KCS named
in the lawsuits.
On December 31, 1997, an officer and director of the Company retired as an
officer. In connection with his retirement, the Company and the former officer
entered into an agreement providing certain benefits to the former officer and
the Company. Pursuant to the agreement, the former officer received an award of
5.0 thousand shares of Common Stock in consideration of his years of service to
the Company. The agreement also provides for a two-year consulting engagement
requiring the former officer to make himself available to the Company to provide
consulting services for a certain portion of his time, for such services he will
receive a consulting fee equal to his base salary in 1997 of $0.3 for services
provided in 1998 and $0.1 for services provided in 1999.
In 1997, the Company invested $0.1 in a company ("Investee") which was
additional reorganizing after declaring bankruptcy. Subsequent to the initial
investment, the Company was required to make an additional investment in
Investee. As a result, the Company elected not to continue its investment in
Investee and not to make the additional required investment. A director of the
Company and one of his business associates, acquired the Company's investment in
Investee for the amount invested by the Company and assumed the Company's
obligations to make additional investments in Investee.
In 1995, the Company retained Jefferies & Company, Inc., of which a director of
the Company was then Executive Vice President, in connection with the offering
of the Company's $250 Senior Secured Notes and acquisition of PPM which was
completed in May 1995. Jefferies & Company, Inc. was paid $9.2 as an
underwriting discount and for services rendered.
The Company requires that all transactions with affiliates be on terms no less
favorable to the Company than could be obtained in comparable transactions with
an unrelated person. The Board is advised in advance of any such proposed
transaction or agreement and utilizes such procedures in evaluating their terms
and provisions as are appropriate in light of the Board's fiduciary duties under
Delaware law. In addition, the Company has an Audit Committee consisting solely
of outside directors. One of the responsibilities of the Audit Committee is to
review related party transactions.
NOTE O-- BUSINESS SEGMENT INFORMATION
The Company operates in two industry segments: Terex Lifting and Terex
Earthmoving. Prior to November 27, 1996 the Company operated in a third industry
segment, the Material Handling Segment, which is treated as a discontinued
operation.
Terex Lifting designs, manufactures and markets telescopic mobile cranes
(including rough terrain trucks and all-terrain mobile cranes), aerial platforms
(including-scissor articulated boom and straight telescoping boom aerial work
platforms), utility aerial devices (including digger derricks and articulated
aerial devices), telescopic materials handlers (including container stackers and
rough terrain lift trucks), truck-mounted cranes (boom trucks) and related
components and replacement parts. These products are used primarily for
construction, repair and maintenance of infrastructure, buildings and
manufacturing facilities, for material handling applications in the
distribution, transportation and utilities industries as well as in the scrap,
refuse and lumber industries. Terex Lifting has eight significant manufacturing
operations: (i) P.P.M. S.A. located in Montceau Les Mines, France, at which
mobile cranes and container stackers under the brand names TEREX and PPM are
manufactured; (ii) PPM SpA, located in Crespellano, Italy, at which mobile
cranes are manufactured under the TEREX, BENDINI and PPM brand names; (iii)
Terex Lifting, located in Conway, South Carolina, at which mobile cranes are
manufactured under the P&H (a licensed trademark of Harnischfeger Corporation)
and TEREX brand names; (iv) Terex Lifting - Waverly Operations, located in
Waverly, Iowa, at which rough terrain hydraulic telescoping mobile cranes, truck
cranes and material handlers are manufactured under the brand names TEREX,
KOEHRING and LORAIN, and aerial lift equipment is manufactured under the brand
names TEREX AERIALS, TEREX AND MARK; (v) Terex Telelect, Inc., located in
Watertown, South Dakota, at which utility aerial devices and digger derricks are
manufactured under the TELELECT and HI-RANGER brand names, (vi) Terex Aerials,
Inc., located in Milwaukee, Wisconsin, at which aerial platforms are
manufactured under the TEREX, SIMON, MARK and TEREX AERIALS brand names; (vii)
Terex RO, Inc., located in Olathe, Kansas, at which truck mounted cranes are
manufactured under the RO-STINGER brand name; and (viii) Terex Baraga Products,
<PAGE>
F-25
Inc., located in Baraga, Michigan, at which rough terrain telescopic lift trucks
are manufactured under the SQUARE SHOOTER brand name.
Terex Earthmoving designs, manufactures and markets heavy-duty, off-highway
earthmoving and construction equipment and related components and replacement
parts. These products are used primarily by construction, mining, logging,
industrial and government customers in building roads, dams and commercial and
residential buildings; supplying coal, minerals, sand and gravel. Terex
Earthmoving has two manufacturing operations: (i) Terex Equipment Limited
("TEL"), located in Motherwell, Scotland, which manufactures off-highway rigid
haulers and articulated haulers and scrapers, each sold under the TEREX brand
name and to other truck manufacturers on a private label basis; and (ii) the
Unit Rig Division of Terex Earthmoving, located in Tulsa, Oklahoma, which
manufactures electric rear and bottom dump haulers principally sold to the
copper, gold and coal mining industry customers in North and South America,
Asia, Africa and Australia. Unit Rig's products are sold under the Company's
TEREX, UNIT RIG, and LECTRA HAUL trademarks. TEL's North, Central and South
American sales and distribution are managed by Terex Americas, a division of the
Company, located in Tulsa, Oklahoma.
Industry segment information is presented below:
1997 1996 1995
------------- ------------- --------------
Sales
Terex Earthmoving................. $ 288.4 $ 314.9 $ 250.3
Terex Lifting..................... 548.0 363.9 252.3
General/Corporate/Eliminations.... 5.9 (0.3) (1.2)
------------- ------------- --------------
Total........................... $ 842.3 $ 678.5 $ 501.4
============= ============= ==============
Income (Loss) from Operations
Terex Earthmoving................. $ 24.7 $ 5.6 $ 13.0
Terex Lifting..................... 47.2 4.8 7.2
General/Corporate/Eliminations.... (0.8) (5.3) (7.4)
------------- ------------- --------------
Total........................... $ 71.1 $ 5.1 $ 12.8
============= ============= ==============
Depreciation and Amortization
Terex Earthmoving................. $ 2.3 $ 1.8 $ 2.3
Terex Lifting..................... 8.8 8.6 7.6
General/Corporate................. 3.2 3.3 3.0
Discontinued Operations........... --- --- 14.8
------------- ------------- --------------
Total........................... $ 14.3 $ 13.7 $ 27.7
============= ============= ==============
Capital Expenditures
Terex Earthmoving................. $ 4.5 $ 5.1 $ 2.7
Terex Lifting..................... 4.3 2.9 2.4
General/Corporate................. 1.1 0.1 0.1
Discontinued Operations........... --- --- 5.3
------------- ------------- --------------
Total........................... $ 9.9 $ 8.1 $ 10.5
============= ============= ==============
Identifiable Assets
Terex Earthmoving................. $ 174.6 $ 189.2 $ 169.4
Terex Lifting..................... 402.1 210.5 239.9
General/Corporate................. 11.8 71.5 27.8
Discontinued Operations........... --- --- 41.8
------------- ------------- --------------
Total........................... $ 588.5 $ 471.2 $ 478.9
============= ============= ==============
<PAGE>
F-26
Geographic segment information is presented below:
1997 1996 1995
------------- ------------- --------------
Sales
North America.................. $ 499.8 $ 379.2 $ 292.3
Europe......................... 362.3 348.6 223.0
All other...................... 91.0 27.2 12.9
Eliminations................... (110.8) (76.5) (26.8)
------------- ------------- --------------
Total........................ $ 842.3 $ 678.5 $ 501.4
============= ============= ==============
Income (Loss) from Operations
North America.................. $ 53.4 $ 1.7 $ 8.6
Europe......................... 18.6 8.3 12.0
All other...................... 1.0 (1.7) (4.2)
Eliminations................... (1.9) (3.2) (3.6)
------------- ------------- --------------
Total........................ $ 71.1 $ 5.1 $ 12.8
============= ============= ==============
Identifiable Assets
North America.................. $ 466.1 $ 237.0 $ 170.2
Europe......................... 295.0 271.1 247.7
All other...................... 7.4 7.2 23.1
Eliminations................... (180.0) (44.1) 37.9
------------- ------------- --------------
Total........................ $ 588.5 $ 471.2 $ 478.9
============= ============= ==============
Sales between segments and geographic areas are generally priced to recover
costs plus a reasonable markup for profit. Operating income equals net sales
less direct and allocated operating expenses, excluding interest and other
nonoperating items. Corporate assets are principally cash, marketable securities
and administration facilities.
The Company is not dependent upon any single customer.
Export sales from U.S. continuing operations were as follows:
Year ended December 31,
------------------------------------------
1997 1996 1995
------------- ------------- ---------------
North and South America............ $ 56.4 $ 31.6 $ 20.1
Europe, Africa and Middle East..... 41.1 49.7 21.5
Asia and Australia................. 32.6 37.5 33.5
============= ============= ===============
$ 130.1 $ 118.8 $ 75.1
============= ============= ===============
NOTE P -- SUBSEQUENT EVENTS (UNAUDITED)
The Company has agreed to purchase all of the outstanding shares of O&K Mining
GmbH ("O&K Mining") from O&K Orenstein & Koppel AG ("Orenstein & Koppel") for
net aggregate consideration of DM 309 (approximately $172), subject to certain
post-closing adjustments. The transaction is scheduled to close on March 31,
1998 and will be financed through the issuance of debt securities and borrowings
under the Company's new $500 global bank credit facility, the New Bank Credit
Facility (as defined below). O&K Mining, which will be part of the Terex
Earthmoving segment, is headquartered in Dortmund, Germany, and has operations
in the United States, United Kingdom, Australia, Canada, South Africa and
Singapore. O&K Mining markets a complete range of large hydraulic excavators
serving the global surface mining industry and the global construction and
infrastructure development markets.
On March 6, 1998, the Company refinanced its 1997 Credit Facility and redeemed
or defeased all of its $166.7 principal amount of its then outstanding Senior
Secured Notes. The refinancing included effectiveness of a revolving credit
facility aggregating up to $125.0 and term loan facilities providing for loans
in an aggregate principal amount of up to approximately $375.0 (collectively the
"New Bank Credit Facility"). In connection with the refinancing of the Company's
1997
<PAGE>
F-27
1997 Bank Credit Facility and the repurchase of the Senior Secured Notes, the
Company incurred extraordinary losses of $1.9 and $36.5, respectively. These
extraordinary charges will be recorded in the first quarter of 1998.
On March 24, 1998, the Company entered into a Purchase Agreement to issue and
sell $150.0 aggregate principal amount of Senior Subordinated Notes due 2008 at
8.875%, discounted to yield 8.94% (the "New Senior Subordinated Notes"). It is
expected that delivery of the New Senior Subordinated Notes will be made against
payment therefore on or about March 31, 1998. The New Senior Subordinated Notes
will be issued in a private placement made in reliance upon an exemption from
registation under the Securities Act of 1933, as amended. It is expected that
the net proceeds from the offering will be used to fund a portion of the
aggregate consideration for the acquisition of O&K Mining and for general
working capital purposes.
Ares Leverage Investment Fund L.P. ("Ares"), an affiliate of a director of the
Company, participated as a lender under the New Bank Credit Facility for the
amount of $15.0. Ares also received a fee of less than $0.1 for participating as
a lender under the New Bank Credit Facility. Participation by Ares as a lender
under the New Bank Credit facility was made in the ordinary course of Ares'
business and on the same terms as all other lenders under the New Bank Credit
Facility.
Canadian Imperial Bank of Commerce, an affiliate of CIBC Oppenheimer Corp., of
which a director of the Company is a managing director, is a lender with a
commitment of up to $37.5 and a Co-Documentation Agent under the New Bank Credit
Facility. Canadian Imperial Bank of Commerce received a fee of $0.8 for acting
as a Co-Documentation Agent under the New Bank Credit Facility. Participation by
Canadian Imperial Bank of Commerce as a lender under the New Bank Credit
Facility was made in the ordinary course of its business and on the same terms
as all other lenders under the New Bank Credit Facility. In addition, CIBC
Oppenheimer Corp. was retained by the Company in connection with the offering of
the New Senior Subordinated Notes. CIBC will be paid $0.5 as an underwriting
discount upon issuance of the New Senior Subordinated Notes.
<PAGE>
F-28
TEREX CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(Amounts in millions)
<TABLE>
<CAPTION>
Additions
----------------------
Balance
Beginning Charges to Balance
of Year Earnings Other Deductions(1) End of Year
---------- ---------- ----------- ------------- ------------
Year ended December 31, 1997: Deducted from asset accounts:
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts........................... $ 7.0 $ 0.4 $ --- $ (2.9) $ 4.5
Reserve for excess and obsolete inventory................. 18.7 8.1 --- (2.8) 24.0
---------- ---------- ------------ ------------- ------------
Totals................................................... $ 25.7 $ 8.5 $ --- $ (5.7) $ 28.5
========== ========== ============ ============= ============
Year ended December 31, 1996: Deducted from asset accounts:
Allowance for doubtful accounts........................... $ 7.4 $ 2.4 $ --- $ (2.8) $ 7.0
Reserve for excess and obsolete inventory.................. 15.9 9.1 --- (6.3) 18.7
---------- ---------- ------------ ------------- ------------
Totals................................................... $ 23.3 $ 11.5 $ --- $ (9.1) $ 25.7
========== ========== ============ ============= ============
Year ended December 31, 1995: Deducted from asset accounts:
Allowance for doubtful accounts........................... $ 6.1 $ 6.3 $ (3.1) $ (1.9) $ 7.4
Reserve for excess and obsolete inventory................. 21.1 8.7 (4.4)(2) (9.5) 15.9
---------- ---------- ------------ ------------- ------------
Totals................................................... $ 27.2 $ 15.0 $ (7.5) $ (11.4) $ 23.3
========== ========== ============ ============= ============
</TABLE>
(1) Primarily represents the utilization of established reserves, net of
recoveries.
(2) Added with the acquisition of businesses and the restatement to Net Assets
of Discontinued Operations.
<PAGE>
F-29
TEREX CORPORATION AND SUBSIDIARIES
SCHEDULE IV - INDEBTEDNESS OF AND TO RELATED PARTIES -- NOT CURRENT
<TABLE>
<CAPTION>
Indebtedness of
------------------------------------------------------------
Balance at Balance at
Beginning of End of
Name of Person Period Additions Deductions Period
- --------------------------------------------- --------------- --------------- -------------- -------------
Year ended December 31, 1997:
Randolph W. Lenz
Promissory note, interest at 6.56% due
<S> <C> <C> <C> <C> <C>
November 2, 2000........................ $ 1,440,000 $ --- $ (600,000) $ 840,000
Payable for shipping charges.............. --- --- --- ---
=============== =============== ============== =============
Total................................... $ 1,440,000 $ --- $ (600,000) $ 840,000
=============== =============== ============== =============
Year ended December 31, 1996:
Randolph W. Lenz
Promissory note, interest at 6.56% due
November 2, 2000........................ $ 1,800,000 $ --- $ (360,000) $ 1,440,000
Payable for shipping charges.............. 33,450 --- (33,450) ---
=============== =============== ============== =============
Total................................... $ 1,833,450 $ --- $ (393,450) $ 1,440,000
=============== =============== ============== =============
Year ended December 31, 1995:
Randolph W. Lenz
Promissory note, interest at 6.56% due
November 2, 2000........................ $ --- $ 1,800,000 $ --- $ 1,800,000
Payable for shipping charges.............. --- 33,450 --- 33,450
=============== =============== ============== =============
Total................................... $ --- $ 1,833,450 $ --- $ 1,833,450
=============== =============== ============== =============
</TABLE>
<PAGE>
E-1
INDEX TO EXHIBITS
3.1 Restated Certificate of Incorporation of Terex Corporation (incorporated by
reference to Exhibit 3.1 to the Form S-1 Registration Statement of Terex
Corporation, Registration No. 33-52297).
3.2 Amended and Restated Bylaws of Terex Corporation.
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.
10.1 Terex Corporation Incentive Stock Option Plan, as amended (incorporated by
reference to Exhibit 4.1 to the Form S-8 Registration Statement of Terex
Corporation, Registration No. 33-21483).
10.2 1994 Terex Corporation Long Term Incentive Plan (incorporated by reference
to Exhibit 10.2 to the Form 10-K for the year ended December 31, 1994 of
Terex Corporation, Commission File No. 1-10702).
10.3 Terex Corporation Employee Stock Purchase Plan (incorporated by reference
to Exhibit 10.3 to the Form 10-K for the year ended December 31, 1994 of
Terex Corporation, Commission File No. 1-10702).
10.4 1996 Terex Corporation Long Term Incentive Plan (incorporated by reference
to Exhibit 10.1 to Form S-8 Registration Statement of Terex Corporation,
Registration No. 333-03983).
10.5 Share Purchase Agreement, as amended, between Terex Cranes, Inc. and Legris
Industries, S.A. and Potain, S.A. (incorporated by reference to Exhibit
10.1 to the From 8-K for May 9, 1995, Commission File No. 1-10702).
10.6 Common Stock Appreciation Rights Agreement dated as of May 9, 1995 between
the Company and United States Trust Company of New York, as Rights Agents
(incorporated by reference to Exhibit 10.29 of the Amendment No. 1 to the
Form S-1 Registration Statement of Terex Corporation, Registration No.
33-52711).
10.7 SAR Registration Rights Agreement dated as of May 9, 1995 among the Company
and the Purchasers (incorporated by reference to Exhibit 10.31 of the
Amendment No. 1 to the Form S-1 Registration Statement of Terex
Corporation, Registration No. 33-52711).
10.8 Agreement dated as of November 2, 1995 between Terex Corporation, a
Delaware corporation, and Randolph W. Lenz (incorporated by reference to
Exhibit 10 to the Form 10-Q for the Three Months ended September 30, 1995,
Commission File No. 1-10702).
10.9 Stock and Asset Purchase and Sales Agreement, dated as of November 9, 1996,
among Terex Corporation, CMH Acquisition Corp., CMH Acquisition
International Corp., Clark Material Handling International, Inc. and Clark
Material Handling Company, as Sellers, and CMHC Acquisition Corporation
(now known as CLARK Material Handling Company), as Buyer (incorporated by
reference to Exhibit 10.1 of the Form 8-K Current Report, Commission File
No. 1-10702, dated and filed with the Commission on December 11, 1996).
10.10 Service Agreement, dated as of November 27, 1996, between Terex
Corporation and CLARK Material Handling Company (incorporated by
reference to Exhibit 10.2 of the F orm 8-K Current Report, Commission File
No. 1-10702, dated and filed with the Commission on December 11, 1996).
10.11 Agreement of Purchase and Sale, dated as of February 24, 1997, among
Simon United States Holdings, Inc. and Simon Overseas Holdings
as Buyer (incorporated by reference to Exhibit 10.25 of the Form 10-K
Annual Report for the year ended December 31, 1996, Commission File
No. 1-10702).
<PAGE>
E-2
10.12 Standstill Agreement , dated June 27, 1997, among Terex
Corporation Randolph W. Lenz and the other parties named herein
(incorporated by reference to Exhibit 10.1 of Amendment No. 1 to the
Form S-1 Registration Statement of Terex Corporation, Registration
No. 333-27749).
10.13 Credit Agreement dated as of March 6, 1998 among Terex
Corporation, certain of its subsidiaries, the lenders named therein, Credit
Suisse First Boston, as Administrative Agent, Bank Boston N.A., as
Syndication Agent and Canadian Imperial Bank of Commerce and First
Union National Bank, as Co-Documentation Agents.
10.14 Guarantee Agreement dated as of March 6, 1998 of Terex Corporation
and Credit Suisse First Boston, as Collateral Agent.
10.15 Guarantee Agreement dated as of March 6, 1998 of Terex Corporation,
each of the subsidiaries of Terex Corporation listed therein and Credit
Suisse First Boston, as Collateral Agent.
10.16 Security Agreement dated as of March 6, 1998 of Terex Corporation, each
of the subsidiaries of Terex Corporation listed therein and Credit
Suisse First Boston, as Collateral Agent.
10.17 Pledge Agreement dated as of March 6, 1998 of Terex Corporation, each
of the subsidiaries of Terex Corporation listed therein and Credit
Suisse First Boston, as Collateral Agent.
10.18 Form Mortgage, Leasehold Mortgage , Assignment of Leases and
Rents, Security Agreement and Financing entered into by Terex
Corporation and certain of the subsidiaries of Terex Corporation, as
Mortgagor, and Credit Suisse first Boston, as Mortgagee.
10.19 Share Purchase Agreement dated December 18, 1997 between O&K AG and Terex
Mining Equipment, Inc.
11.1 Computation of per share earnings.
21.1 Subsidiaries of Terex Corporation.
23.1 Independent Accountants' Consent of Price Waterhouse LLP, Stamford,
Connecticut.
24.1 Power of Attorney.
<PAGE>
EXHIBIT 11.1
(Page 1 of 2)
TEREX CORPORATION AND SUBSIDIARIES
Computation of Earnings per Common Share
(in millions except per share amounts)
<TABLE>
<CAPTION>
Year Ended December 31,
--------------- --------------- --------------
1997 1996 1995
--------------- --------------- --------------
BASIC:
<S> <C> <C> <C>
Income (loss) from continuing operations before extraordinary items....$ 30.3 $ (54.3) $ (32.1)
Income from discontinued operations.................................... --- 102.0 4.4
--------------- --------------- --------------
Income (loss) before extraordinary items............................... 30.3 47.7 (27.7)
Less: Accretion of Preferred Stock................................. (4.8) (22.9) (7.3)
--------------- --------------- --------------
Income (loss) before extraordinary item applicable to common stock..... 25.5 24.8 (35.0)
Extraordinary loss on retirement of debt............................... (14.8) --- (7.5)
=============== =============== ==============
Net income (loss) applicable to common stock...........................$ 10.7 $ 24.8 $ (42.5)
=============== =============== ==============
Basic shares outstanding............................................... 16.2 11.8 10.4
=============== =============== ==============
Basic income per common share
Income (loss) from continuing operations before extraordinary item..$ 1.57 $ (6.54) $ (3.79)
Income from discontinued operations................................. --- 8.64 0.42
--------------- -------------- ---------------
Income (loss) before extraordinary items............................ 1.57 2.10 (3.37)
Extraordinary loss.................................................. (0.91) --- (0.72)
=============== ============== ===============
Net income (loss)...................................................$ 0.66 $ 2.10 $ (4.09)
=============== ==============================
</TABLE>
<PAGE>
EXHIBIT 11.1
(Page 2 of 2)
<TABLE>
<CAPTION>
TEREX CORPORATION AND SUBSIDIARIES
Computation of Earnings per Common Share
(in millions except per share amounts)
Year Ended December 31,
--------------- --------------- --------------
1997 1996 1995
--------------- --------------- --------------
DILUTED:
<S> <C> <C> <C>
Income (loss) from continuing operations before extraordinary items....$ 30.3 $ (54.3) $ (32.1)
Income from discontinued operations.................................... --- 102.0 4.4
--------------- --------------- --------------
Income (loss) before extraordinary items............................... 30.3 47.7 (27.7)
Less: Accretion of Preferred Stock................................. (4.8) (22.9) (7.3)
--------------- --------------- --------------
Income (loss) before extraordinary item applicable to common stock..... 25.5 24.8 (35.0)
Add: Accretion of Preferred Stock assumed converted at
beginning of period............................................... --- --- (a) --- (a)
--------------- --------------- --------------
25.5 24.8 (35.0)
Extraordinary loss on retirement of debt............................... (14.8) --- (7.5)
--------------- --------------- --------------
Net income (loss) applicable to common stock...........................$ 10.7 $ 24.8 $ (42.5)
=============== =============== ==============
Weighted average shares outstanding during the period.................. 16.2 11.8 10.4
Assumed exercise of warrants at ratio determined as of
December 31, 1997................................................. 0.3 1.2 --- (a)
Assumed conversion of Preferred Stock.................................. --- --- (a) --- (a)
Assumed exercise of equity rights...................................... 0.5 --- ---
Assumed exercise of stock options...................................... 0.7 0.3 --- (a)
=============== =============== ==============
Diluted shares outstanding............................................. 17.7 13.3 10.4
=============== =============== ==============
Diluted income per common share
Income (loss) from continuing operations before extraordinary item..$ 1.44 $ (5.81) $ (3.79)
Income from discontinued operations................................. --- 7.67 0.42
--------------- --------------- --------------
Income (loss) before extraordinary items............................ 1.44 1.86 (3.37)
Extraordinary loss.................................................. (0.84) --- (0.72)
=============== =============== ==============
Net income (loss)...................................................$ 0.60 $ 1.86 $ (4.09)
=============== =============== ==============
</TABLE>
(a) Excluded from the computation because the effect is anti-dilutive.
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (Nos. 33-21483, 33-00949 and 33-03983) and on Form S-3
(No. 33-52297) of Terex Corporation of our report dated March 6, 1998 appearing
on page F-2 of this Form 10-K.
PRICE WATERHOUSE LLP
Stamford, Connecticut
March 27, 1998
<PAGE>
Exhibit 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below hereby constitutes and appoints Ronald M. DeFeo and Eric I Cohen,
or either of them, as his true and lawful attorneys-in-fact and agents with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign the Terex Corporation Annual Report on
Form 10-K for the year ended December 31, 1997 (including, without limitation,
amendments), and to file the same with all exhibits thereto, and all document in
connection therewith, with the Securities and Exchange Commission, granting said
attorney-in-fact and agent, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be done, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Signature Title Date
--------- ----- ----
/s/ Ronald M. DeFeo Chairman, Chief Executive Officer March 27, 1998
Ronald M. DeFeo and Director
(Principal Executive Officer)
/s/ David J. Langevin Executive Vice President March 27, 1998
David J. Langevin (Acting Principal Financial Officer)
/s/ Joseph F. Apuzzo Vice President Finance and March 27, 1998
Joseph F. Apuzzo and Controller
(Principal Accounting Officer)
/s/ G. Chris Andersen Director March 27, 1998
G. Chris Andersen
/s/ William H. Fike Director March 27, 1998
William H. Fike
/s/ Bruce I. Raben Director March 27, 1998
Bruce I. Raben
/s/ Marvin B. Rosenberg Director March 27, 1998
Marvin B. Rosenberg
/s/ David A. Sachs Director March 27, 1998
David A. Sachs
/s/ Adam E. Wolf Director March 27, 1998
Adam E. Wolf
<PAGE>
1
AMENDED AND RESTATED
BYLAWS
OF
TEREX CORPORATION
Dated as of March 9, 1998
ARTICLE I. OFFICES
1.1. Principal and Business Offices. The Corporation may have such
principal and other business offices, either within or without the State of
Delaware, as the Board of Directors may designate or as the business of the
Corporation may require from time to time.
1.2. Registered Office. The registered office of the Corporation
required by the Delaware General Corporation Law to be maintained in the State
of Delaware may be, but need not be, identical with the principal office in the
State of Delaware, and the address of the registered office may be changed from
time to time by resolution of the Board of Directors or by the registered agent.
The business office of the registered agent of the Corporation shall be
identical to such registered office.
ARTICLE II. STOCKHOLDERS
2.1. Annual Meetings. (a) The annual meeting of the stockholders shall
be held at such place, on such date and at such time as may be fixed by or under
the authority of the Board of Directors, for the purpose of electing directors
and for the transaction of such other business as may come before the meeting.
If the election of directors shall not be held on the day fixed as herein
provided for any annual meeting of the stockholders, or at any adjournment
thereof, the Board of Directors shall cause the election to be held at a special
meeting of the stockholders as soon thereafter as conveniently may be.
(b) Nominations of persons for election to the Board of
Directors of the Corporation and the proposal of business to be considered by
the stockholders may be made at an annual meeting of stockholders (i) pursuant
to the Corporation's notice of meeting, (ii) by or at the direction of the Board
of Directors or (iii) by any stockholder of the Corporation who was a
stockholder of record at the time of giving of the notice provided for in this
bylaw, who is entitled to vote at the meeting and who complied with the notice
procedures set forth in this Section 2.1.
(c) For nominations or other business to be properly brought
before an annual meeting by a stockholder pursuant to clause (III) of Section
2.1(b), the stockholder must have given timely notice thereof in writing to the
Secretary of the Corporation. To be timely, a stockholder's notice shall be
delivered to the Secretary at the principal executive offices of the Corporation
<PAGE>
2
not less than sixty (60) days nor more than ninety (90) days prior to the first
anniversary of the preceding year's annual meeting; provided, however, that in
the event that the date of the annual meeting is advanced by more than thirty
(30) days or delayed by more than sixty (60) days from such anniversary date,
notice by the stockholder to be timely must be so delivered not earlier than the
90th day prior to such annual meeting and not later than the close of business
on the later of the 60th day prior to such annual meeting or the 10th day
following the day on which public announcement of the date of such meeting is
first made. Such stockholder's notice shall set forth (i) as to each person whom
the stockholder proposes to nominate for election or reelection as a director
all information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required, in
each case pursuant to Regulation 14A under the Securities Exchange Act of 1934,
as amended (the "Exchange Act") (including such person's written consent to
being name in the proxy statement as a nominee and to serving as a director if
elected); (ii) as to any other business that the stockholder proposes to bring
before the meeting, a brief description of the business desired to be brought
before the meeting, the reasons for conducting such business at the meeting and
any material interest in such business of such stockholder and the beneficial
owner, if any, on whose behalf the proposal is made; and (iii) as to the
stockholder giving the notice and the beneficial owner, if any, on whose behalf
the nomination or proposal is made (x) the name and address of such stockholder,
as they appear on the Corporation's books, and of such beneficial owner and (y)
the class and number of shares of the Corporation which are owned beneficially
and of record by such stockholder and such beneficial owner.
(d) Notwithstanding anything in the second sentence of Section
2.1(c) to the contrary, in the event that the number of directors to be elected
to the Board of Directors of the Corporation is increased and there is no public
announcement naming all of the nominees for director or specifying the size of
the increased Board of Directors made by the Corporation at least seventy (70)
days prior to the first anniversary of the preceding year's annual meeting, a
stockholder's notice required by this Section 2.1 shall also be considered
timely, but only with respect to nominees for any new positions created by such
increase, if it shall be delivered to the Secretary at the principal executive
offices of the Corporation not later than the close of business on the tenth
(10th) day following the day on which such public announcement is first made by
the Corporation.
(e) Only such persons who are nominated in accordance with the
procedures set forth in these bylaws shall be eligible to serve as directors and
only such business shall be conducted at an annual meeting of stockholders as
shall have been brought before the meeting in accordance with the procedures set
forth in these bylaws. The chairman of the meeting shall have the power and duty
to determine whether a nomination or any business proposed to be brought before
the meeting was made in accordance with the procedures set forth in these
bylaws. The chairman of the meeting shall have the power and duty to determine
whether a nomination or any business proposed to be brought before the meeting
was made in accordance with the procedures set forth in these bylaws and, if any
proposed nomination or business is not in compliance with these bylaws, to
declare that such defective proposed business or nomination shall be
disregarded.
(f) For purposes of these bylaws, "public announcement" shall
mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or a comparable national news service or in a document publicly
<PAGE>
3
filed by the Corporation with the Securities and Exchange Commission pursuant to
Section 13, 14, or 15(d) of the Exchange Act.
(g) Notwithstanding the foregoing provisions of this Section
2.1, a stockholder shall also comply with all applicable requirements of the
Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in this bylaw. Nothing in this bylaw shall be deemed to affect
any rights of stockholders to request inclusion of proposals in the
Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act.
2.2 Special Meetings. (a) Except as otherwise set forth in the
certificate of inCorporation, special meetings of the stockholders, for any
purpose or purposes, unless otherwise prescribed by statute, may be called by
the Board of Directors or by the person or in the manner designated by the Board
of Directors. Only such business shall be conducted at a special meeting of
stockholders as shall have been brought before the meeting pursuant to the
Corporation's notice of meeting.
(b) Nominations for election to the Board of Directors may be
made at a special meeting of stockholders at which directors are to be selected
pursuant to the Corporation's notice of meeting (i) by or at the direction of
the Board of Directors or (ii) by any stockholder of the Corporation who was a
stockholder of record at the time of giving of the notice provided for in this
Section 2.2, who is entitled to vote at the meeting and who complied with the
notice procedures set forth in this Section 2.2. Nominations by stockholders of
persons for election to the Board of Directors may be made at such a special
meeting of stockholders if the stockholder's notice complies with the notice
requirements set forth in clause (i) of Section 2.1(c) and is delivered to the
Secretary at the principal executive offices of the Corporation not earlier than
the 90th day prior to such special meeting and not later than the close of
business on the later of the 60th day prior to the date of such special meeting
or the 10th day following the day on which public announcement is first made of
the date of the special meeting and of the nominees proposed by the Board of
Directors to be elected at such meeting.
2.3. Place of Meeting. The Board of Directors may designate any place,
either within or without the State of Delaware, as the place of meeting for any
annual meeting or for any special meeting called by the Board of Directors. If
no designation is made or if a special meeting be otherwise called, the place of
meeting shall be at the principal executive offices of the Corporation.
2.4. Notice of Meeting. Written notice stating the place, day and hour
of the meeting and, in the case of a special meeting, the purpose or purposes
for which the meeting is called, shall be delivered to each stockholder of
record entitled to vote at such meeting not less than ten (10) days (unless a
longer period is required by law) nor more than sixty (60) days before the date
of the meeting, either personally or by mail, by or at the direction of the
President or the Secretary or other officer or persons calling the meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the United
States mail, addressed to the stockholder at his address as it appears on the
stock record books of the Corporation, with postage thereon prepaid.
2.5. Adjournment. The Board of Directors may postpone or reschedule any
previously scheduled special meeting. At the adjourned meeting, the Corporation
may transact any business which might have been transacted at the original
meeting. No notice of the time or place of an adjournment need be given if the
<PAGE>
4
time and place are announced at the meeting at which an adjournment is taken,
unless the adjournment is for more than thirty (30) days or a new record date is
fixed for the adjourned meeting, in which case notice of the adjourned meeting
shall be given to each stockholder of record entitled to vote thereat. Unless a
new record date for the adjourned meeting is fixed, the determination of
stockholders of record entitled to notice of or to vote at the meeting at which
adjournment is taken shall apply to the adjourned meeting.
2.6. Fixing of Record Date. For the purpose of determining the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, the Board of Directors may fix a date as the record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which record
date shall not be more than sixty (60) nor less than ten (10) days before the
date of such meeting. For the purpose of determining the stockholders entitled
to receive payment of any dividend or other distribution or allotment of any
rights or the stockholders entitled to exercise any rights in respect of any
change, conversion or exchange of stock, or for the purpose of any other lawful
action, the Board of Directors may fix a date as the record date, which record
date shall not precede the date upon which the resolution fixing the record date
is adopted, and which record date shall not be more than sixty (60) days prior
to such action. For the purpose of determining the stockholders entitled to
consent to corporate action in writing without a meeting, the Board of Directors
may fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted by the Board of Directors, and
which date shall not be more than ten (10) days after the date upon which the
resolution fixing the record date is adopted by the Board of Directors. If no
record date is fixed, the record date for determining:
(a) stockholders entitled to notice of or to vote at a meeting
of stockholders shall be at the close of business on the day next preceding the
day on which notice is given, or, if notice is waived, at the close of business
on the day next preceding the day on which the meeting is held;
(b) stockholders entitled to express consent to a corporate
action in writing without a meeting, when no prior action of the Board of
Directors is necessary, shall be the first day on which a signed written consent
is delivered to the Corporation in accordance with applicable law;
(c) stockholders entitled to express consent to a corporate
action in writing without a meeting, when prior action of the Board of Directors
is necessary, shall be at the close of business on the day on which the Board of
Directors adopts the resolution taking such prior action; and
(d) stockholders for any other purpose shall be the close of
business on the day on which the Board of Directors adopts the resolution
relating thereto.
2.7. Voting Records. The officer having charge of the stock transfer
books for shares of the Corporation shall, at least ten (10) days before each
meeting of stockholders, make a complete record of the stockholders entitled to
vote at such meeting, arranged in alphabetical order, showing the address of
<PAGE>
5
each stockholder, the number of shares of each class of stock of the Corporation
entitled to vote registered in the name of each stockholder and the total number
of votes to which each stockholder is entitled. Such record shall be produced
and kept open to the examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at least ten (10)
days prior to the meeting, either at a place within the city where the meeting
is to be held as specified in the notice of the meeting or at the place of the
meeting. The record shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
present. The original stock transfer books shall be the only evidence as to who
are the stockholders entitled to examine such record or transfer books or to
vote at any meeting of stockholders.
2.8 Quorum; Required Vote. Except as otherwise provided in the
Certificate of InCorporation or as may be required by law, a quorum at a meeting
of stockholders will exist if shares of the Corporation holding a majority of
all votes entitled to be cast at such meeting are represented in person or by
proxy. Where a separate vote by a class or classes is required, a majority of
the shares of such class or classes present in person or represented by proxy
shall constitute a quorum entitled to take action with respect to that vote on
that matter. In all matters other than the election of directors, the
affirmative vote of the holders of a majority of the votes represented at the
meeting in person or by proxy voting together as one class shall be the act of
the stockholders, unless a greater vote is required by law or the certificate of
inCorporation. Unless otherwise required by law or the certificate of
inCorporation, directors shall be elected by a plurality of the votes of shares
represented at the meeting in person or by proxy and entitled to vote on the
election of directors. If a quorum shall fail to attend any meeting, the
chairman of the meeting may adjourn the meeting to another place, date, or time.
At such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified.
2.9. Conduct of Meeting. (a) Such person as the Board of directors may
have designated or, in the absence of such a person, the Chairman of the Board,
or, in his or her absence, the President or, in his or her absence, such person
as may be chosen by the holders of a majority of the shares entitled to vote who
are present, in person or by proxy, shall call to order any meeting of the
stockholders and act as chairman of the meeting. In the absence of the Secretary
of the Corporation, the secretary of the meeting shall be such person as the
chairman appoints.
(b) The chairman of any meeting of stockholders shall
determine the order of business and the procedure at the meeting, including such
regulation of the manner of voting and the conduct of discussion as seem to him
or her in order. The chairman shall have the power to adjourn the meeting to
another place, date and time. The date and time of the opening and closing of
the polls for each matter upon which the stockholders will vote at the meeting
shall be announced at the meeting.
2.10. Proxies. At any meeting of the stockholders, every stockholder
entitled to vote may vote in person or by proxy authorized by an instrument in
writing or by a transmission permitted by law filed with the Corporation in
accordance with the procedure established for the meeting. Any copy, facsimile
telecommunication or other reliable reproduction of the writing or transmission
<PAGE>
6
created pursuant to this paragraph may be substituted or used in lieu of the
original writing or transmission for any and all purposes for which the original
writing or transmission could be used, provided that such copy, facsimile
telecommunication or other reproduction shall be a complete reproduction of the
entire original writing or transmission. Unless otherwise provided in the proxy
and supported by sufficient interest, a proxy may be revoked at any time before
it is voted, either by written notice filed with the Secretary or the acting
secretary of the meeting or by oral notice given by the stockholder to the
presiding officer during the meeting. The presence of a stockholder who has
filed his proxy shall not of itself constitute a revocation. No proxy shall be
valid after three (3) years from the date of its execution, unless otherwise
provided in the proxy. The Board of Directors shall have the power and authority
to make rules establishing presumptions as to the validity and sufficiency of
proxies.
2.11. Voting of Shares. (a) Each outstanding share of stock of the
Corporation shall be entitled to that number of votes, if any, upon each matter
submitted to a vote at a meeting of stockholders as provided in or in accordance
with the certificate of inCorporation.
(b) All voting, including on the election of directors but
excepting where otherwise required by law, may be by a voice vote; provided,
however, that upon demand therefore by a stockholder entitled to vote or by his
or her proxy, a stock vote shall be taken. Every stock vote shall be taken by
ballots, each of which shall state the name of the stockholder or proxy voting
and such other information as may be required under the procedure established
for the meeting.
(c) The Corporation may, and to the extent required by law,
shall, in advance of any meeting of stockholders, appoint one or more inspectors
to act at the meeting and make a written report as alternate inspectors to
replace any inspector who fails to act. If no inspector or alternate is able to
act at a meeting of stockholders, the person presiding at the meeting may, and
to the extent required by law, shall appoint one or more inspectors to act at
the meeting. Each inspector, before entering upon the discharge of his duties,
shall take and sign an oath faithfully to execute the duties of inspector with
strict impartiality and according to the best of his ability. Every vote taken
by ballots shall be counted by a duly appointed inspector or inspectors.
2.12. Voting of Shares by Certain Holders. (a) Other Corporations.
Shares standing in the name of another Corporation may be voted either in person
or by proxy, by the president of such Corporation or any other officer appointed
by such president. A proxy executed by any principal officer of such other
Corporation or assistant thereto shall be conclusive evidence of the signer's
authority to act, in the absence of express notice to this Corporation, given in
writing to the Secretary of this Corporation, of the designation of some other
person by the board of directors or the bylaws of such other Corporation.
(b) Legal Representatives and Fiduciaries. Shares held by any
administrator, executor, guardian, conservator, trustee in bankruptcy, receiver,
or assignee for creditors may be voted by duly executed proxy, without a
transfer of such shares to his name. Shares standing in the name of a fiduciary
may be voted by him, either in person or by proxy. A proxy executed by a
fiduciary shall be conclusive evidence of the signer's authority to act in the
absence of express notice to this Corporation, given in writing to the Secretary
of this Corporation, that such manner of voting is expressly prohibited or
otherwise directed by the document creating the fiduciary relationship.
(c) Pledgees. A stockholder whose shares are pledged shall be
entitled to vote such shares unless in the transfer of the shares the pledger
<PAGE>
7
has expressly authorized the pledgee to vote the shares and thereafter the
pledgee or his proxy shall be entitled to vote the shares so transferred.
(d) Treasury Stock and Subsidiaries. Neither treasury shares,
nor shares held by another Corporation if a majority of the shares entitled to
vote for the election of directors of such other Corporation is held by this
Corporation, shall be voted at any meeting or counted in determining the total
number of outstanding shares entitled to vote, but shares of its own issue held
by this Corporation in a fiduciary capacity or held by such other Corporation in
a fiduciary capacity may be voted and shall be counted in determining the total
number of outstanding shares entitled to vote.
(e) Joint Holders. Shares of record in the names of two or
more persons or shares to which two or more persons have the same fiduciary
relationship, unless the Secretary of the Corporation is given notice otherwise
and furnished with a copy of the instrument creating the relationship, may be
voted as follows:
(i) If voted by an individual, his vote binds all
holders.
(ii) If voted by more than one holder, the majority
vote binds all, unless the vote
is evenly split in which case the shares may be voted proportionally, or
according to the ownership interest as shown in the instrument filed with the
Secretary of the Corporation.
2.13. Waiver of Notice by Stockholders. Whenever any notice whatever is
required to be given to any stockholder of the Corporation under the certificate
of inCorporation or bylaws or any provision of the Delaware General Corporation
Law, a waiver thereof in writing, signed at any time, whether before or after
the time of meeting, by the stockholder entitled to such notice, shall be deemed
equivalent to the giving of such notice. Attendance of a person at a meeting
shall constitute waiver of notice of such meeting, except when the person
attends for the express purpose of objecting to the transaction of any business.
Neither the business nor purpose of any regular or special meeting of
stockholders, directors or members of a committee of directors need be specified
in the waiver.
2.14. Stock List. (a) A complete list of stockholders entitled to vote
at any meeting of stockholders, arranged in alphabetical order for each class of
stock and showing the address of each such stockholder and the number of shares
registered in his or her name, shall be open to the examination of any such
stockholder, for any purpose germane to the meeting, during ordinary business
hours for a period of at least ten (10) days prior to the meeting, either at a
place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or if not so specified, at the place
where the meeting is to be held.
(b) The stock list shall also be kept at the place of the meeting
during the whole time thereof and shall be open to the examination of any such
stockholder who is present. This list shall presumptively determine the identity
of the stockholders entitled to vote at the meeting and the number of shares
held by each of them.
ARTICLE III. BOARD OF DIRECTORS
3.1.Number, Election, and Term of Directors. Subject to the rights of the
holders of any series of preferred stock to elect directors under specified
<PAGE>
8
circumstances, the number of directors shall be fixed from time to time
exclusively by the Board of Directors pursuant to a resolution adopted by a
majority of the total number of directors which the Corporation would have if
there were no vacancies. Except as otherwise set forth in the certificate of
incorporation, each director shall hold office until the next annual meeting of
stockholders and until his successor shall have been elected and qualified, or
until his prior death, resignation or removal. Directors need not be residents
of the State of Delaware or stockholders of the corporation.
3.2. Newly Created Directorships and Vacancies. Subject to applicable
law and to the rights of the holders of any series of preferred stock with
respect to such series of preferred stock, and unless the Board of Directors
otherwise determines, newly created directorships resulting from any increase in
the authorized number of directors or any vacancies on the Board of Directors
resulting from death, resignation, retirement, disqualification, removal from
office or other cause shall be filled only by a majority vote of the Directors
then in office, though less than a quorum, and directors so chosen shall hold
office for a term expiring at the annual meeting of stockholders at which the
term of office of the class to which they have been elected expires and until
such director's successor shall have been duly elected and qualified. No
decrease in the number of authorized directors constituting the entire Board of
Directors shall shorten the term of any incumbent director.
3.3. Removal and Resignation. Except as otherwise set forth in the
certificate of incorporation, a director may be removed from office by
affirmative vote of a majority of the votes represented by outstanding shares
entitled to vote for the election of such director taken at a meeting of
stockholders called for that purpose. A director may resign at any time by
filing his written resignation with the Secretary of the Corporation.
3.4. Regular Meetings. A regular meeting of the Board of Directors
shall be held without other notice than this bylaw immediately after the annual
meeting of stockholders and each adjourned session thereof. The place of such
regular meeting shall be the same as the place of the meeting of stockholders
which precedes it, or such other suitable place as may be announced at such
meeting of stockholders. The Board of Directors may provide, by resolution, the
time and place, either within or without the State of Delaware, for the holding
of additional regular meetings without other notice than such resolution.
3.5. Special Meetings. Except as otherwise set forth in the certificate
of inCorporation, special meetings of the Board of Directors may be called by or
at the request of the Chairman of the Board, President, Secretary or any two (2)
or more directors. The individual(s) calling any special meeting of the Board of
Directors may fix any place, either within or without the State of Delaware, as
the place for holding any special meeting of the Board of Directors called by
them, and if no other place is fixed the place of the meeting shall be at the
principal executive offices of the Corporation.
3.6 Notice; Waiver. Notice of each special meeting of the Board of
Directors shall be given by written notice to each director at his business
address or at such other address as such director shall have designated in
writing filed with the Secretary, by mailing such notice not less than
seventy-two (72) hours prior thereto or by personal delivery, telephone, or
facsimile transmission of such notice not less than twenty-four (24) hours prior
thereto. If mailed, such notice shall be deemed to be delivered when deposited
in the United States mail so addressed, with postage thereon prepaid. Whenever
<PAGE>
9
any notice whatever is required to be given to any director of the Corporation
under the certificate of inCorporation or bylaws or any provision of law, a
waiver thereof in writing, signed at any time, whether before or after the time
of meeting, by the director entitled to such notice, shall be deemed equivalent
to the giving of such notice. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director attends a
meeting for the sole purpose of objecting thereat to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the Board of Directors need be specified in the notice or waiver of notice of
such meeting. Unless otherwise indicated in the notice thereof, any and all
business may be transacted at a special meeting.
3.7 Quorum. Except as otherwise provided by law or by the certificate
of inCorporation or these bylaws, a majority of the whole Board of Directors
shall constitute a quorum for the transaction of business at any meeting of the
Board of Directors. A majority of the directors present (though less than such
quorum) may adjourn the meeting to another place, date, or time without further
notice or waiver thereof.
3.8. Manner of Acting. The act of the majority of the directors present
at a meeting at which a quorum is present shall be the act of the Board of
Directors, unless the act of a greater number is required by law or by the
certificate of inCorporation or these bylaws.
3.9. Conduct of Meetings. The Chairman of the Board or, in his absence,
the President or, in their absence, any director chosen by the directors
present, shall call meetings of the Board of Directors to order and shall act as
chairman of the meeting. The Secretary of the Corporation shall act as secretary
of all meetings of the Board of Directors but in the absence of the Secretary,
the presiding officer may appoint any Assistant Secretary or any director or
other person present to act as secretary of the meeting.
3.10. Powers. The Board of Directors may, except as otherwise required
by law, exercise all such powers and do all such acts and things as may be
exercised or done by the Corporation, including, without limiting the generality
of the foregoing, the unqualified power:
(a) To declare dividends from time to time in accordance with
law;
(b) To purchase or otherwise acquire any property, rights or
privileges on such terms as it shall determine;
(c) To authorize the creation, making, and issuance, in such form
as it may determine, of written obligations of every kind, negotiable or
non-negotiable, secured or unsecured, and to do all things necessary in
connection therewith;
(d) To remove any officer of the Corporation with or without
cause, and from time to time to devolve the powers and duties of any officer
upon any other person for the time being;
(e) To confer upon any officer of the Corporation the power to
appoint, remove and suspend subordinate officers, employees and agents;
(f) To adopt from time to time such stock option, stock purchase,
bonus or other compensation plans for directors, officers, employees and agents
of the Corporation and its subsidiaries as it may determine;
<PAGE>
10
(g) To adopt from time to time such insurance, retirement, and
other benefit plans for directors, officers, employees, and agents of the
Corporation and its subsidiaries as it may determine; and
(h) To adopt from time to time regulations, not inconsistent with
these bylaws, for the management of the Corporation's business and affairs.
3.11. Compensation. (a) Unless otherwise restricted by the certificate
of inCorporation, the Board of Directors shall have the authority to fix the
compensation of the directors. The directors may be paid their expenses, if any,
of attendance at each meeting of the Board of Directors may be paid a fixed sum
for attendance at each meeting of the Board of Directors and/or paid a stated
salary and/or paid other compensation as director. No such payment shall
preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor. Members of special or standing committees may
be allowed compensation for serving on a committee and/or attending committee
meetings.
(b) The Board of Directors shall also shall have authority to
provide for or delegate authority to an appropriate committee to provide for
reasonable pensions, disability or death benefits, and other benefits or
payments, to directors, officers and employees and to their estates, families,
dependents or beneficiaries on account of prior services rendered by such
directors, officers and employees to the Corporation.
3.12. Presumption of Assent. Solely for the purposes of Section 174 of
the Delaware General Corporation Law, a director of the Corporation who is
present at a meeting of the Board of Directors or a committee thereof of which
he is a member at which action on any corporate matter is taken shall be
presumed to have assented to the action taken unless his dissent shall be
entered in the minutes of the meeting or unless he shall file his written
dissent to such action with the person acting as the secretary of the meeting
before the adjournment thereof or shall forward such dissent by registered mail
to the Secretary of the Corporation immediately after the adjournment of the
meeting. Such right to dissent shall not apply to a director who voted in favor
of such action.
3.13. Unanimous Consent without Meeting. Any action required or
permitted by the certificate of inCorporation or bylaws or any provision of law
to be taken by the Board of Directors at a meeting or by a resolution of any
committee thereof may be taken without a meeting if a consent in writing,
setting forth the action so taken, filed with the minutes of the proceedings,
shall be signed by all of the directors then in office or comprising such
committee.
ARTICLE IV. COMMITTEES
4.1. Committees of the Board of Directors. The Board of Directors, by a
vote of a majority of the whole Board, may from time to time designate
committees of the Board, with such lawfully delegable powers and duties as it
thereby confers, to serve at the pleasure of the Board and shall, for those
committees and any others provided for herein, elect a director or directors to
<PAGE>
11
serve as the member or members, designating, if it desires, other directors as
alternate members who may replace any absent or disqualified member at any
meeting of the committee. In the absence of disqualification of any member of
any committee and any alternate member in his or her place, the member or
members of the committee present at the meeting and not disqualified from
voting, whether or not he or she or they constitute a quorum, may by unanimous
vote appoint another member of the Board of Directors to act at the meeting in
the place of the absent or disqualified member.
4.2. Conduct of Business. Each committee may determine the procedural
rules for meeting and conducting its business and shall act in accordance
therewith, except as otherwise provided herein or required by law. Adequate
provision shall be made for notice to members of all meetings; one-third (1/3)
of the members shall constitute a quorum unless the committee shall consist of
one (1) or two (2) members, in which event one (1) member shall constitute a
quorum; and all matters shall be determined by a majority vote of the members
present. Action may be taken by any committee without a meeting if all members
thereof consent thereto in writing, and the writing or writings are filed with
the minutes of the proceedings of such committee.
ARTICLE V. OFFICERS
5.1. Number. The principal officers of the Corporation shall be a
Chairman of the Board, a President, one or more Vice Presidents, a Secretary and
a Treasurer, each of whom shall be elected by the Board of Directors. Such other
officers and assistant officers as may be deemed necessary may be elected or
appointed by the Board of Directors. Any number of offices may be held by the
same person.
5.2. Election and Term of Office. The officers of the Corporation to be
elected by the Board of Directors shall be elected annually by the Board of
Directors at the first meeting of the Board of Directors held after each annual
meeting of the stockholders. If the election of officers shall not be held at
such meeting, such election shall be held as soon thereafter as conveniently may
be. Each officer shall hold office until his successors shall have been duly
elected or until his prior death, resignation or removal. Any officer may resign
at any time upon written notice to the Corporation. Failure to elect officers
shall not dissolve or otherwise affect the Corporation.
5.3. Removal. Any officer or agent may be removed by the Board of
Directors whenever in its judgment the best interests of the Corporation will be
served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Election or appointment shall not of
itself create contract rights.
5.4. Vacancies. A vacancy in any principal office because of death,
resignation, removal, disqualification or otherwise, shall be filled by the
Board of Directors for the unexpired portion of the term.
5.5 The Chairman of the Board. The Chairman of the Board shall be the
chief executive officer of the Corporation and, subject to the control of the
Board of Directors, shall in general supervise and control all of the business
and affairs of the Corporation. He shall, when present, preside at all meetings
of the stockholders and of the Board of Directors. He shall have authority,
<PAGE>
12
subject to such rules as may be prescribed by the Board of Directors, to appoint
such agents and employees of the Corporation as he shall deem necessary, to
prescribe their powers, duties and compensation, and to delegate authority to
them. Such agents and employees shall hold office at the discretion of the
Chairman of the Board. He shall have authority to sign, execute and acknowledge,
on behalf of the Corporation, all deeds, mortgages, bonds, stock certificates,
contracts, leases, reports and all other documents or instruments necessary or
proper to be executed in the course of the Corporation's regular business or
which shall be authorized by resolution of the Board of Directors; and, except
as otherwise provided by law or the Board of Directors, he may authorize the
President or any other officer or agent of the Corporation to sign, execute and
acknowledge such documents or instruments in his place and stead. In general, he
shall perform all duties incident to the office of Chairman of the Board and
such other duties as may be prescribed by the Board of Directors from time to
time.
5.6. The President. The President shall be the chief operating officer
of the Corporation, and if there shall be no Chairman of the Board, the Chief
Executive Officer of the Corporation) and, subject to the control of the Board
of Directors, shall assist the Chairman of the Board in supervising and
controlling all of the business and affairs of the Corporation. In the absence
of the Chairman of the Board or in the event of his death, inability or refusal
to act, or in the event for any reason it shall be impracticable for the
Chairman of the Board to act personally, the President shall perform the duties
of the Chairman of the Board and, when so acting, shall have all the powers of
and be subject to all the restrictions upon the Chairman of the Board. He shall,
in the absence of the Chairman of the Board, when present, preside at all
meetings of the stockholders and of the Board of Directors. He shall have
authority, subject to such rules as may be prescribed by the Board of Directors
and to the approval of the Chairman of the Board, to appoint such agents and
employees of the Corporation as he shall deem necessary, to prescribe their
powers, duties and compensation, and to delegate authority to them. Such agents
and employees shall hold office at the discretion of the President. He shall
have authority to sign, execute and acknowledge, on behalf of the Corporation,
all deeds, mortgages, bonds, stock certificates, contracts, leases, reports and
all other documents or instruments necessary or proper to be executed in the
course of the Corporation's regular business, or which shall be authorized by
resolution of the Board of Directors; and, except as otherwise provided by law
or the Board of Directors, he may authorize any Vice President or other officer
or agent of the Corporation to sign, execute and acknowledge such documents or
instruments in his place and stead. In general, he shall perform all duties
incident to the office of President and such other duties as may be prescribed
by the Board of Directors from time to time.
5.7. The Vice Presidents. In the absence of the President or in the
event of his death, inability or refusal to act, or in the event for any reason
it shall be impracticable for the President to act personally, the Vice
President (or, in the event there shall be more than one Vice President, the
Vice Presidents in the order designated by the Board of Directors, or in the
absence of such designation, then in the order of their election) shall perform
the duties of the President and, when so acting, shall have all the powers of
and be subject to all the restrictions upon the President. Any Vice President
may sign, with the Secretary or Assistant Secretary, certificates for shares of
the Corporation; and shall perform such other duties and have such authority as
from time to time may be delegated or assigned to him by the President or the
Board of Directors. The execution of any instrument of the Corporation by any
Vice President shall be conclusive evidence, as to third parties, of his
authority to act in the stead of the President.
<PAGE>
13
5.8. The Secretary. The Secretary shall: (a) keep the minutes of the
meetings of the stockholders and the Board of Directors in one or more books
provided for the purpose; (b) attest instruments to be filed with the Secretary
of State; (c) see that all notices are duly given in accordance with the
provisions of these bylaws or as required by law; (d) be custodian of the
corporate records and of the seal of the Corporation, if any, and see that the
seal of the Corporation, if any, is affixed to all documents the execution of
which on behalf of the Corporation under its seal is duly authorized; (e) keep
or arrange for the keeping of a register of the post office address of each
stockholder which shall be furnished to the Secretary by such stockholders; (f)
sign with the Chairman of the Board, the President or any Vice President
certificates for shares of the Corporation the issuance of which shall have been
authorized by resolution of the Board of Directors; (g) have general charge of
the stock transfer books of the Corporation; and (h) in general perform all
duties incident to the office of the Secretary and have such other duties and
exercise such authority as from time to time may be delegated or assigned to him
by the President or by the Board of Directors.
5.9. The Treasurer. The Treasurer shall: (a) have charge and custody of
and be responsible for all funds and securities of the Corporation; (b) receive
and give receipts for moneys due and payable to the Corporation from any source
whatsoever, and deposit all such moneys in the name of the Corporation in such
banks, trust companies or other depositories as shall be selected in accordance
with the provisions of Section 5.4; and (c) in general perform all of the duties
and exercise such other authority as from time to time may be delegated or
assigned to him by the President or by the Board of Directors. If required by
the Board of Directors, the Treasurer shall give a bond for the faithful
discharge of his duties in such sum and with such surety or sureties as the
Board of Directors shall determine.
5.10. Assistant Secretaries and Assistant Treasurers. There shall be
such number of Assistant Secretaries and Assistant Treasurers as the Board of
Directors may from time to time authorize. The Assistant Secretaries may sign
with the President or any Vice President certificates for shares of the
Corporation the issuance of which shall have been authorized by a resolution of
the Board of Directors. The Assistant Treasurers shall respectively, if required
by the Board of Directors, give bonds for the faithful discharge of their duties
in such sums and with such sureties as the Board of Directors shall determine.
The Assistant Secretaries and Assistant Treasurers, in general, shall perform
such duties and have such authority as shall from time to time be delegated or
assigned to them by the Secretary or the Treasurer, respectively, or by the
President or the Board of Directors.
5.11. Other Assistants and Acting Officers. The Board of Directors
shall have the power to appoint any person to act as assistant to any officer,
or as agent for the Corporation in his stead, or to perform the duties of such
officer whenever for any reason it is impracticable for such officer to act
personally, and such assistant or acting officer or other agent so appointed by
the Board of Directors shall have the power to perform all the duties of the
office to which he is so appointed to be an assistant, or as to which he is so
appointed to act, except as such power may be otherwise defined or restricted by
the Board of Directors.
5.12. Salaries. The salaries of the principal officers shall be fixed
from time to time by the Board of Directors or by a duly authorized committee
thereof, and no officer shall be prevented from receiving such salary by reason
of the fact that he is also a director of the Corporation.
<PAGE>
14
5.13. Delegation of Authority. The Board of Directors may from time to
time delegate the powers or duties of any officer to any other officers or
agents, notwithstanding any provision hereof.
5.14. Action with Respect to Securities of Other Corporations. Unless
otherwise directed by the Board of Directors, the President or any officer of
the Corporation authorized by the President shall have power to vote and
otherwise act on behalf of the Corporation, in person or by proxy, at any
meeting of stockholders of or with respect to any action of stockholders of any
other Corporation in which this Corporation may hold securities and otherwise to
exercise any and all rights and powers which this Corporation may possess by
reason of its ownership of securities in such other Corporation.
ARTICLE VI. CONTRACTS, CHECKS AND SPECIAL CORPORATE ACTS
6.1. Contracts. The Board of Directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute or deliver any
instrument in the name of and on behalf of the Corporation, and such
authorization may be general or confined to specific instances. In the absence
of other designation, all deeds, mortgages and instruments or assignment or
pledge made by the Corporation shall be executed in the name of the Corporation
by the Chairman of the Board, the President or any Vice President and by the
Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer; the
Secretary or an Assistant Secretary, when necessary or required, shall affix the
corporate seal, if any, thereto; and when so executed no other party to such
instrument or any third party shall be required to make any inquiry into the
authority of the signing officer or officers.
6.2. Checks, Drafts, etc. All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of
the Corporation, shall be signed by such officer or officers, agent or agents of
the Corporation and in such manner as shall from time to time be determined by
or under the authority of a resolution of the Board of Directors.
6.3. Voting of Securities Owned by this Corporation. Subject always to
the specific directions of the Board of Directors, (a) any shares or other
securities issued by any other Corporation and owned or controlled by this
Corporation may be voted at any meeting of security holders of such other
Corporation by the Chairman of the Board, the President, any Vice President, the
Treasurer, or the Secretary of this Corporation, and (b) whenever, in the
judgment of the Chairman of the Board or in his absence, of the President, or in
their absence, any Vice President, it is desirable for this Corporation to
execute a proxy or written consent in respect to any shares or other securities
issued by any other Corporation and owned by this Corporation, such proxy or
consent shall be executed in the name of this Corporation by the Chairman of the
Board, the President, any Vice President, the Treasurer or the Secretary of this
Corporation, without necessity of any authorization by the Board of Directors,
affixation of corporate seal, if any, or countersignature or attestation by
another officer. Any person or persons designated in the manner above stated as
the proxy or proxies of this Corporation shall have full right, power and
authority to vote the shares or other securities issued by such other
Corporation and owned by this Corporation the same as such shares or other
securities might be voted by this Corporation.
<PAGE>
15
ARTICLE VII. CERTIFICATES FOR SHARES AND THEIR TRANSFER
7.1. Certificates for Shares. Certificates representing shares of the
Corporation shall be in such form, consistent with law, as shall be determined
by the Board of Directors. Such certificates shall be signed by the Chairman of
the Board, the President or any Vice President and by the Secretary or an
Assistant Secretary or the Treasurer or an Assistant Treasurer. All certificates
for shares shall be consecutively numbered or otherwise identified. The name and
address of the person to whom the shares represented thereby are issued, with
the number of shares and date of issue, shall be entered on the stock transfer
books for the Corporation. All certificates surrendered to the Corporation for
transfer shall be canceled and no new certificate shall be issued until the
former certificate for a like number of shares shall have been surrendered and
canceled, except as provided in Section 7.6.
7.2. Facsimile Signatures. The signatures of any officers of the
Corporation upon a certificate may be facsimiles if the certificate is manually
signed on behalf of a transfer agent, or a registrar, other than the Corporation
itself or an employee of the Corporation.
7.3. Signature by Former Officers. In case any officer, who has signed
or whose facsimile signature has been placed upon any certificate for shares,
shall have ceased to be such officer before such certificate is issued, it may
be issued by the Corporation with the same effect as if he were such officer at
the date of its issue.
7.4. Transfer of Shares. Prior to due presentment of a certificate for
shares for registration of transfer the Corporation may treat the registered
owner of such shares as the person exclusively entitled to vote, to receive
notifications and otherwise to have and exercise all the rights and power of an
owner. Transfers of shares shall be made only upon the books of the Corporation
kept at an office of the Corporation or by transfer agents designated to
transfer shares of the Corporation. Where a certificate for shares is presented
to the Corporation with a request to register for transfer, the Corporation
shall not be liable to the owner or any other person suffering loss as a result
of such registration of transfer if (a) there were on or with the certificate
the necessary endorsements, and (b) the Corporation had no duty to inquire into
adverse claims or has discharged any such duty. The Corporation may require
reasonable assurance that said endorsements are genuine and effective and in
compliance with such other regulations as may be prescribed by or under the
authority of the Board of Directors. Where a transfer of shares is made for
collateral security, and not absolutely, it shall be so expressed in the entry
of transfer if, when the shares are presented, both the transferor and the
transferee so request.
7.5. Restrictions on Transfer. The face or reverse side of each
certificate representing shares shall bear a conspicuous notation of any
restriction imposed by the Corporation upon the transfer of such shares.
7.6. Lost, Destroyed or Stolen Certificates. Where the owner claims
that his certificates for shares have been lost, destroyed or wrongfully taken,
a new certificate shall be issued in place thereof if the owner (a) so requests
before the Corporation has notice that such shares have been acquired by a bona
fide purchaser, and (b) satisfies such other reasonable requirements as may be
prescribed by or under the authority of the Board of Directors concerning proof
<PAGE>
16
of such loss, theft, or destruction and concerning the giving of a satisfactory
bond or bonds of indemnity.
7.7. Consideration of Shares. The shares of the Corporation may be
issued for such consideration as shall be fixed from time to time by the Board
of Directors, consistent with the law of the State of Delaware.
7.8. Stock Regulations. The Board of Directors shall have the power and
authority to make all such further rules and regulations not inconsistent with
the statutes of the State of Delaware as it may deem expedient concerning the
issue, transfer and registration of certificates representing shares of the
Corporation.
7.9. Record Date. (a) In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders, or
to receive payment of any dividend or other distribution or allotment of any
rights or to exercise any rights in respect of any change, conversion, or
exchange of stock or for the purpose of any other lawful action, the Board of
Directors may, except as otherwise required by law, fix a record date, which
record date shall not precede the date on which the resolution fixing the record
date is adopted and which record date shall not be more than sixty (60) nor less
than ten (10) days before the date of any meeting of stockholders, nor more than
sixty (60) days prior to the time for such other action as hereinbefore
described; provided, however, that if no record date is fixed by the Board of
Directors, the record date for determining stockholders entitled to notice of or
to vote at a meeting of stockholders shall be at the close of business on the
day next preceding the day on which notice is given or, if notice is waived, at
the close of business on the day next preceding the day on which the meeting is
held, and, for determining stockholders entitled to receive payment of any
dividend or other distribution or allotment of rights or to exercise any rights
of change, conversion, or exchange of stock or for any other purpose, the record
date shall be at the close of business on the day on which the Board of
Directors adopts a resolution relating thereto.
(b) A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any adjournment
of the meeting; provided, however, that the Board of Directors may fix a new
record date for the adjourned meeting.
ARTICLE VIII. SEAL
8.1. The Board of Directors may provide for a corporate seal in an
appropriate form or may provide that the Corporation shall have no seal.
ARTICLE IX. AMENDMENTS
9.1. By Stockholders. Except as otherwise set forth herein, in the
certificate of inCorporation or required by law, these bylaws may be adopted,
amended or repealed by the stockholders entitled to vote at the stockholders
annual meeting without prior notice, or at any other meeting provided the
amendment under consideration has been set forth in the notice of meeting, by
the affirmative vote of not less than two-thirds of the votes present or
represented by outstanding shares at any meeting at which a quorum is in
attendance.
<PAGE>
17
9.2. By Directors. Except as otherwise set forth herein in the
certificate of inCorporation or required by law, the Board of Directors is
expressly authorized to adopt, alter, amend, or repeal these bylaws by the
affirmative vote of a majority of the Board of Directors at any meeting at which
a quorum is present.
9.3. Implied Amendments. Any action taken or authorized by the Board of
Directors which would be inconsistent with these bylaws, but is taken or
authorized by the affirmative vote of not less than the number of votes or the
number of directors required to amend the bylaws to conform with such action,
shall be given the same effect as though the bylaws had been temporarily amended
or suspended so far, but only so far, as is necessary to permit the specific
action so taken or authorized.
ARTICLE X. INDEMNIFICATION
10.1. Mandatory Indemnification. (a) In all cases other than those set
forth in Section 10.1(b) hereof and subject to the conditions and limitations
set forth hereinafter in this Article X, the Corporation shall indemnify and
hold harmless any person who is or was a party, or is threatened to be made a
party, to any Action (see Section 10.17 for definitions of capitalized terms
used herein) by reason of his or her status as an Executive and/or as to acts
performed in the course of such Executive's duties to the Corporation and/or an
Affiliate, against Liabilities and reasonable Expenses incurred by or on behalf
of an Executive in connection with any Action, including, without limitation, in
connection with the investigation, defense, settlement or appeal of any Action;
provided, that it is not determined by the Authority, or by a court, pursuant to
Section 10.3 that the Executive engaged in misconduct which constitutes a Breach
of Duty.
(b) To the extent an Executive has been successful on the
merits or otherwise in connection with any Action, including, without
limitation, the settlement, dismissal, abandonment or withdrawal of any such
Action where the Executive does not pay, incur or assume any material
Liabilities, or in connection with any claim, issue or matter therein, he or she
shall be indemnified by the Corporation against reasonable Expenses incurred by
or on behalf of him or her in connection therewith. The Corporation shall pay
such Expenses to the Executive (net of all Expenses, if any, previously advanced
to the Executive pursuant to Section 10.2), or to such other person or entity as
the Executive may designate in writing to the Corporation, within ten (10) days
after the receipt of the Executive's written request therefor, without regard to
the provisions of Section 10.3. In the event the Corporation refuses to pay such
requested Expenses the Executive may petition a court to order the Corporation
to make such payment pursuant to Section 10.4.
(c) Notwithstanding any other provision contained in this
Article X to the contrary, the Corporation shall not:
(i) indemnify, contribute or advance Expenses to an
Executive with respect to any Action initiated or brought voluntarily by the
Executive and not by way of defense, except with respect to Actions:
(1) brought to establish or enforce a right to
indemnification, contribution and/or an advance of Expenses under Section 10.4,
<PAGE>
18
under the Statute as it may then be in effect or under any other applicable
statute or law or otherwise as required;
(2) initiated or brought voluntarily by an
Executive to the extent such Executive is successful on the merits or otherwise
in connection with such an Action in accordance with and pursuant to Section
10.1(b); or
(3) as to which the Board determines it be
appropriate.
(ii) indemnify an Executive against judgments,
fines or penalties incurred in a Derivative Action if the Executive is finally
adjudged liable to the Corporation by a court (unless the court before which
such Derivative Action was brought determines that the Executive is fairly and
reasonably entitled to indemnity for any or all of such judgments, fines or;
(iii) indemnify an Executive under this Article X for any
amounts paid in settlement of any Action effected without the Corporation's
written consent.
(d) The Corporation shall not settle any Action in any manner
which would impose any Liabilities or other type of limitation on the Executive
without the Executive's written consent. Neither the Corporation nor the
Executive shall unreasonably withhold their consent to any proposed settlement.
(e) An Executive's conduct with respect to an employee benefit
plan sponsored by or otherwise associated with the Corporation and/or an
Affiliate for a purpose he or she reasonably believes to be in the interests of
the participants in and beneficiaries of such plan is conduct that does not
constitute a breach or failure to perform his or her duties to the Corporation
or an Affiliate, as the case may be.
10.3. Advance for Expenses. (a) The Corporation shall pay to an
Executive, or to such other person or entity as the Executive may designate in
writing to the Corporation, his or her reasonable Expenses incurred by or on
behalf of such Executive in connection with any Action, or claim, issue or
matter associated with any such Action, in advance of the final disposition or
conclusion of any such Action (or claim, issue or matter associated with any
such Action), within ten (10) days after the receipt of the Executive's written
request therefor; provided, the following conditions are satisfied:
(i) the Executive has first requested an advance of such
Expenses in writing (and delivered a copy of such request to the Corporation)
from the insurance carrier(s), if any, to whom a claim has been reported
under an applicable insurance policy purchased by the Corporation and each such
insurance carrier, if any, has declined to make such an advance;
(ii) the Executive furnishes to the Corporation an
executed written certificate affirming his or her good faith belief that he or
she has not engaged in misconduct which constitutes a Breach of Duty; and
(iii) the Executive furnishes to the Corporation an
executed written agreement to repay any advances made under this Section 10.2 if
it is ultimately determined that he or she is not entitled to be indemnified
by the Corporation for such Expenses pursuant to this Article X.
<PAGE>
19
(b) If the Corporation makes an advance of Expenses to an
Executive pursuant to this Section 10.2, the Corporation shall be subrogated to
every right of recovery the Executive may have against any insurance carrier
from whom the Corporation has purchased insurance for such purpose.
10.4. Determination of Right to Indemnification. (a) Except as
otherwise set forth in this Section 10.3 or in Section 10.1(c), any
indemnification to be provided to an Executive by the Corporation under Section
10.1(a) upon the final disposition or conclusion of any Action, or any claim,
issue or matter associated with any such Action, unless otherwise ordered by a
court, shall be paid by the Corporation to the Executive (net of all Expenses,
if any, previously advanced to the Executive pursuant to Section 10.2), or to
such other person or entity as the Executive may designate in writing to the
Corporation, within sixty (60) days after the receipt of the Executive's written
request therefor. Such request shall include an accounting of all amounts for
which indemnification is being sought. No further corporate authorization for
such payment shall be required other than this Section 10.3(a).
(b) Notwithstanding the foregoing, the payment of such
requested indemnifiable amounts pursuant to Section 10.1(a) may be denied by the
Corporation if:
(i) the Board by a majority vote thereof determines
that the Executive has engaged in misconduct which constitutes a Breach of Duty;
or
(ii) a majority of the directors of the Corporation
is party in interest to such Action.
(c) In either event of nonpayment pursuant to Section 10.3(b),
the Board shall immediately authorize and direct, by resolution, that an
independent determination be made as to whether the Executive has engaged in
misconduct which constitutes a Breach of Duty and, therefore, whether
indemnification of the Executive is proper pursuant to this Article X.
(d) Such independent determination shall be made, at the
option of the Executive(s) seeking indemnification, by (i) a panel of three
arbitrators (selected as set forth below in Section 10.3(f) from the panels of
arbitrators of the American Arbitration Association) in New York, New York, in
accordance with the Commercial Arbitration Rules then prevailing of the American
Arbitration Association; (ii) an independent legal counsel mutually selected by
the Executive(s) seeking indemnification and the Board by a majority vote of a
quorum thereof consisting of directors who were not parties in interest to such
Action (or, if such quorum is not obtainable, by the majority vote of the entire
Board); or (iii) a court in accordance with Section 10.4.
(e) In any such determination there shall exist a rebuttable
presumption that the Executive has not engaged in misconduct which constitutes a
Breach of Duty and is, therefore, entitled to indemnification hereunder. The
burden of rebutting such presumption by clear and convincing evidence shall be
on the Corporation.
(f) If a panel of arbitrators is to be employed hereunder, one
<PAGE>
20
of such arbitrators shall be selected by the Board by a majority vote of a
quorum thereof consisting of directors who were not parties in interest to such
Action (or, if such quorum is not obtainable, by an independent legal counsel
chosen by the majority vote of the entire Board), the second by the Executive(s)
seeking indemnification and the third by the previous two arbitrators.
(g) The Authority shall make its independent determination
hereunder within sixty (60) days of being selected and shall simultaneously
submit a written opinion of its conclusions to both the Corporation and the
Executive.
(h) If the Authority determines that an Executive is entitled
to be indemnified for any amounts pursuant to this Article X, the Corporation
shall pay such amounts to the Executive (net of all Expenses, if any, previously
advanced to the Executive pursuant to Section 10.2), including interest thereon
as provided in Section 10.6(c), or to such other person or entity as the
Executive may designate in writing to the Corporation, within ten (10) days of
receipt of such opinion.
(i) The Expenses associated with the indemnification process
set forth in this Section 10.3, including, without limitation, the Expenses of
the Authority selected hereunder, shall be paid by the Corporation.
10.5. Court-Ordered Indemnification and Advance for Expenses. (a) An
Executive may, either before or within two years after a determination, if any,
has been made by the Authority, petition the court before which such Action was
brought or any other court of competent jurisdiction to independently determine
whether or not he or she has engaged in misconduct which constitutes a Breach of
Duty and is, therefore, entitled to indemnification under the provisions of this
Article X. Such court shall thereupon have the exclusive authority to make such
determination unless and until such court dismisses or otherwise terminates such
proceeding without having made such determination. An Executive may petition a
court under this Section 10.4 either to seek an initial determination by the
court as authorized by Section 10.3(d) or to seek review by the court of a
previous adverse determination by the Authority.
(b) The court shall make its independent determination
irrespective of any prior determination made by the Authority; provided,
however, that there shall exist a rebuttable presumption that the Executive has
not engaged in misconduct which constitutes a Breach of Duty and is therefore
entitled to indemnification hereunder. The burden of rebutting such presumption
by clear and convincing evidence shall be on the Corporation.
(c) In the event the court determines that an Executive has
engaged in misconduct which constitutes a Beach of Duty, it may nonetheless
order indemnification to be paid by the Corporation if it determines that the
Executive is fairly and reasonably entitled to indemnification in view of all of
the circumstances of such Action.
(d) In the event the Corporation does not (i) advance Expenses
to the Executive within ten (10) days of such Executive's compliance with
Section 10.2; or (ii) indemnify an Executive with respect to requested Expenses
under Section 10.1(b) within ten (10) days of such Executive's written request
therefor, the Executive may petition the court before which such Action was
brought, if any, or any other court of competent jurisdiction to order the
Corporation to pay such reasonable Expenses immediately. Such court, after
<PAGE>
21
giving any notice it considers necessary, shall order the Corporation to pay
such Expenses if it determines that the Executive has complied with the
applicable provisions of Section 10.2 or 10.1(b), as the case may be.
(e) If the court determines pursuant to this Section 10.4 that
the Executive is entitled to be indemnified for any Liabilities and/or Expenses,
or to the advance of Expenses, unless otherwise ordered by such court, the
Corporation shall pay such Liabilities and/or Expenses to the Executive (net of
all Expenses, if any, previously advanced to the Executive pursuant to Section
10.2), including interest thereon as provided in Section 10.6(c) or to such
other person or entity as the Executive may designate in writing to the
Corporation, within ten (10) days of the rendering of such determination.
(f) An Executive shall pay all Expenses incurred by such
Executive in connection with the judicial determination provided in this Section
10.4, unless it shall ultimately be determined by the court that he or she is
entitled, in whole or in part, to be indemnified by, or to receive an advance
from, the Corporation as authorized by this Article X. All Expenses incurred by
an Executive in connection with any subsequent appeal of the judicial
determination provided for in this Section 10.4 shall be paid by the Executive
regardless of the disposition of such appeal.
10.6. Termination of an Action Is Nonconclusive. The adverse
termination of any Action against an Executive by judgment, order, settlement or
conviction, or upon a plea of no contest or its equivalent, shall not, of
itself, create a presumption that the Executive has engaged in misconduct which
constitutes a Breach of Duty.
10.7. Partial Indemnification; Reasonableness; Interest. (a) If it is
determined by the Authority, or by a court, that an Executive is entitled to
indemnification as to some claims, issues or matters, but not as to other
claims, issues or matters, involved in any Action, the Authority, or the court,
shall authorize the proration and payment by the Corporation of such Liabilities
and/or reasonable Expenses with respect to which indemnification is sought by
the Executive, among such claims, issues or matters as the Authority, or the
court, shall deem appropriate in light of all of the circumstances of such
Action.
(b) If it is determined by the Authority, or by a court, that
certain Expenses incurred by or on behalf of an Executive are for whatever
reason unreasonable in amount, the Authority, or the court, shall nonetheless
authorize indemnification to be paid by the Corporation to the Executive for
such Expenses as the Authority, or the court, shall deem reasonable in light of
all of the circumstances of such Action.
(c) Interest shall be paid by the Corporation to an Executive,
to the extent deemed appropriate by the Authority, or by a court, at a
reasonable interest rate, for amounts for which the Corporation indemnifies or
advances to the Executive.
10.8. Insurance; Subrogation. (a) The Corporation may purchase and
maintain insurance on behalf of any person who is or was an Executive of the
Corporation, and/or is or was serving as an Executive of an Affiliate, against
Liabilities and/or Expenses asserted against him or her and/or incurred by or on
behalf of him or her in any such capacity or arising out of his or her status as
such an Executive, whether or not the Corporation would have the power to
<PAGE>
22
indemnify him or her against such Liabilities and/or Expenses under this Article
X or under the Statute as it may then be in effect. Except as expressly provided
herein, the purchase and maintenance of such insurance shall not in any way
limit or affect the rights and obligations of the Corporation and/or any
Executive under this Article X. Such insurance may, but need not, be for the
benefit of all Executives of the Corporation and those serving as an Executive
of an Affiliate.
(b) If an Executive shall receive payment from any insurance
carrier or from the plaintiff in any Action against such Executive in respect of
indemnified amounts after payments on account of all or part of such indemnified
amounts have been made by the Corporation pursuant to this Article X, such
Executive shall promptly reimburse the Corporation for the amount, if any, by
which the sum of such payment by such insurance carrier or such plaintiff and
payments by the Corporation to such Executive exceeds such indemnified amounts;
provided, however, that such portions, if any, of such insurance proceeds that
are required to be reimbursed to the insurance carrier under the terms of its
insurance policy, such as deductible, retention or coinsurance-insurance
amounts, shall not be deemed to be payments to such Executive hereunder.
(c) Upon payment of indemnified amounts under this Article X,
the Corporation shall be subrogated to such Executive's rights against any
insurance carrier in respect of such indemnified amounts and the Executive shall
execute and deliver any and all instruments and/or documents and perform any and
all other acts or deeds which the Corporation shall deem necessary or advisable
to secure such rights. The Executive shall do nothing to prejudice such rights
of recovery or subrogation.
10.9. Witness Expenses. The Corporation shall advance or reimburse any
and all reasonable Expenses incurred by or on behalf of an Executive in
connection with his or her appearance as a witness in any Action at a time when
he or she has not been formally named a defendant or respondent to such an
Action, within ten (10) days after the receipt of an Executive's written request
therefor.
10.10. Contribution. (a) Subject to the limitations of this Section
10.9, if the indemnity provided for in Section 10.1 is unavailable to an
Executive for any reason whatsoever, the Corporation, in lieu of indemnifying
the Executive, shall contribute to the amount incurred by or on behalf of the
Executive, whether for Liabilities and/or for reasonable Expenses in connection
with any Action in such proportion as deemed fair and reasonable by the
Authority, or by a court, in light of all of the circumstances of any such
Action, in order to reflect:
(i) the relative benefits received by the Corporation
and the Executive as a result of the event(s) and/or transaction(s) giving cause
to such Action; and/or
(ii) the relative fault of the Corporation (and its
other Executives, employees and/or agents) and the Executive in connection with
such event(s) and/or transaction(s).
(b) The relative fault of the Corporation (and its other
Executives, employees and/or agents) on the one hand, and of the Executive, on
the other hand, shall be determined by reference to, among other things, the
parties' relative intent, knowledge, access to information and opportunity to
<PAGE>
23
correct or prevent the circumstances resulting in such Liabilities and/or
Expenses. The Corporation agrees that it would not be just and equitable if
contribution pursuant to this Section 10.9 were determined by pro rata
allocation or any other method of allocation which does not take into account
the foregoing equitable considerations.
(c) An Executive shall not be entitled to contribution from
the Corporation under this Section 10.9 in the event it is determined by the
Authority, or by a court, that the Executive has engaged in misconduct which
constitutes a Breach of Duty.
(d) The Corporation's payment of, and an Executive's right to,
contribution under this Section 10.9 shall be made and determined in accordance
with and pursuant to the provisions in Sections 10.3 and/or 10.4 relating to the
Corporation's payment of, and the Executive's right to, indemnification under
this Article X.
10.11. Indemnification of Employees. Unless otherwise specifically set
forth in this Article X, the Corporation shall indemnify and hold harmless any
person who is or was a party, or is threatened to be made a party to any Action
by reason of his or her status as, or the fact that he or she is or was an
employee or authorized agent or representative of the Corporation and/or an
Affiliate as to acts performed in the course and within the scope of such
employee's, agent's or representative's duties to the Corporation and/or an
Affiliate, in accordance with and to the fullest extent permitted by the Statute
as it may then be in effect.
10.12. Severability. If any provision of this Article X shall be deemed
invalid or inoperative, or if a court of competent jurisdiction determines that
any of the provisions of this Article X contravenes public policy, this Article
X shall be construed so that the remaining provisions shall not be affected, but
shall remain in full force and effect, and any such provisions which are invalid
or inoperative or which contravene public policy shall be deemed, without
further Action or deed by or on behalf of the Corporation, to be modified,
amended and/or limited, but only to the extent necessary to render the same
valid and enforceable, and the Corporation shall indemnify and hold harmless an
Executive as to Liabilities and reasonable Expenses with respect to any Action
to the full extent permitted by any applicable provision of this Article X that
shall not have been invalidated and to the full extent otherwise permitted by
the Statute as it may then be in effect.
10.13. Nonexclusivity of Article X. The right to indemnification,
contribution and advancement of Expenses provided to an Executive by this
Article X shall not be deemed exclusive of any other rights to indemnification,
contribution and/or advancement of Expenses which any Executive or other
employee or agent of the Corporation and/or of an Affiliate may be entitled
under any charter provision, written agreement, resolution, vote of stockholders
or disinterested directors of the Corporation or otherwise, including, without
limitation, under the Statute as it may then be in effect, both as to acts in
his or her official capacity as such Executive or other employee or agent of the
Corporation and/or of an Affiliate or as to acts in any other capacity while
holding such office or position, whether or not the Corporation would have the
power to indemnify, contribute and/or advance Expenses to the Executive under
this Article X or under the Statute: provided that it is not determined that the
Executive or other employee or agent has engaged in misconduct which constitutes
a Breach of Duty.
10.14. Notice to the Corporation; Defense of Actions. (a) An Executive
<PAGE>
24
shall promptly notify the Corporation in writing upon being served with or
having actual knowledge of any citation, summons, complaint, indictment or any
other similar document relating to any Action which may result in a claim of
indemnification, contribution or advancement of Expenses hereunder, but the
omission so to notify the Corporation will not relieve the Corporation from any
liability which it may have to the Executive otherwise than under this Agreement
unless the Corporation shall have been irreparably prejudiced by such omission.
(b) With respect to any such Action as to which an Executive
notifies the Corporation of the commencement thereof:
(i) The Corporation shall be entitled to participate
therein at its own expense; and
(ii) Except as otherwise provided below, to the
extent that it may wish, the Corporation ( or any other indemnifying party,
including any insurance carrier, similarly notified by the Corporation or the
Executive) shall be entitled to assume the defense thereof, with counsel
selected by the Corporation (or such other indemnifying party) and reasonably
satisfactory to the Executive.
(c) After notice from the Corporation (or such other
indemnifying party) to the Executive of its election to assume the defense of an
Action, the Corporation shall not be liable to the Executive under this Article
X for any Expenses subsequently incurred by the Executive in connection with the
defense thereof other than reasonable costs of investigation or as otherwise
provided below. The Executive shall have the right to employ his or her own
counsel in such Action but the Expenses of such counsel incurred after notice
from the Corporation (or such other indemnifying party) of its assumption of the
defense thereof shall be at the expense of the Executive unless (i) the
employment of counsel by the Executive has been authorized by the Corporation;
(ii) the Executive shall have reasonably concluded that there may be a conflict
of interest between the Corporation (or such other indemnifying party) and the
Executive in the conduct of the defense of such Action; or (iii) the Corporation
(or such other indemnifying party) shall not in fact have employed counsel to
assume the defense of such Action, in each of which cases the Expenses of
counsel shall be at the expense of the Corporation. The Corporation shall not be
entitled to assume the defense of any Derivative Action or any Action as to
which the Executive shall have made the conclusion provided for in clause (ii)
above.
10.15. Continuity of Rights and Obligations. The terms and provisions
of this Article X shall continue as to an Executive subsequent to his or her
Termination Date and such terms and provisions shall inure to the benefit of the
heirs, estate, executors and administrators of such Executive and the successors
and assigns of the Corporation, including, without limitation any successor to
the Corporation by way of merger, consolidation and/or sale or disposition of
all or substantially all of the assets or capital stock of the Corporation.
Except as provided herein, all rights and obligations of the Corporation and the
Executive hereunder shall continue in full force and effect despite the
subsequent amendment or modification of the Corporation's Certificate of
InCorporation, as it is in effect on the date hereof, and such rights and
obligations shall not be affected by any such amendment or modification, any
resolution of directors or stockholders of the Corporation, or by any other
corporate action which conflicts with or purports to amend, modify, limit or
eliminate any of the rights or obligations of the Corporation and/or of the
Executive hereunder.
<PAGE>
25
10.16. Amendment. (a) This Article X may only be altered, amended or
repealed by the affirmative vote of a majority of the stockholders of the
Corporation so entitled to vote; provided, however, that the Board may alter or
amend this Article X without such stockholder approval if any such alteration or
amendment:
(i) is made in order to conform to any amendment or
revision of the Delaware General Corporation Law, including, without limitation,
the Statute, which (A) expands or permits the expansion of an Executive's right
to indemnification thereunder ; (B) limits or eliminates, or permits the
limitation or elimination, of the liability of the Executives; or (C) is
otherwise beneficial to the Executives; or
(ii) in the sole judgment and discretion of the
Board, does not materially adversely affect the rights and protections of the
stockholders of the Corporation.
(b) Any repeal, modification or amendment of this Article X
shall not adversely affect any rights or protections of an Executive existing
under this Article X immediately prior to the time of such repeal, modification
or amendment.
10.17. Certain Definitions. The following terms as used in this
Article X shall be defined as follows:
(a) "Action(s)" shall include, without limitation, any
threatened, pending or completed action, claim, litigation, suit or proceeding,
whether civil, criminal, administrative, arbitrative or investigative, whether
predicated on foreign, federal, state or local law, whether brought under and/or
predicated upon the Securities Act of 1933, as amended, and/or the Securities
Exchange Act of 1934, as amended, and/or their respective state counterparts
and/or any rule or regulation promulgated thereunder, whether a Derivative
Action and/or whether formal or informal.
(b) "Affiliate" shall include, without limitation, any
Corporation, partnership, joint venture, employee benefit plan, trust, or other
similar enterprise that directly or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control with,
the Corporation.
(c) "Authority" shall mean the panel of arbitrators or
independent legal counsel selected pursuant to Section 10.3 .
(d) "Board" shall mean the Board of Directors of the
Corporation.
(e) "Breach of Duty" shall mean the Executive breached or
failed to perform his or her duties to the Corporation or an Affiliate, as the
case may be, and the Executive's breach of or failure to perform those duties
constituted:
(i) a breach of his or her "duty of loyalty" (as defined
herein) to the Corporation or its stockholders;
(ii) acts or omissions not in "good faith" (as further
<PAGE>
26
defined herein) or which involve intentional misconduct or a knowing violation
of the law;
(iii) a violation of Section 174 of the Delaware
General Corporation Law; or
(iv) a transaction from which the Executive derived
an improper direct personal financial profit (unless such profit is determined
to be immaterial in light of all the circumstances).
In determining whether an Executive has acted or omitted to act otherwise than
in "good faith," as such term is used herein, the Authority, or the court, shall
determine solely whether such Executive (i) in the case of conduct in his or her
"official capacity" (as defined herein) with the Corporation, believed in the
exercise of his or her business judgment that his or her conduct was in the best
interests of the Corporation; and (ii) in all other cases reasonably believed
that his or her conduct was at least not opposed to the best interests of the
Corporation.
(f) "Derivative Action" shall mean any Action brought by or in
the right of the Corporation and/or an Affiliate.
(g) "Duty of loyalty" shall mean a breach of fiduciary duty by
an Executive which constitutes a willful failure to deal fairly with the
Corporation or its stockholders in connection with a transaction in which the
Executive has a material undisclosed personal conflict of interest.
(h) "Executive(s)" shall mean any individual who is, was or
has agreed to become a director and/or officer of the Corporation and/or an
Affiliate.
(i) "Expenses" shall include, without limitation, any and all
expenses, fees, costs, charges, attorneys' fees and disbursements, other
out-of-pocket costs, reasonable compensation for time spent by the Executive in
connection with the Action for which he or she is not otherwise compensated by
the Corporation, any Affiliate, any third party or other entity and any and all
other direct and indirect costs of any type or nature whatsoever.
(j) "Liabilities" shall include, without limitation,
judgments, amounts incurred in settlement, fines, penalties and, with respect to
any employee benefit plan, any excise tax or penalty incurred in connection
therewith, and any and all other liabilities of every type or nature whatsoever.
(k) "Official capacity" shall mean the office of director or
officer in the Corporation, membership on any committee of directors, any other
offices in the Corporation held by an Executive and any other employment or
agency relationship between the Executive and the Corporation and "official
capacity," as such term is used herein, shall not include service for any
Affiliate or other foreign or domestic Corporation or any partnership, joint
venture, trust, employee benefit plan, or other enterprise.
(l) "Statute" shall mean Delaware General Corporation Law
Section 145 (for any successor provisions).
(m) "Termination Date" shall mean the date an Executive
<PAGE>
27
ceases, for whatever reason, to serve in an employment relationship with the
Company and/or any Affiliate.
XI. NOTICES
11.1. Notices. Except as otherwise specifically provided herein or
required by law, all notices required to be given to any stockholder, director,
officer, employee, or agent shall be in writing and may in every instance be
effectively given by hand delivery to the recipient thereof, by depositing such
notice in the mails, postage paid, recognized overnight delivery service or by
sending such notice by facsimile, receipt acknowledged, or by prepaid telegram
or mailgram. Any such notice shall be addressed to such stockholder, director,
officer, employee or agent at his or her last known address as the same appears
on the books of the Corporation. The time when such notice is received, if hand
delivered, or dispatched, if delivered through the mails or by telegram or
mailgram, shall be the time of the giving of the notice.
11.2. Waivers. A written waiver of any notice, signed by a stockholder,
director, officer, employee, or agent, whether before or after the time of the
event for which notice is to be given, shall be deemed equivalent to the notice
required to be given to such stockholder, director, officer, employee, or agent.
Neither the business nor the purpose of any meeting need be specified in such a
waiver. Attendance at any meeting shall constitute waiver of notice except
attendance for the sole purpose of objecting to the timeliness of notice.
ARTICLE XII. MISCELLANEOUS
12.1. Facsimile Signatures. In addition to the provisions for use of
facsimile signatures elsewhere specifically authorized in these bylaws,
facsimile signatures of any officer or officers of the Corporation may be used
whenever and as authorized by the Board of Directors or a committee thereof.
12.2. Corporate Seal. The Board of Directors may provide a suitable
seal, containing the name of the Corporation, which seal shall be in the charge
of the Secretary. If and when so directed by the Board of Directors or a
committee thereof, duplicates of the seal may be kept and used by the Treasurer
or by an Assistant Secretary or Assistant Treasurer.
12.3. Reliance upon Books, Reports, and Records. Each director, each
member of any committee designated by the Board of Directors, and each officer
of the Corporation shall, in the performance of his or her duties, be fully
protected in relying in good faith upon the books of account or other records of
the Corporation and upon such information, opinions, reports, or statements
presented to the Corporation by any of its officers or employees, or committees
of the Board of Directors so designated, or by any other person as to matters
which such director or committee member reasonably believes are within such
other person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Corporation.
12.4. Fiscal Year. The fiscal year of the Corporation shall be as
fixed by the Board of Directors.
12.5. Time Periods. In applying any provision of these bylaws which
requires that an act be done or not be done a specified number of days prior to
<PAGE>
28
an event or that an act be done during a period of a specified number of days
prior to an event, calendar days shall be used, the day of the doing of the act
shall be excluded, and the day of the event shall be included.
CERTIFICATE OF ELIMINATION WITH
RESPECT TO THE SERIES B CUMULATIVE REDEEMABLE
CONVERTIBLE PREFERRED STOCK OF TEREX CORPORATION
PURSUANT TO SECTION 151(g)
In accordance with Section 151(g) of the General Corporation Law of the State of
Delaware, Terex Corporation, a Delaware corporation (the "Company"), does hereby
certify that the following resolutions respecting its Series B Cumulative
Redeemable Convertible Preferred Stock (the "Series B Preferred Stock") were
duly adopted by the Company's Board of Directors:
RESOLVED, all of its issued and outstanding Series B Preferred
Stock have been converted to common stock of the Company in
accordance with their terms and that no shares of the
Company's Series B Preferred Stock are outstanding and that no
shares of the Series B Preferred Stock will be issued subject
to the certificate of designations previously filed with
respect to the Series B Preferred Stock.
RESOLVED, that the officers of the Company are directed to
file with the Secretary of State of the State of Delaware a
certificate pursuant to Section 151(g) of the General
Corporation Law of the State of Delaware setting forth these
resolutions in order to eliminate from the Company's
certificate of incorporation all matters set forth in the
certificate of designations with respect to the Series B
Preferred Stock.
IN WITNESS WHEREOF, Terex Corporation has caused this certificate to be signed
by its Senior Vice President this 23rd day of March, 1998.
TEREX CORPORATION
By:_______________________________
Eric I Cohen
Senior Vice President
TEREX CORPORATION
$250,000,000
13 1/4% Senior Secured Notes due 2002
Series A and Series B
---------------------------------
FIFTH SUPPLEMENTAL INDENTURE
Dated as of February 18, 1998
--------------------------------
UNITED STATES TRUST COMPANY OF NEW YORK,
Trustee
<PAGE>
1
FIFTH SUPPLEMENTAL INDENTURE
FIFTH SUPPLEMENTAL INDENTURE, dated as of February 18, 1998, between
TEREX CORPORATION, a Delaware corporation (the "Company"), and UNITED STATES
TRUST COMPANY OF NEW YORK, a New York corporation, as trustee (the "Trustee").
WHEREAS, the Company, and CMH Acquisition Corp., Clark Material
Handling Company, CMH Acquisition International Corp., Koehring Cranes, Inc.,
Legris Industries, Inc., PPM Cranes, Inc., as guarantors (collectively, the
"Original Guarantors") and the Trustee are parties to an Indenture, dated as of
May 9, 1995 (said Indenture, as it may heretofore or hereafter from time to time
be amended, the "Indenture") providing for the issuance of the Company's 13 1/4%
Series A Senior Secured Notes due 2002 and the Company's 13-1/4% Series B Senior
Secured Notes due 2002 (collectively, the "Notes");
WHEREAS, the Company and the Trustee entered into a First Supplemental
Indenture, dated as of April 7, 1997, pursuant to which Terex-Telelect Inc.,
Terex Aerial Inc., Terex Atlantico Inc., Terex-Ro Corporation, Terex West Coast
Inc., and Terex Aviation Ground Equipment Inc. became additional guarantors
under the Indenture (the "Additional Guarantors");
WHEREAS, the Company and the Trustee entered into a Second
Supplemental Indenture, dated as of April 14, 1997, pursuant to which Terex
Baraga Products, Inc. and M & M Enterprises of Baraga, Inc. (the "Baraga
Guarantors") became additional guarantors under the Indenture;
WHEREAS, the Company and the Trustee entered into a Third Supplemental
Indenture, dated as of December 9, 1997, pursuant to which Terex Cranes, Inc.
(formerly known as Terex/PPM Cranes Holdings, Inc.) ("Terex Cranes") became an
additional guarantor under the Indenture;
WHEREAS, the Company and the Trustee entered into a Fourth
Supplemental Indenture, dated as of January 5, 1998, pursuant to which Payhauler
Corp. and Progressive Components, Inc. became additional guarantors under the
Indenture (together with the Original Guarantors, the Additional Guarantors, the
Baraga Guarantors and Terex Cranes, the "Guarantors"); and
WHEREAS, holders of at least a majority of the principal amount of the
Notes outstanding have consented in writing to certain amendments to the
Indenture pursuant to Section 9.2 thereof, and the Company, the Guarantors and
the Trustee desire to make such amendments to the Indenture.
NOW, THEREFORE, the Company, the Guarantors and the Trustee agree as
follows for the equal and ratable benefit of the Holders of the Notes.
<PAGE>
2
ARTICLE 1
AMENDMENT TO THE INDENTURE
Section 1.01. Article 1 of the Indenture is hereby amended as follows:
(a) The following definitions are hereby deleted: Acquired Debt,
Acquisition, Acquisition Agreement, Capital Lease Obligation, Cash Equivalent,
Consolidated EBITDA, Consolidated Interest Expense, Consolidated Net Income,
Consolidated Net Worth, Eligible Inventory, Eligible Receivables, Existing
Credit Facility, Floor Plan Guaranty, Interest Coverage Ratio, Net Assets, Net
Income, Permitted Investments, Permitted Proceeds, PPM Funded Debt, PPM
Subordinated Note, Restricted Investment, Revolving Credit Facility and Weighted
Average Life to Maturity.
(b) The definition of "Permitted Liens" is hereby amended by (i)
inserting on the third to last line thereof after the words "leases and
subleases," a new clause (xii) which shall read as follows: "(xii) Liens junior
to the Liens granted by the Company or any of its Subsidiaries on any of their
respective properties, assets or revenues pursuant to the Security Documents,"
(ii) renumbering current clause (xii) as clause (xiii) and (iii) changing the
number "(xi)" on the last line thereof to the number "(xii)."
(c) The definition of "Purchase Money Liens" is hereby amended in its
entirety to read as follows:
"Purchase Money Liens" means (i) Liens to secure or
securing Purchase Money Obligations and (ii) Liens to secure
Indebtedness issued in exchange for, or the proceeds of which
are contemporaneously used to extend, refinance, renew,
replace, or refund outstanding Indebtedness of the Company or
any of its Restricted Subsidiaries incurred solely to
refinance Purchase Money Obligations provided that such
refinancing indebtedness is incurred no later than 180 days
after the satisfaction of such Purchase Money Obligations.
(d) Section 1.2 is hereby amended by (i) deleting the references to
"Affiliate Transaction," "Excess Proceeds," "Purchase Money Indebtedness,"
"Refinance," "Refinance Indebtedness" and "Restricted Payments" and (ii)
changing the references to "Excess Proceeds Offer," "Excess Proceeds Offer
Period" and "Excess Proceeds Payment Date" to "Net Proceeds Offer," "Net
Proceeds Offer Period" and "Net Proceeds Payment Date," respectively.
Section 1.02. Articles 4, 5, 6 and 8 of the Indenture are hereby
amended as follows:
(a) Sections 4.7, 4.8, 4.9, 4.11, 4.15 and 4.16 are hereby deleted in
their entirety.
(b) Section 4.10 is hereby amended in its entirety to read as follows:
<PAGE>
3
Section 4.10. Purchase of Notes Following Asset Sales.
If the Company or any Restricted Subsidiary (i)
elects to make an Asset Sale on such terms as it may
determine in its sole discretion and (ii) further elects to
offer to purchase the Notes with any or all of the Net
Proceeds of such Asset Sale (the "Net Proceeds Offer"), the
Company shall offer to purchase Notes having an aggregate
principal amount equal to the Net Proceeds of such Asset
Sale that the Company elects to apply to the purchase of
Notes (the "Purchase Amount"), at a purchase price equal to
100% of the aggregate principal amount thereof, plus accrued
and unpaid interest, if any, to the purchase date.
The Net Proceeds Offer shall remain open for a
period of 20 Business Days and no longer, unless a longer
period is required by law (the "Net Proceeds Offer Period").
Promptly after the termination of the Net Proceeds Offer
Period (the "Net Proceeds Payment Date"), the Company shall
purchase and mail or deliver payment for the Purchase Amount
for the Notes or portions thereof tendered, pro rata or by
such other method as may be required by law, or, if less
than the Purchase Amount has been tendered, all Notes
tendered pursuant to the Net Proceeds Offer. The principal
amount of Notes to be purchased pursuant to a Net Proceeds
Offer may be reduced by the principal amount of Notes
acquired by the Company through purchase or redemption
(other than pursuant to a Change of Control Offer)
subsequent to the date of an Asset Sale and surrendered to
the Trustee for cancellation.
The Net Proceeds Offer shall be conducted in
compliance with all applicable laws, including (without
limitation), Regulation 14E of the Exchange Act and the
rules thereunder and all other applicable Federal and state
securities laws.
The Company shall commence the Net Proceeds Offer
by mailing to the Trustee and each Holder, at such Holder's
last registered address, a notice, which shall govern the
terms of the Net Proceeds Offer, and shall state:
(1) that the Net Proceeds Offer is being made
pursuant to this Section 4.10, the principal amount of Notes
which shall be accepted for payment and that all Notes
validly tendered shall be accepted for payment on a pro rata
basis;
(2) the purchase price and the date of purchase;
(3) that any Notes not tendered or accepted for
payment pursuant to the Net Proceeds Offer shall continue to
accrue interest;
(4) that, unless the Company defaults in the
payment of the purchase price with respect to any Notes
tendered, Notes accepted for payment pursuant to the Net
Proceeds Offer shall cease to accrue interest after the Net
Proceeds Payment Date;
(5) that Holders electing to have Notes purchased
pursuant to a Net Proceeds Offer shall be required to
surrender their Notes, with the form entitled "Option of
Holder to Elect Purchase" on the reverse of the Note
completed, to the Company prior to the close of business on
the third Business Day immediately preceding the Net
Proceeds Payment Date;
<PAGE>
4
(6) that Holders shall be entitled to withdraw
their election if the Company receives, not later than the
close of business on the second Business Day preceding the
Net Proceeds Payment Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder,
the principal amount of Notes the Holder delivered for
purchase and a statement that such Holder is withdrawing his
election to have such Notes purchased;
(7) that Holders whose Notes are purchased only in
part shall be issued Notes representing the unpurchased
portion of the Notes surrendered; provided that each Note
purchased and each new Note issued shall be in principal
amount of $1,000 or whole multiples thereof; and
(8) the instructions that Holders must follow in
order to tender their Notes.
On or before the Net Proceeds Payment Date, the Company shall (i)
accept for payment on a pro rata basis the Notes or portions thereof tendered
pursuant to the Net Proceeds Offer, (ii) deposit with the Paying Agent money
sufficient to pay the purchase price of all Notes or portions thereof so
accepted and (iii) deliver to the Trustee the Notes so accepted, together with
an Officer's Certificate stating that the Notes or portions thereof tendered to
the Company are accepted for payment. The Paying Agent shall promptly mail to
each Holder of Notes so accepted payment in an amount equal to the purchase
price of such Notes, and the Trustee shall promptly authenticate and mail to
such Holders new Notes equal in principal amount to any unpurchased portion of
the Note surrendered.
The Company shall make a public announcement of the results of the Net
Proceeds Offer as soon as practicable after the Net Proceeds Payment Date. For
the purposes of this Section 4.10, the Trustee shall act as the Paying Agent.
(c) Section 4.12 is hereby amended in its entirety to read as follows:
Section 4.12. Limitation on Liens.
(a) The Company shall not, and shall not permit any
Restricted Subsidiary to, directly or indirectly, create, incur,
assume or suffer to exist any Lien on any asset (real, personal,
tangible or intangible) now owned or hereafter acquired, or on any
income or profits therefrom, or assign or convey any right to receive
income therefrom, except (i) Liens on Accounts and Inventory and the
proceeds thereof (and contract rights and general intangibles relating
thereto and any other Mutual Collateral (as defined in the
Intercreditor Agreement)), (ii) Purchase Money Liens and (iii)
Permitted Liens.
(b) Anything in the Security Documents to the contrary
notwithstanding, the Company and its Subsidiaries may grant Liens in
accordance with this Section 4.12; provided, that no such Lien shall
affect the attachment, perfection or priority of the Lien of the
Security Documents. Subject to the foregoing, upon receipt of a
written notice from the Company or a pledging Subsidiary or another
<PAGE>
5
secured party stating that Collateral is subject to a security
interest under a security agreement executed by the pledgor which
contains a description of the security, the Trustee shall execute
appropriate instruments acknowledging that such Collateral is subject
to such other security interest.
(d) Section 4.17 is hereby amended by deleting the following clause
which begins at the end of the twenty-first line thereof and ends on the
twenty-fourth line thereof: "and such Person shall be permitted by virtue of its
Fixed Charge Coverage Ratio to incur, immediately after giving effect to such
acquisition, at least $1.00 of additional Indebtedness pursuant to Section
4.9(a) of this Indenture."
(e) Section 5.1 of the Indenture is hereby amended by (i) adding the
word "and" after Section 5.1(ii), (ii) replacing the comma and the word "and" at
the end of Section 5.1(iii) with a period, (iii) deleting Section 5.1(iv) in its
entirety and (iv) inserting a new paragraph immediately following Section
5.1(iii) which shall read as follows:
Nothing in this Section 5.1 shall be construed to prohibit a
consolidation or merger between the Company, any Guarantor and/or any
Restricted Subsidiary or among Restricted Subsidiaries or Guarantors,
nor prohibit the sale, assignment, transfer, lease, conveyance or
other disposal by the Company or any Restricted Subsidiary of all or
substantially all of its properties or assets in one or more related
transactions to any Restricted Subsidiary or to the Company.
(f) Section 6.1 of the Indenture is hereby amended by (i) changing the
reference to "Excess Proceeds Offer" in Section 6.1(2) to "Net Proceeds Offer,"
(ii) amending Section 6.1(3) in its entirety to read as follows: "(3) the
Company defaults in the performance of or breaches any of the provisions of
Sections 4.10, 4.12 or 4.14 hereof" and (iii) deleting Sections 6.1(4), 6.1(6)
and 6.1(7) in their entirety.
(g) Section 8.1 of the Indenture is hereby amended by (i) deleting the
words "(as certified by a nationally recognized accounting firm designated by
the Company)" on the sixth and seventh lines of Section 8.1(1) and inserting
therefor the words "(as certified by an Officers' Certificate delivered by the
Company)", (ii) inserting the word "and" after Section 8.1(1), (iii) deleting
Sections 8.1(2) and 8.1(3) and (iv) deleting the first sentence of the paragraph
immediately following 8.1(4) which begins with the words "Then, this Indenture"
and replacing it with a new sentence which shall read as follows:
Then, this Indenture shall cease to be of further effect (except as
provided in this paragraph), and the Trustee, on demand of the
Company, shall execute proper instruments acknowledging confirmation
of and discharge under this Indenture in the case of clause (A) above,
and the Company's ability not to comply with restrictive covenants and
related Events of Default in the case of clause (B) above, and, in the
case of clauses (A) and (B) above, the release of the Liens created
under the Security Documents.
<PAGE>
6
ARTICLE 2
MISCELLANEOUS
Section 2.01. The supplement to the Indenture effected hereby shall be
binding upon all Holders of the Securities, their transferees and assigns. All
Securities issued and outstanding on the date hereof shall be deemed to
incorporate by reference or include the supplement to the Indenture effected
hereby.
Section 2.02. All terms used in this Fifth Supplemental Indenture which
are defined in the Indenture shall have the meanings specified in the Indenture
unless the context of this Supplemental Indenture otherwise requires.
Section 2.03. This Fifth Supplemental Indenture shall become a binding
agreement between the parties when counterparts hereof shall have been executed
and delivered by each of the parties hereto. The amendments set forth in Article
1 shall become operative on the opening of business on the Acceptance Date, as
defined in the Company's Offer to Purchase and Consent Solicitation Statement,
dated February 2, 1998, relating to the Company's offer to purchase all of the
outstanding Notes.
Section 2.04. This Fifth Supplemental Indenture shall be construed,
interpreted and the rights of the parties determined in accordance with the laws
of the State of New York, as applied to contracts made and performed within the
State of New York, without regard to principles of conflicts of law.
Section 2.05. This Fifth Supplemental Indenture may be executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same amendment.
Section 2.06. The recitals contained in this Supplemental Indenture are
made by the Company and not by the Trustee and all of the provisions contained
in the Indenture, in respect of the rights, privileges, immunities, powers and
duties of the Trustee shall be applicable in respect thereof as fully and with
like effect as if set forth herein in full.
IN WITNESS WHEREOF, the parties hereto have caused this Fifth
Supplemental Indenture to be duly executed as of the date first above written.
<PAGE>
7
TEREX CORPORATION
By:___________________________
Name: Brian J. Henry
ATTEST: Title: Vice President-Finance/Treasurer
- -------------------------
Eric I Cohen, Secretary
UNITED STATES TRUST COMPANY
OF NEW YORK, as Trustee
By:______________________________
Name:
ATTEST: Title:
- -------------------------
GUARANTORS:
KOEHRING CRANES, INC.
By:____________________________
Name: Brian J. Henry
ATTEST: Title: Treasurer
- --------------------------
Eric I Cohen, Secretary
PPM CRANES, INC.
By:___________________________________
Name: Brian J. Henry
ATTEST: Title: Treasurer
- ---------------------------
Eric I Cohen, Secretary
<PAGE>
8
TEREX-TELELECT INC.
By:___________________________________
Name: Brian J. Henry
ATTEST: Title: Treasurer
- ---------------------------
Eric I Cohen, Secretary
TEREX AERIALS INC.
By:________________________________
Name: Brian J. Henry
ATTEST: Title: Treasurer
- --------------------------
Eric I Cohen, Secretary
TEREX WEST COAST INC.
By:________________________________
Name: Brian J. Henry
ATTEST: Title: Treasurer
- --------------------------
Eric I Cohen, Secretary
TEREX ATLANTICO, INC.
By:_________________________________
Name: Brian J. Henry
ATTEST: Title: Treasurer
- --------------------------
Eric I Cohen, Secretary
<PAGE>
9
TEREX AVIATION GROUND EQUIPMENT INC.
By:________________________________
Name: Brian J. Henry
ATTEST: Title: Treasurer
- --------------------------
Eric I Cohen, Secretary
TEREX-RO CORPORATION
By:________________________________
Name: Brian J. Henry
ATTEST: Title: Treasurer
- --------------------------
Eric I Cohen, Secretary
TEREX CRANES, INC.
By:________________________________
Name: Brian J. Henry
ATTEST: Title: Treasurer
- --------------------------
Eric I Cohen, Secretary
PAYHAULER CORP.
By:________________________________
Name: Brian J. Henry
ATTEST: Title: Treasurer
- --------------------------
Eric I Cohen, Secretary
<PAGE>
10
TEREX BARAGA PRODUCTS, INC.
By:________________________________
Name: Brian J. Henry
ATTEST: Title: Treasurer
- --------------------------
Eric I Cohen, Secretary
M & M ENTERPRISES OF BARAGA, INC.
By:_______________________________
Name: Brian J. Henry
ATTEST: Title: Treasurer
- --------------------------
Eric I Cohen, Secretary
PROGRESSIVE COMPONENTS, INC.
By:_______________________________
Name: Brian J. Henry
ATTEST: Title: Treasurer
- --------------------------
Eric I Cohen, Secretary
<PAGE>
---------------------------------------------------------------------------
CREDIT AGREEMENT
dated as of March 6, 1998
among
TEREX CORPORATION,
CERTAIN OF ITS SUBSIDIARIES,
THE LENDERS NAMED HEREIN,
CREDIT SUISSE FIRST BOSTON,
as Administrative Agent,
BANKBOSTON N.A.,
as Syndication Agent,
and
CANADIAN IMPERIAL BANK OF COMMERCE and
FIRST UNION NATIONAL BANK
as Co-Documentation Agents
- -----------------------------------------------------------------------------
<PAGE>
1
TABLE OF CONTENTS
ARTICLE I
Definitions Page
SECTION 1.01. Defined Terms............................................... 2
SECTION 1.02. Terms Generally............................................. 28
SECTION 1.03. Exchange Rates.............................................. 29
ARTICLE II
The Credits
SECTION 2.01. Commitments................................................. 29
SECTION 2.02. Loans....................................................... 30
SECTION 2.03. Borrowing Procedure......................................... 32
SECTION 2.04. Evidence of Debt; Repayment of Loans........................ 33
SECTION 2.05. Fees........................................................ 33
SECTION 2.06. Interest on Loans........................................... 35
SECTION 2.07. Default Interest............................................ 35
SECTION 2.08. Alternate Rate of Interest.................................. 36
SECTION 2.09. Termination and Reduction of Commitments.................... 36
SECTION 2.10. Conversion and Continuation of Borrowings................... 37
SECTION 2.11. Repayment of Term Borrowings................................ 39
SECTION 2.12. Prepayment.................................................. 40
SECTION 2.13. Mandatory Prepayments....................................... 41
SECTION 2.14. Reserve Requirements; Change in Circumstances............... 44
SECTION 2.15. Change in Legality.......................................... 45
SECTION 2.16. Indemnity................................................... 46
SECTION 2.17. Pro Rata Treatment.......................................... 46
SECTION 2.18. Sharing of Setoffs.......................................... 47
SECTION 2.19. Payments.................................................... 47
SECTION 2.20. Taxes....................................................... 48
SECTION 2.21. Assignment of Commitments Under Certain Circumstances;
Duty to Mitigate......................................... 50
SECTION 2.22. Swingline Loans............................................. 51
SECTION 2.23. Letters of Credit........................................... 52
SECTION 2.24. A/C Fronted Loans........................................... 56
SECTION 2.25. Reporting Requirements of A/C Fronting Lenders
and Issuing Banks........................................ 58
SECTION 2.26. Additional Issuing Banks.................................... 59
<PAGE>
2
ARTICLE III
Representations and Warranties
SECTION 3.01. Organization; Powers........................................ 59
SECTION 3.02. Authorization............................................... 59
SECTION 3.03. Enforceability.............................................. 60
SECTION 3.04. Governmental Approvals...................................... 60
SECTION 3.05. Financial Statements........................................ 60
SECTION 3.06. No Material Adverse Change.................................. 60
SECTION 3.07. Title to Properties; Possession Under Leases................ 60
SECTION 3.08. Subsidiaries................................................ 61
SECTION 3.09. Litigation; Compliance with Laws............................ 61
SECTION 3.10. Agreements.................................................. 62
SECTION 3.11. Federal Reserve Regulations................................. 62
SECTION 3.12. Investment Company Act; Public Utility Holding
Company Act.............................................. 62
SECTION 3.13. Use of Proceeds............................................. 62
SECTION 3.14. Tax Returns................................................. 62
SECTION 3.15. No Material Misstatements................................... 62
SECTION 3.16. Employee Benefit Plans...................................... 63
SECTION 3.17. Environmental Matters....................................... 63
SECTION 3.18. Insurance................................................... 64
SECTION 3.19. Security Documents.......................................... 64
SECTION 3.20. Location of Real Property and Leased Premises............... 65
SECTION 3.21. Labor Matters............................................... 65
SECTION 3.22. Solvency.................................................... 65
ARTICLE IV
Conditions of Lending
SECTION 4.01. All Credit Events........................................... 66
SECTION 4.02. First Credit Event.......................................... 66
ARTICLE V
Affirmative Covenants
SECTION 5.01. Existence; Businesses and Properties........................ 70
SECTION 5.02. Insurance................................................... 70
SECTION 5.03. Obligations and Taxes....................................... 72
SECTION 5.04. Financial Statements, Reports, etc. ........................ 72
SECTION 5.05. Litigation and Other Notices................................ 73
SECTION 5.06. Employee Benefits........................................... 73
SECTION 5.07. Maintaining Records; Access to Properties
and Inspections.......................................... 74
SECTION 5.08. Use of Proceeds............................................. 74
SECTION 5.09. Compliance with Environmental Laws.......................... 74
<PAGE>
3
SECTION 5.10. Preparation of Environmental Reports........................ 74
SECTION 5.11. Further Assurances.......................................... 74
SECTION 5.12. Interest Rate Protection Agreements......................... 75
ARTICLE VI
Negative Covenants
SECTION 6.01. Indebtedness................................................ 76
SECTION 6.02. Liens....................................................... 77
SECTION 6.03. Sale and Lease-Back Transactions............................ 79
SECTION 6.04. Investments, Loans and Advances............................. 79
SECTION 6.05. Mergers, Consolidations, Sales of Assets and Acquisitions... 80
SECTION 6.06. Dividends and Distributions; Restrictions on Ability of
Subsidiaries to Pay Dividends............................ 81
SECTION 6.07. Transactions with Affiliates................................ 81
SECTION 6.08. Business of Borrowers and Subsidiaries...................... 81
SECTION 6.09. Other Indebtedness and Agreements........................... 82
SECTION 6.10. Capital Expenditures........................................ 82
SECTION 6.11. Consolidated Leverage Ratio................................. 83
SECTION 6.12. Consolidated Interest Coverage Ratio........................ 83
SECTION 6.13. Consolidated Fixed Charge Coverage Ratio.................... 83
SECTION 6.14. Fiscal Year................................................. 83
ARTICLE VII
Events of Default........................... 84
ARTICLE VIII
The Administrative Agent and the Collateral Agent............ 86
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices..................................................... 88
SECTION 9.02. Survival of Agreement....................................... 89
SECTION 9.03. Binding Effect.............................................. 89
SECTION 9.04. Successors and Assigns...................................... 89
SECTION 9.05. Expenses; Indemnity......................................... 92
SECTION 9.06. Right of Setoff............................................. 93
SECTION 9.07. Applicable Law.............................................. 93
SECTION 9.08. Waivers; Amendment.......................................... 94
SECTION 9.09. Interest Rate Limitation.................................... 94
SECTION 9.10. Entire Agreement............................................ 95
SECTION 9.11. WAIVER OF JURY TRIAL........................................ 95
<PAGE>
4
SECTION 9.12. Severability................................................ 95
SECTION 9.13. Counterparts................................................ 95
SECTION 9.14. Headings.................................................... 95
SECTION 9.15. Jurisdiction; Consent to Service of Process................. 95
SECTION 9.16. Conversion of Currencies.................................... 96
SECTION 9.17. Confidentiality............................................. 97
SECTION 9.18. European Monetary Union..................................... 97
SECTION 9.19. German Borrower............................................. 98
SCHEDULES
Schedule 1.01(a) Additional Cost
Schedule 1.01(b) Subsidiary Guarantors
Schedule 1.01(c) Mortgaged Properties
Schedule 1.01(d) Existing Letters of Credit
Schedule 1.01(e) Certain Countries
Schedule 1.01(f) Inactive Subsidiaries
Schedule 1.01(g) Subordination Provisions
Schedule 2.01(a) Lenders; Commitments
Schedule 2.01(b) Sublimits for Alternative Currency Extensions of Credit
Schedule 3.08 Subsidiaries
Schedule 3.09 Litigation
Schedule 3.17 Environmental Matters
Schedule 3.18 Insurance
Schedule 3.19(d) Mortgage Filing Offices
Schedule 3.20(a) Owned Real Property
Schedule 3.20(b) Leased Real Property
Schedule 4.02(a) Local Counsel
Schedule 6.01 Indebtedness
Schedule 6.02 Liens
Schedule 6.04 Investments
EXHIBITS
Exhibit A Form of Assignment and Acceptance
Exhibit B Form of Borrowing Request
Exhibit C Form of Indemnity, Subrogation and Contribution Agreement
Exhibit D Form of Mortgage
Exhibit E Form of Pledge Agreement
Exhibit F Form of Security Agreement
Exhibit G Form of Subsidiary Guarantee Agreement
Exhibit H Form of Terex Guarantee
Exhibit I-1 Form of Opinion of Eric Cohen
Exhibit I-2 Form of Local Counsel Opinion
<PAGE>
1
CREDIT AGREEMENT dated as of March
6, 1998, among TEREX CORPORATION, a Delaware
corporation ("Terex"), TEREX EQUIPMENT
LIMITED, a company organized under the laws
of Scotland (the "Scottish Borrower"),
P.P.M. S.A., a company organized under the
laws of the Republic of France (the "French
Borrower"), UNIT RIG (AUSTRALIA) PTY. LTD.,
a company organized under the laws of the
New South Wales, Australia (the "Australian
Borrower"), and P.P.M. Sp.A., a company
organized under the laws of the Republic of
Italy (the "Italian Borrower"), the Lenders
(as defined in Article I), the Issuing Banks
(as defined in Article I) and CREDIT SUISSE
FIRST BOSTON, a bank organized under the
laws of Switzerland, acting through its New
York branch ("CSFB"), as administrative
agent (in such capacity, the "Administrative
Agent") and as collateral agent (in such
capacity, the "Collateral Agent") for the
Lenders.
Terex intends to (a) refinance indebtedness outstanding under the
Existing Credit Agreement (such term and each other capitalized term used but
not defined herein having the meaning given it in Article I) and (b) offer to
purchase (the "Debt Tender Offer") all its outstanding 13-1/4% Senior Secured
Notes due 2002 (the "Existing Notes") and, in connection therewith, seek the
consent (the "Consent Solicitation") of the holders of the Existing Notes to
amend certain of the provisions of the indenture (the "Existing Note Indenture")
governing the Existing Notes. Certain of the Subsidiary Borrowers intend to
refinance (together with the refinancing referred to in clause (a) of the
preceding sentence, the "Refinancing") certain of their existing indebtedness.
In addition, following the Closing Date, Terex intends to acquire (the
"Acquisition") all the outstanding capital shares of O&K Mining from O&K
Orenstein & Koppel AG and to issue the Senior Subordinated Notes.
The Borrowers have requested the Lenders to extend credit in the form
of (a) Tranche A Term Loans to be made on the Closing Date and on one other day
during the Tranche A Term Loan Availability Period, in an aggregate principal
amount not in excess of $175,000,000 (or the Dollar Equivalent thereof in
Alternative Currencies), (b) Tranche B Term Loans to be made on the Closing
Date, in an aggregate principal amount not in excess of $200,000,000, and (c)
Revolving Loans to be made at any time and from time to time during the period
from the Closing Date to the Revolving Credit Maturity Date, in an aggregate
principal amount at any time outstanding not in excess of $125,000,000 (or the
Dollar Equivalent thereof in Alternative Currencies). The Borrowers have
requested the A/C Fronting Lenders and the Swingline Lender to extend credit, at
any time and from time to time during the period from the Closing Date to the
Revolving Credit Maturity Date, in the form of A/C Fronted Loans and Swingline
Loans, respectively. The Borrowers have requested the Issuing Banks to issue
letters of credit, in an aggregate face amount at any time outstanding not in
excess of $35,000,000 (or the Dollar Equivalent thereof in Alternative
Currencies), to support payment obligations incurred in the ordinary course of
business by the Borrowers and their respective Subsidiaries. The proceeds of the
Term Loans, together with a portion of the Revolving Loans, are to be used
solely (a) on the Closing Date, (i) to effect the Refinancing, (ii) to finance
the Debt Tender Offer, (iii) to pay related fees and expenses and (iv) for
working capital purposes and (b) on the date on which the Acquisition is
<PAGE>
2
consummated, to fund a portion of the cash consideration therefor and to pay
related fees and expenses, and the proceeds of the Revolving Loans, A/C Fronted
Loans and Swingline Loans (other than the Loans used for the purposes previously
specified in this sentence) are to be used solely for working capital and other
general corporate purposes, including the financing of the Acquisition and other
Permitted Acquisitions.
The Lenders are willing to extend such credit to the Borrowers and the
Issuing Banks are willing to issue letters of credit for the account of the
Borrowers on the terms and subject to the conditions set forth herein.
Accordingly, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the following
terms shall have the meanings specified below:
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
"ABR Loan" shall mean any ABR Term Loan or ABR Revolving Loan.
"ABR Revolving Loan" shall mean any Revolving Loan bearing interest at
a rate determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"ABR Term Borrowing" shall mean a Borrowing comprised of ABR Term
Loans.
"ABR Term Loan" shall mean any ABR Tranche A Term Loan or any ABR
Tranche B Term Loan.
"ABR Tranche A Term Loan" shall mean any Tranche A Term Loan bearing
interest at a rate determined by reference to the Alternate Base Rate in
accordance with the provisions of Article II.
"ABR Tranche B Term Loan" shall mean any Tranche B Term Loan bearing
interest at a rate determined by reference to the Alternate Base Rate in
accordance with the provisions of Article II.
"A/C Fronted Base Rate" shall mean, for any day, with respect to any
A/C Fronted Loan, a rate per annum (rounded upwards, if necessary, to the next
1/16 of 1%) equal to the average rate at which overnight deposits in the
currency in which the applicable A/C Fronted Loan is denominated and
approximately equal in principal amount to such A/C Fronted Loan are obtainable
by the applicable A/C Fronting Lender on such day at its lending office for such
A/C Fronted Loan in the interbank market (or any other market for overnight
funds in such currency utilized by such A/C Fronting Lender), adjusted to
reflect any direct or indirect costs of obtaining such deposits (including
reserve and assessment costs, to the extent applicable). The A/C Fronted Base
Rate applicable to any A/C Fronted Loan shall be determined for each day by the
A/C Fronting Lender in respect of such Loan and such determination shall be
conclusive absent manifest error. The applicable A/C Fronting Lender shall
<PAGE>
3
notify the applicable Borrower and the Administrative Agent promptly upon
establishing the A/C Fronted Base Rate for any A/C Fronted Loan, or upon any
change thereto.
"A/C Fronted Base Rate Loans" shall mean any A/C Fronted Loan bearing
interest at a rate determined by reference to the A/C Fronted Base Rate in
accordance with the provisions of Article II.
"A/C Fronted Exposure" shall mean, at any time, the Dollar Equivalent
of the aggregate principal amount of all outstanding A/C Fronted Loans at such
time. The A/C Fronted Exposure of any Revolving Credit Lender at any time shall
equal its Pro Rata Percentage of the aggregate A/C Fronted Exposure at such
time.
"A/C Fronted Fixed Rate Loan" shall mean any A/C Fronted Loan bearing
interest at a rate determined by reference to the Bank Bill Rate or the Italian
Fixed Rate in accordance with the provisions of Article II.
"A/C Fronted Loan" shall mean any loan made by an A/C Fronting Lender
pursuant to its A/C Fronting Commitment.
"A/C Fronting Commitment" shall mean, with respect to any Lender, the
commitment of such Lender to make Loans pursuant to Section 2.24, as set forth
on Schedule 2.01(a), or in the Assignment and Acceptance pursuant to which such
Lender assumed its A/C Fronting Commitment, as applicable, as the same may be
reduced from time to time pursuant to Section 2.24(f) and pursuant to
assignments by such Lender pursuant to Section 9.04.
"A/C Fronting Fees" shall have the meaning assigned to such term in
Section 2.05(e).
"A/C Fronting Lender" shall mean (a) with respect to Australian
Dollars, the Australian Fronting Lender, and (b) with respect to Lire, the
Italian Fronting Lender.
"A/C Participation Fees" shall have the meaning assigned to such term
in Section 2.05(d).
"Acquired Indebtedness" shall mean Indebtedness of a person or any of
its subsidiaries (the "Acquired Person") (a) existing at the time such person
becomes a Subsidiary of Terex or at the time it merges or consolidates with
Terex or any of its Subsidiaries or (b) assumed in connection with the
acquisition of assets from such person; provided in each case that (i) such
Indebtedness was not created in contemplation of such acquisition, merger or
consolidation and (ii) such acquisition, merger or consolidation is otherwise
permitted under this Agreement.
"Acquired Person" shall have the meaning assigned to such term in the
definition of the term "Acquired Indebtedness".
"Acquisition" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Additional Cost" shall mean, in relation to any Borrowing that is
denominated in Pounds and is made by the Scottish Borrower, for any Interest
Period, the cost as calculated by the Administrative Agent in accordance with
<PAGE>
4
Schedule 1.01(a) imputed to each Lender participating in such Borrowing of
compliance with the mandatory liquid assets requirements of the Bank of England
during that Interest Period, expressed as a percentage.
"Additional Subordinated Notes" shall mean subordinated notes in an
aggregate principal amount at any time outstanding not to exceed $150,000,000
and issued from time to time by Terex, or assumed in connection with a Permitted
Acquisition, after the issuance of the Senior Subordinated Notes; provided that
(a) except in the case of Additional Subordinated Notes assumed in connection
with a Permitted Acquisition, the Net Cash Proceeds thereof are used either (i)
to finance one or more Permitted Acquisitions or (ii) to prepay Term Loans in
accordance with Section 2.13(e), (b) such subordinated notes do not require any
scheduled payment of principal prior to a date that is 12 months after the
Tranche B Maturity Date and (c) the subordination provisions and other
non-pricing terms and conditions of such subordinated notes are no less
favorable to the Loan Parties and the Lenders than the analogous provisions of
the Senior Subordinated Notes.
"Adjusted LIBO Rate" shall mean, with respect to any Eurocurrency
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the LIBO Rate in effect for such
Interest Period multiplied by Statutory Reserves; provided, however, that, if
such Eurocurrency Borrowing is denominated in Pounds and is made by the Scottish
Borrower, then the "Adjusted LIBO Rate" shall be the LIBO Rate in effect for
such Interest Period plus Additional Cost.
"Administrative Agent Fees" shall have the meaning assigned to such
term in Section 2.05(b).
"Administrative Questionnaire" shall mean an Administrative
Questionnaire in the form of Exhibit A.
"Affiliate" shall mean, when used with respect to a specified person,
another person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the person
specified.
"Aggregate Revolving Credit Exposure" shall mean the aggregate amount
of the Lenders' Revolving Credit Exposures.
"Agreement Currency" shall have the meaning assigned to such term in
Section 9.16.
"Alternate Base Rate" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greater of
(a) the Prime Rate in effect on such day and (b) the Federal Funds Effective
Rate in effect on such day plus 1/2 of 1%. If for any reason the Administrative
Agent shall have determined (which determination shall be conclusive absent
manifest error) that it is unable to ascertain the Federal Funds Effective Rate
for any reason, including the inability or failure of the Administrative Agent
to obtain sufficient quotations in accordance with the terms of the definition
thereof, the Alternate Base Rate shall be determined without regard to clause
(b) of the preceding sentence until the circumstances giving rise to such
inability no longer exist. Any change in the Alternate Base Rate due to a change
in the Prime Rate or the Federal Funds Effective Rate shall be effective on the
effective date of such change in the Prime Rate or the Federal Funds Effective
Rate, respectively. The term "Prime Rate" shall mean the rate of interest per
<PAGE>
5
annum publicly announced from time to time by the Administrative Agent as its
prime rate in effect at its principal office in New York City; each change in
the Prime Rate shall be effective on the date such change is publicly announced
as being effective. The term "Federal Funds Effective Rate" shall mean, for any
day, the weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day that is a Business Day,
the average of the quotations for the day for such transactions received by the
Administrative Agent from three Federal funds brokers of recognized standing
selected by it.
"Alternative Currency" shall mean (a) with respect to Tranche A Term
Loans, Revolving Loans and Letters of Credit, Marks, Pounds and Francs, (b) with
respect to A/C Fronted Loans and Letters of Credit, Australian Dollars and Lire
and (c) with respect to Letters of Credit, any other foreign currency which is
approved by the applicable A/C Fronting Lender and the applicable Issuing Bank,
in each case in its sole discretion.
"Alternative Currency Borrowing" shall mean a Borrowing comprised of
Alternative Currency Loans.
"Alternative Currency Equivalent" shall mean, on any date of
determination, with respect to any amount denominated in dollars in relation to
any specified Alternative Currency, the equivalent in such specified Alternative
Currency of such amount in dollars, determined by the Administrative Agent
pursuant to Section 1.03 using the applicable Exchange Rate then in effect.
"Alternative Currency Loan" shall mean any Loan denominated in an
Alternative Currency.
"Alternative Currency Revolving Credit Exposure" shall mean, at any
time with respect to any Alternative Currency, the sum of (a) the Dollar
Equivalent of the aggregate principal amount of all A/C Fronted Loans and
outstanding Revolving Loans that are denominated in such Alternative Currency at
such time, (b) the Dollar Equivalent of the aggregate undrawn amount of all
outstanding Letters of Credit that are denominated in such Alternative Currency
at such time and (c) the Dollar Equivalent of the aggregate principal amount of
all L/C Disbursements in respect of Letters of Credit that are denominated in
such Alternative Currency at such time.
"Alternative Currency Revolving Loan" shall mean a Revolving Loan
denominated in an Alternative Currency.
"Alternative Currency Term Loan" shall mean a Tranche A Term Loan
denominated in an Alternative Currency. Each Alternative Currency Term Loan must
be a Eurocurrency Term Loan.
"Applicable Percentage" shall mean, for any day, with respect to any
Eurocurrency Revolving Loan, Eurocurrency Tranche A Term Loan, Eurocurrency
Tranche B Term Loan, ABR Revolving Loan, ABR Tranche A Term Loan, ABR Tranche B
Term Loan, A/C Fronted Loan or with respect to the Facility Fees, as the case
may be, the applicable percentage set forth below under the caption
"Eurocurrency Spread--Tranche A Term Loans and Revolving Loans", "Eurocurrency
<PAGE>
6
Spread--Tranche B Term Loans", "ABR Spread--Tranche A Term Loans and Revolving
Loans", "ABR Spread--Tranche B Term Loans", "A/C Fronted Loan Spread" or
"Facility Fee Percentage", as the case may be, based upon the Consolidated
Leverage Ratio as of the relevant date of determination; provided that, until
delivery of Terex's financial statements pursuant to Section 5.04(a) with
respect to its fiscal year ended December 31, 1997, the Applicable Percentage
shall be deemed to be in Category 3:
<TABLE>
<CAPTION>
ABR
Eurocurrency Spread--
Spread-- Tranche A
Tranche A Term Eurocurrency Term Loans ABR
Consolidated Loans and Spread-- and ABR-- Spread--
Leverage Ratio Revolving Tranche B Revolving A/C Fronted Tranche B Facility Fee
Loans Term Loans Loans Loan Spread Term Loans Percentage
Category 1
<S> <C> <C> <C> <C> <C> <C>
Greater than or equal 2.00% 3.00% 1.00% 1.00% 2.00% 0.5000%
to 5.25 to 1.00
Category 2
Greater than or equal 1.75% 2.75% 0.75% 0.75% 1.75% 0.5000%
to 4.75 to 1.00 but less
than 5.25 to 1.00
Category 3
Greater than or equal 1.50% 2.50% 0.50% 0.50% 1.50% 0.5000%
to 4.00 to 1.00 but less
than 4.75 to 1.00
Category 4
Greater than or equal 1.25% 2.50% 0.25% 0.25% 1.50% 0.5000%
to 3.50 to 1.00 but less
than 4.00 to 1.00
Category 5
Greater than or equal 1.125% 2.50% 0.125% 0.125% 1.50% 0.375%
to 3.00 to 1.00 but less
than 3.50 to 1.00
Category 6 0.875% 2.25% -0.125% 0.000% 1.25% 0.375%
Less than 3.00 to 1.00
</TABLE>
Each change in the Applicable Percentage resulting from a change in the
Consolidated Leverage Ratio shall be effective with respect to all Loans,
Commitments and Letters of Credit on the date of delivery to the Administrative
Agent of the financial statements and certificates required by Section 5.04(a)
or (b) based upon the Consolidated Leverage Ratio as of the end of the most
<PAGE>
7
recent fiscal quarter included in such financial statements so delivered, and
shall remain in effect until the date immediately preceding the next date of
delivery of such financial statements and certificates indicating another such
change. Notwithstanding the foregoing, at any time after the occurrence and
during the continuance of an Event of Default, the Consolidated Leverage Ratio
shall be deemed to be in Category 1 for purposes of determining the Applicable
Percentage.
"Asset Sale" shall mean the sale, transfer or other disposition (by way
of merger or otherwise and including by way of a Sale and Leaseback) by any
Borrower or any Subsidiary to any person other than any Borrower or any
Guarantor of (a) any capital stock of any Subsidiary (other than directors'
qualifying shares) or (b) any other assets of any Borrower or any Subsidiary
(other than inventory, excess, damaged, obsolete or worn out assets, scrap,
Permitted Investments and accounts receivable, in each case disposed of in the
ordinary course of business and, in the case of accounts receivable, consistent
with past practice); provided that any asset sale or series of related asset
sales described in clause (b) above having a value not in excess of $1,000,000
shall be deemed not to be an "Asset Sale" for purposes of this Agreement.
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Lender and an assignee, and accepted by the Administrative
Agent, in the form of Exhibit B or such other form as shall be approved by the
Administrative Agent.
"Australian Dollars" shall mean dollars in lawful currency of
Australia.
"Australian Fronting Lender" shall mean Credit Suisse First Boston,
acting through its Sydney office branch, and its successors and assigns in such
capacity.
"Bank Bill Rate" shall mean, in relation to an Interest Period for any
A/C Fronted Fixed Rate Loan denominated in Australian Dollars, the rate
determined by the A/C Fronting Lender to be the average bid rate displayed at or
about 10:10 a.m. (Sydney time) on the first day of such Interest Period on the
Reuters screen BBSY page for a term equivalent to such Interest Period. If (a)
for any reason there is no rate displayed for a period equivalent to such
Interest Period or (b) the basis on which such rate is displayed is changed and
in the reasonable opinion of the A/C Fronting Lender such rate ceases to reflect
the A/C Fronting Lender's cost of funding to the same extent as at the date of
this Agreement, then the Bank Bill Rate shall be the rate determined by the A/C
Fronting Lender to be the average of the buying rates quoted to the A/C Fronting
Lender by three reference banks selected by it at or about that time on that
date for bills of exchange that are accepted by an Australian bank and that have
a term equivalent to the Interest Period. If there are no such buying rates the
rate shall be the rate reasonably determined by the A/C Fronting Lender to be
its cost of funds. Rates will be expressed as a yield percent per annum to
maturity and rounded up, if necessary, to the nearest two decimal places.
"Board" shall mean the Board of Governors of the Federal Reserve System
of the United States of America.
"Borrowers" shall mean, collectively, Terex, the Scottish Borrower, the
French Borrower, the Australian Borrower, the Italian Borrower and, after its
accession to this Agreement pursuant to Section 9.19, the German Borrower.
<PAGE>
8
"Borrowing" shall mean a group of Loans of a single Type made by the
Lenders on a single date and as to which a single Interest Period is in effect.
"Borrowing Request" shall mean a request by any Borrower in accordance
with the terms of Section 2.03 and substantially in the form of Exhibit C.
"Business Day" shall mean any day other than a Saturday, Sunday or day
on which banks in New York City are authorized or required by law to close;
provided, however, that when used in connection with a Eurocurrency Loan, the
term "Business Day" shall also exclude any day on which banks are not open for
dealings in dollar deposits in the London interbank market, and, when used in
connection with any Calculation Date or determining any date on which any amount
is to be paid or made available in an Alternative Currency, the term "Business
Day" shall also exclude any day on which commercial banks and foreign exchange
markets are not open for business in the principal financial center in the
country of such Alternative Currency.
"Calculation Date" shall mean (a) the date of delivery of each
Borrowing Request, (b) the date of issuance of any Letter of Credit, (c) the
date of conversion or continuation of any Borrowing pursuant to Section 2.10 or
(d) such additional dates as the Administrative Agent or the Required Lenders
shall specify.
"Capital Lease Obligations" of any person shall mean the obligations of
such person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Casualty" shall have the meaning assigned to such term in the
Mortgages.
"Casualty Proceeds" shall have the meaning assigned to such term in the
Mortgages.
A "Change in Control" shall be deemed to have occurred if (a) any
person or group (within the meaning of Rule 13d-5 of the Securities Exchange Act
of 1934 as in effect on the date hereof) shall own directly or indirectly,
beneficially or of record, shares representing more than 30% of the aggregate
ordinary voting power represented by the issued and outstanding capital stock of
Terex; (b) a majority of the seats (other than vacant seats) on the board of
directors of Terex shall at any time be occupied by persons who were neither (i)
nominated by the board of directors of Terex, nor (ii) appointed by directors so
nominated; (c) any change in control (or similar event, however denominated)
with respect to Terex or any of its Subsidiaries shall occur under and as
defined in any indenture or agreement in respect of Indebtedness in an
outstanding principal amount in excess of $5,000,000 to which Terex or any of
its Subsidiaries is a party; or (d) any person or group shall otherwise directly
or indirectly Control Terex.
"Closing Date" shall mean the date of the first Credit Event.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
<PAGE>
9
"Collateral" shall mean all the "Collateral" as defined in any Security
Document and shall also include the Mortgaged Properties. Notwithstanding any
contrary provision contained herein, until such time as the condition described
in Section 5.11(c) has been satisfied, the term "Collateral" shall not include
any inventory or parts therefor of the Company which was manufactured or sold by
Fiatallis Latino American, Ltda, Fiat-Hitachi Excavators, S.p.A or any of their
subsidiaries or affiliated companies or inventory or parts therefor which bears
the tradename "Fiatallis", and any proceeds therefrom, including without
limitation accounts, contract rights, chattel paper and general intangibles
generated in any manner from the sale, lease demonstration or other disposition
of the inventory or parts therefor (collectively, the "Fiat Collateral").
"Commitment" shall mean, with respect to any Lender, such Lender's
Revolving Credit Commitment, Term Loan Commitments, A/C Fronting Commitment and
Swingline Commitment.
"Condemnation" shall have the meaning assigned to such term in the
Mortgages.
"Condemnation Proceeds" shall have the meaning assigned to such term in
the Mortgages.
"Confidential Information Memorandum" shall mean the Confidential
Information Memorandum of the Borrowers dated February 1998.
"Consent Solicitation" shall have the meaning assigned to such term in
the preamble to this Agreement.
"Consolidated Capital Expenditures" shall mean, for any period, the
aggregate of all expenditures (whether paid in cash or other consideration or
accrued as a liability) by Terex or any of its Subsidiaries during such period
that, in accordance with GAAP, are or should be included in "additions to
property, plant and equipment" or similar items reflected in the consolidated
statement of cash flows of Terex and the Subsidiaries for such period (including
the amount of assets leased by incurring any Capital Lease Obligation); provided
that expenditures for Permitted Acquisitions shall not constitute Consolidated
Capital Expenditures.
"Consolidated Current Assets" shall mean, as of any date of
determination, the total assets that would properly be classified as current
assets (other than cash and cash equivalents) of Terex and its Subsidiaries as
of such date, determined on a consolidated basis in accordance with GAAP.
"Consolidated Current Liabilities" shall mean, as of any date of
determination, the total liabilities (other than, without duplication, (a) the
current portion of long-term Indebtedness and (b) outstanding Revolving Loans,
A/C Fronted Loans and Swingline Loans) that would properly be classified as
current liabilities of Terex and its Subsidiaries as of such date, determined on
a consolidated basis in accordance with GAAP.
"Consolidated EBITDA" shall mean, for any period, Consolidated Net
Income for such period, plus, without duplication and to the extent deducted
from revenues in determining Consolidated Net Income for such period, the sum of
(a) the aggregate amount of Consolidated Interest Expense for such period, (b)
the aggregate amount of letter of credit fees paid during such period, (c) the
<PAGE>
10
aggregate amount of income and franchise tax expense for such period, (d) all
amounts attributable to depreciation and amortization for such period, (e) all
non-recurring non-cash charges during such period and (f) all non-cash
adjustments made to translate foreign assets and liabilities for changes in
foreign exchange rates made in accordance with FASB No. 52, and minus, without
duplication and to the extent added to revenues in determining Consolidated Net
Income for such period, (i) all non-recurring non-cash gains during such period
and (ii) all non-cash adjustments made to translate foreign assets and
liabilities for changes in foreign exchange rates made in accordance with FASB
No. 52, all as determined on a consolidated basis with respect to Terex and the
Subsidiaries in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" shall mean, for any period,
the ratio of (a) Consolidated EBITDA for such period to (b) the sum, without
duplication, of (i) Consolidated Interest Expense for such period; (ii) income
or franchise taxes paid in cash during such period; (iii) scheduled and
voluntary payments of principal with respect to all Indebtedness (including the
principal portion of Capital Lease Obligations but excluding payments for
inventory to be sold in the ordinary course of business) of Terex and its
Subsidiaries on a consolidated basis during such period (other than repayments
of Indebtedness (x) pursuant to the Refinancing on or prior to the Closing Date
or (y) with the proceeds of other Indebtedness permitted to be incurred
hereunder or equity); (iv) payments permitted pursuant to Section 6.06 made in
cash during such period; and (v) Consolidated Capital Expenditures made in cash
during such period.
"Consolidated Interest Coverage Ratio" shall mean, for any period, the
ratio of (a) Consolidated EBITDA for such period to (b) Consolidated Interest
Expense for such period.
"Consolidated Interest Expense" of Terex and its Subsidiaries shall
mean, for any period, interest expense of Terex and its Subsidiaries for such
period, net of interest income, included in the determination of Consolidated
Net Income. For purposes of the foregoing, interest expense shall be determined
after giving effect to any net payments made or received by Terex and its
Subsidiaries under Interest Rate Protection Agreements.
"Consolidated Leverage Ratio" shall mean, as of any date of
determination, the ratio of (a) Total Debt on such date to (b) the sum of (i)
Consolidated EBITDA for the most recent period of four consecutive fiscal
quarters ended on or prior to such date and (ii) the Pro Forma Acquisition
EBITDA of all Acquired Persons acquired during such period of four consecutive
fiscal quarters. For purposes of calculating the Consolidated Leverage Ratio as
of any date, if any portion of the Total Debt outstanding on such date is
denominated in a currency other than dollars, then the portion, if any, of
Consolidated EBITDA or Pro Forma Acquisition EBITDA during the period of four
consecutive fiscal quarters ending on or prior to such date and denominated in
any such other currency shall be translated to dollars using the same exchange
rate as is used to translate such portion of the Total Debt denominated in such
other currency.
"Consolidated Net Income" shall mean, for any period, the sum of net
income (or loss) for such period of Terex and its Subsidiaries on a consolidated
basis determined in accordance with GAAP, but excluding: (a) the income (or
loss) of any person accrued prior to the date it became a Subsidiary of Terex or
is merged into or consolidated with Terex or such person's assets are acquired
by Terex or any of its Subsidiaries; (b) non-recurring gains (or losses) during
such period; (c) extraordinary gains (or losses), as defined under GAAP during
<PAGE>
11
such period; and (d) the income of any Subsidiary to the extent that the
declaration or payment of dividends or similar distributions by the Subsidiary
of that income is prohibited by operation of the terms of its charter or any
agreement, instrument, judgment, decree, statute, rule or governmental
regulation applicable to the Subsidiary.
"Consolidated Senior Secured Leverage Ratio" shall mean, as of any date
of determination, the ratio of (a) Total Senior Secured Debt on such date to (b)
the sum of (i) Consolidated EBITDA for the most recent period of four
consecutive fiscal quarters ended on or prior to such date and (ii) the Pro
Forma Acquisition EBITDA of all Acquired Persons acquired during such period of
four consecutive fiscal quarters. For purposes of calculating the Consolidated
Senior Secured Leverage Ratio as of any date, if any portion of the Total Senior
Secured Debt outstanding on such date is denominated in a currency other than
dollars, then the portion, if any, of Consolidated EBITDA or Pro Forma
Acquisition EBITDA during the period of four consecutive fiscal quarters ending
on or prior to such date and denominated in any such other currency shall be
translated to dollars using the same exchange rate as is used to translate such
portion of the Total Debt denominated in such other currency.
"Control" shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
person, whether through the ownership of voting securities, by contract or
otherwise, and the terms "Controlling" and "Controlled" shall have meanings
correlative thereto.
"Credit Event" shall have the meaning assigned to such term in Section
4.01.
"Debt Tender Offer" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Default" shall mean any event or condition which upon notice, lapse of
time or both would constitute an Event of Default.
"Dollar Borrowing" shall mean a Borrowing comprised of Dollar Loans.
"Dollar Equivalent" shall mean, on any date of determination, with
respect to any amount denominated in any currency other than dollars, the
equivalent in dollars of such amount, determined by the Administrative Agent
pursuant to Section 1.03 using the applicable Exchange Rate with respect to such
currency at the time in effect.
"Dollar Loan" shall mean a Dollar Revolving Loan or a Dollar Term Loan.
"Dollar Revolving Loan" shall mean a Revolving Loan denominated in
dollars and made pursuant to Section 2.01.
Dollar Term Loan" shall mean a Term Loan denominated in dollars. Each
Dollar Term Loan shall be either a Eurocurrency Term Loan or an ABR Term Loan.
"dollars" or "$" shall mean lawful money of the United States of
America.
"Domestic Subsidiaries" shall mean all Subsidiaries incorporated or
organized under the laws of the United States of America, any State thereof or
the District of Columbia.
<PAGE>
12
"environment" shall mean ambient air, surface water and groundwater
(including potable water, navigable water and wetlands), the land surface or
subsurface strata, the workplace or as otherwise defined in any Environmental
Law.
"Environmental Claim" shall mean any written accusation, allegation,
notice of violation, claim, demand, order, directive, cost recovery action or
other cause of action by, or on behalf of, any Governmental Authority or any
person for damages, injunctive or equitable relief, personal injury (including
sickness, disease or death), Remedial Action costs, tangible or intangible
property damage, natural resource damages, nuisance, pollution, any adverse
effect on the environment caused by any Hazardous Material, or for fines,
penalties or restrictions, resulting from or based upon (a) the existence, or
the continuation of the existence, of a Release (including sudden or non-sudden,
accidental or non-accidental Releases), (b) exposure to any Hazardous Material,
(c) the presence, use, handling, transportation, storage, treatment or disposal
of any Hazardous Material or (d) the violation or alleged violation of any
Environmental Law or Environmental Permit.
"Environmental Law" shall mean any and all applicable present and
future treaties, laws, rules, regulations, codes, ordinances, orders, decrees,
judgments, injunctions, notices or binding agreements issued, promulgated or
entered into by or with any Governmental Authority, relating in any way to the
environment, preservation or reclamation of natural resources, the management,
Release or threatened Release of any Hazardous Material or to health and safety
matters, including the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C. ss.ss. 9601 et seq. (collectively
"CERCLA"), the Solid Waste Disposal Act, as amended by the Resource Conservation
and Recovery Act of 1976 and Hazardous and Solid Waste Amendments of 1984, 42
U.S.C. Section. 6901 et seq., the Federal Water Pollution Control Act, as
amended by the Clean Water Act of 1977, 33 U.S.C. Section. 1251 et seq., the
Clean Air Act of 1970, as amended 42 U.S.C. Section. 7401 et seq., the Toxic
Substances Control Act of 1976, 15 U.S.C. Section. 2601 et seq., the
Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. Section. 651
et seq., the Emergency Planning and Community Right-to-Know Act of 1986, 42
U.S.C. Section. 11001 et seq., the Safe Drinking Water Act of 1974, as amended,
42 U.S.C. Section. 300(f) et seq., the Hazardous Materials Transportation Act,
49 U.S.C. Section. 5101 et seq., and any similar or implementing state or local
law, and all amendments or regulations promulgated under any of the foregoing.
"Environmental Permit" shall mean any permit, approval, authorization,
certificate, license, variance, filing or permission required by or from any
Governmental Authority pursuant to any Environmental Law.
"Equity Issuance" shall mean any issuance or sale by any Borrower or
any Subsidiary of any shares of capital stock or other equity securities of any
such person or any obligations convertible into or exchangeable for, or giving
any person a right, option or warrant to acquire such securities or such
convertible or exchangeable obligations, except in each case for (a) any
issuance or sale to any Borrower or any Subsidiary, (b) any issuance of
directors' qualifying shares, (c) sales or issuances of common stock to
management or employees of any Borrower or any Subsidiary under any employee
stock option plan, stock purchase plan, retirement plan, deferred compensation
plan or other employee benefit plan in existence from time to time to the extent
that (i) the proceeds from all sales and issuances described in this clause (c)
shall not exceed in the aggregate $1,000,000 in any fiscal year of Terex and
<PAGE>
13
(ii) the shares of common stock issued pursuant to this clause (c) shall not
exceed 10% of the common stock of such Borrower or such Subsidiary, as
applicable.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as the same may be amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that, together with Terex, is treated as a single employer under
Section 414(b) or (c) of the Code, or solely for purposes of Section 302 of
ERISA and Section 412 of the Code, is treated as a single employer under Section
414 of the Code.
"ERISA Event" shall mean (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder, with respect to a
Plan; (b) the adoption of any amendment to a Plan that would require the
provision of security pursuant to Section 401(a)(29) of the Code or Section 307
of ERISA; (c) the existence with respect to any Plan of an "accumulated funding
deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived; (d) the filing pursuant to Section 412(d) of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan; (e) the incurrence of any liability under
Title IV of ERISA with respect to the termination of any Plan or the withdrawal
or partial withdrawal of Terex or any of its ERISA Affiliates from any Plan or
Multiemployer Plan; (f) the receipt by Terex or any ERISA Affiliate from the
PBGC or a plan administrator of any notice relating to the intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (g)
the receipt by Terex or any ERISA Affiliate of any notice concerning the
imposition of Withdrawal Liability or a determination that a Multiemployer Plan
is, or is expected to be, insolvent or in reorganization, within the meaning of
Title IV of ERISA; (h) the occurrence of a "prohibited transaction" with respect
to which Terex or any of its Subsidiaries is a "disqualified person" (within the
meaning of Section 4975 of the Code) or with respect to which Terex or any such
Subsidiary could otherwise be liable; (i) any other event or condition with
respect to a Plan or Multiemployer Plan that could reasonably be expected to
result in liability of any Borrower; and (j) any Foreign Benefit Event.
"Eurocurrency Borrowing" shall mean a Borrowing comprised of
Eurocurrency Loans.
"Eurocurrency Loan" shall mean any Eurocurrency Revolving Loan or
Eurocurrency Term Loan.
"Eurocurrency Revolving Borrowing" shall mean a Eurocurrency Borrowing
comprised of Eurocurrency Revolving Loans.
"Eurocurrency Revolving Loan" shall mean any Revolving Loan bearing
interest at a rate determined by reference to the Adjusted LIBO Rate in
accordance with the provisions of Article II.
"Eurocurrency Term Borrowing" shall mean a Borrowing comprised of
Eurocurrency Term Loans.
"Eurocurrency Term Loan" shall mean any Eurocurrency Tranche A Term
Loan or Eurocurrency Tranche B Term Loan.
<PAGE>
14
"Eurocurrency Tranche A Term Loan" shall meany any Tranche A Term Loan
bearing interest at a rate determined by reference to the Adjusted LIBO Rate in
accordance with the provisions of Article II.
"Eurocurrency Tranche B Term Loan" shall mean any Tranche B Term Loan
bearing interest at a rate determined by reference to the Adjusted LIBO Rate in
accordance with the provisions of Article II.
"Event of Default" shall have the meaning assigned to such term in
Article VII.
"Excess Cash Flow" shall mean, for any fiscal year of Terex, the excess
of (a) the sum, without duplication, of (i) Consolidated EBITDA for such fiscal
year, (ii) extraordinary or non-recurring cash receipts of Terex and its
Subsidiaries, if any, during such fiscal year and not included in Consolidated
EBITDA and (iii) reductions to non-cash working capital of Terex and its
Subsidiaries for such fiscal year (i.e., the decrease, if any, in Consolidated
Current Assets minus Consolidated Current Liabilities from the beginning to the
end of such fiscal year), over (b) the sum, without duplication, of (i) the
amount of any cash income taxes payable by Terex and its Subsidiaries with
respect to such fiscal year, (ii) cash interest paid by Terex and its
Subsidiaries during such fiscal year, (iii) Consolidated Capital Expenditures
committed or made in cash in accordance with Section 6.10 during such fiscal
year (and not deducted from Excess Cash Flow in any prior year), (iv) scheduled
principal repayments of Indebtedness made by Terex and its Subsidiaries during
such fiscal year, (v) optional and mandatory prepayments of the principal of
Term Loans and reductions of Revolving Credit Commitments during such fiscal
year, but only to the extent that such prepayments and reductions do not occur
in connection with a refinancing of all or any portion of the Loans, (vi)
extraordinary or non-recurring expenses and losses to the extent paid in cash by
Terex and its Subsidiaries, if any, during such fiscal year and not included in
Consolidated EBITDA and (vii) additions to non-cash working capital for such
fiscal year (i.e., the increase, if any, in Consolidated Current Assets minus
Consolidated Current Liabilities from the beginning to the end of such Fiscal
Year); provided that, to the extent otherwise included therein, the Net Cash
Proceeds of Asset Sales and Equity Issuances shall be excluded from the
calculation of Excess Cash Flow.
"Exchange Rate" shall mean, on any day, with respect to any currency
other than dollars (for purposes of determining the Dollar Equivalent) or any
Alternative Currency (for purposes of determining the Alternative Currency
Equivalent with respect to such Alternative Currency), the rate at which such
currency may be exchanged into dollars or the applicable Alternative Currency,
as the case may be, as set forth at approximately 11:00 a.m., New York City
time, on such date on the applicable Bloomberg Key Cross Currency Rates Page. In
the event that any such rate does not appear on any Bloomberg Key Cross Currency
Rates Page, the Exchange Rate shall be determined by reference to such other
publicly available service for displaying exchange rates selected by the
Administrative Agent for such purpose, or, at the discretion of the
Administrative Agent, such Exchange Rate shall instead be the arithmetic average
of the spot rates of exchange of the Administrative Agent in the market where
its foreign currency exchange operations in respect of such currency are then
being conducted, at or about 10:00 a.m., local time, on such date for the
purchase of dollars or the applicable Alternative Currency, as the case may be,
for delivery two Business Days later; provided that, if at the time of any such
determination, for any reason, no such spot rate is being quoted, the
Administrative Agent may use any other reasonable method it deems appropriate
<PAGE>
15
to determine such rate, and such determination shall be presumed correct absent
manifest error.
"Existing Credit Agreement" shall mean the Revolving Credit Agreement
dated as of April 7, 1997, among Terex, the Subsidiaries listed therein, the
lenders party thereto and BankBoston, N.A., as agent.
"Existing Issuing Bank" shall mean BankBoston, N.A.
"Existing Letter of Credit" shall mean each letter of credit that is
(a) issued by an Existing Issuing Bank, (b) outstanding on the Closing Date and
(c) listed in Schedule 1.01(d).
"Existing Note Indenture" shall have the meaning assigned to such term
in the preamble to this Agreement.
"Existing Notes" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Facility Fee" shall have the meaning assigned to such term in Section
2.05(a).
"Fee Letter" shall mean the Fee Letter dated January 30, 1998, between
Terex and the Administrative Agent.
"Fees" shall mean the Facility Fees, the Administrative Agent's Fees,
the A/C Participation Fees, the A/C Fronting Fees, the L/C Participation Fees
and the Issuing Bank Fees.
"Financial Officer" of any corporation shall mean the chief financial
officer, a Vice President-Finance, principal accounting officer, Treasurer or
Controller of such corporation.
"Floor Plan Guarantees" shall mean Guarantees (including but not
limited to repurchase or remarketing obligations) by Terex or a 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 Terex or a Subsidiary, the
proceeds of which Indebtedness is used solely to pay the purchase price of such
inventory to such franchise dealer or other purchaser or lessor and any related
reasonable fees and expenses (including financing fees); provided, however, that
(a) to the extent commercially practicable, the Indebtedness so Guaranteed is
secured by a perfected first priority Lien on such inventory in favor of the
holder of such Indebtedness and (b) if Terex or such Subsidiary is required to
make payment with respect to such Guarantee, Terex or such Subsidiary will have
the right to receive either (i) title to such inventory, (ii) a valid assignment
of a perfected first priority Lien in such inventory or (iii) the net proceeds
of any resale of such inventory.
"Foreign Base Rate Loans" shall mean Loans (other than A/C Fronted
Loans) in any Alternative Currency the rate of interest applicable to which is
based upon the rate of interest per annum maintained by the Administrative Agent
as the rate of interest (in the absence of a eurocurrency rate) determined by it
with the approval of a majority in interest of the Lenders participating in such
Loan to be the average rate charged to borrowers of similar quality as the
<PAGE>
16
applicable Borrower of such Loans in such Alternative Currency. Notwithstanding
anything to the contrary contained herein, Loans may be made or maintained as
Foreign Base Rate Loans only to the extent specified in Section 2.02(f), 2.08 or
2.15.
"Foreign Benefit Event" shall mean, with respect to any Foreign Pension
Plan, (a) the existence of unfunded liabilities in excess of the amount
permitted under any applicable law, or in excess of the amount that would be
permitted absent a waiver from a Governmental Authority, (b) the failure to make
the required contributions or payments, under any applicable law, on or before
the due date for such contributions or payments, (c) the receipt of a notice by
a Governmental Authority relating to the intention to terminate any such Foreign
Pension Plan or to appoint a trustee or similar official to administer any such
Foreign Pension Plan, or alleging the insolvency of any such Foreign Pension
Plan and (d) the incurrence of any liability in excess of $5,000,000 (or the
Dollar Equivalent thereof in another currency) by Terex or any of its
Subsidiaries under applicable law on account of the complete or partial
termination of such Foreign Pension Plan or the complete or partial withdrawal
of any participating employer therein, or (e) the occurrence of any transaction
that is prohibited under any applicable law and could reasonably be expected to
result in the incurrence of any liability by Terex or any of its Subsidiaries,
or the imposition on Terex or any of its Subsidiaries of any fine, excise tax or
penalty resulting from any noncompliance with any applicable law, in each case
in excess of $5,000,000 (or the Dollar Equivalent thereof in another currency).
"Foreign Pension Plan" shall mean any benefit plan which under
applicable law is required to be funded through a trust or other funding vehicle
other than a trust or funding vehicle maintained exclusively by a Governmental
Authority.
"Foreign Subsidiary" shall mean any Subsidiary that is not a Domestic
Subsidiary.
"Francs" and "Ffr" shall mean francs in lawful currency of the Republic
of France.
"GAAP" shall mean generally accepted accounting principles in effect in
the United States applied on a consistent basis.
"German Borrower" shall mean O&K Mining, but only following the
consummation of the Acquisition and the accession to this Agreement by O&K
Mining pursuant to Section 9.19.
"Governmental Authority" shall mean the government of the United States
of America, the United Kingdom, Germany, France, Italy, Australia, any other
nation or any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.
"Guarantee" of or by any person shall mean any obligation, contingent
or otherwise, of such person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other person (the "primary obligor") in any
manner, whether directly or indirectly, and including any obligation of such
person, direct or indirect, (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or to purchase (or to advance
<PAGE>
17
or supply funds for the purchase of) any security for the payment of such
Indebtedness, (b) to purchase or lease property, securities or services for the
purpose of assuring the owner of such Indebtedness of the payment of such
Indebtedness or (c) to maintain working capital, equity capital or any other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness; provided, however, that the
term "Guarantee" shall not include (i) endorsements for collection or deposit in
the ordinary course of business and (ii) Floor Plan Guarantees except to the
extent that they appear as debt on the Borrower's balance sheet.
"Guarantee Agreements" shall mean the Subsidiary Guarantee Agreement
and the Terex Guarantee Agreement.
"Guarantors" shall mean Terex and the Subsidiary Guarantors.
"Hazardous Materials" shall mean all explosive or radioactive
materials, substances or wastes, hazardous or toxic materials, substances or
wastes, pollutants, solid, liquid or gaseous wastes, including petroleum or
petroleum distillates, asbestos or asbestos containing materials,
polychlorinated biphenyls ("PCBs") or PCB-containing materials or equipment,
radon gas, infectious or medical wastes and all other substances or wastes of
any nature regulated pursuant to any Environmental Law.
"Hedging Agreement" shall mean any Interest Rate Protection Agreement
or any foreign currency exchange agreement, commodity price protection agreement
or other interest or currency exchange rate or commodity price hedging
arrangement not entered into for speculation.
"Inactive Subsidiary" shall mean each Subsidiary of Terex listed on
Schedule 1.01(f) until such time as such Subsidiary shall become a Subsidiary
Guarantor.
"Indebtedness" of any person shall mean, without duplication, (a) all
obligations of such person for borrowed money or advances of any kind, (b) all
obligations of such person evidenced by bonds, debentures, notes or similar
instruments, (c) all obligations of such person upon which interest charges are
customarily paid, (d) all obligations of such person under conditional sale or
other title retention agreements relating to property or assets purchased by
such person, (e) all obligations of such person issued or assumed as the
deferred purchase price of property or services (excluding trade accounts
payable and accrued obligations incurred in the ordinary course of business),
(f) all Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien on property owned or acquired by such person, whether or not the
obligations secured thereby have been assumed, (g) all Guarantees by such person
of Indebtedness of others, (h) all Capital Lease Obligations of such person, (i)
all obligations of such person in respect of interest rate protection
agreements, foreign currency exchange agreements or other interest or exchange
rate hedging arrangements and (j) all obligations of such person as an account
party in respect of letters of credit and bankers' acceptances. The Indebtedness
of any person shall include the Indebtedness of any partnership in which such
person is a general partner, to the extent such Indebtedness is recourse to such
person either expressly or by operation of law.
<PAGE>
18
"Indemnity, Subrogation and Contribution Agreement" shall mean the
Indemnity, Subrogation and Contribution Agreement, substantially in the form of
Exhibit D, among the Borrowers, the Subsidiary Guarantors and the Collateral
Agent.
"Interest Payment Date" shall mean, with respect to any Loan, the last
day of the Interest Period applicable to the Borrowing of which such Loan is a
part and, in the case of a Eurocurrency Borrowing with an Interest Period of
more than three months' duration, each day that would have been an Interest
Payment Date had successive Interest Periods of three months' duration been
applicable to such Borrowing, and, in addition, the date of any prepayment of
such Borrowing or conversion of such Borrowing to a Borrowing of a different
Type.
"Interest Period" shall mean (a) as to any Eurocurrency Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on the last
day) in the calendar month that is 1, 2, 3 or 6 months thereafter (and, in the
case of an Alternative Currency Borrowing maturing or required to be repaid in
less than one month, the date thereafter requested by the applicable Borrower
and agreed to by the Administrative Agent), as the applicable Borrower may
elect, (b) as to any ABR Borrowing or Borrowing bearing interest by reference to
the A/C Fronted Base Rate, the period commencing on the date of such Borrowing
and ending on the earliest of (i) the next succeeding March 31, June 30,
September 30 or December 31, (ii) the Revolving Credit Maturity Date, the
Tranche A Maturity Date or the Tranche B Maturity Date, as applicable, and (iii)
the date such Borrowing is converted to a Borrowing of a different Type in
accordance with Section 2.10 or repaid or prepaid in accordance with Section
2.11 or 2.12, (c) as to any A/C Fronted Fixed Rate Loan bearing interest by
reference to the Bank Bill Rate, the period commencing on the date of such Loan
and ending on the date (more than 7 but not more than 92 days thereafter) as the
Australian Borrower may elect and (d) as to any A/C Fronted Loan bearing
interest by reference to the Italian Fixed Rate, the period commencing on the
date of such Loan and ending on the numerically corresponding day (or, if there
is no numerically corresponding day, on the last day) in the calendar that is 1,
2 or 3 months thereafter, as the Italian Borrower may elect; provided, however,
that if any Interest Period would end on a day other than a Business Day, such
Interest Period shall be extended to the next succeeding Business Day unless
such next succeeding Business Day would fall in the next calendar month, in
which case such Interest Period shall end on the next preceding Business Day.
Interest shall accrue from and including the first day of an Interest Period to
but excluding the last day of such Interest Period.
"Interest Rate Protection Agreement" shall mean any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or
similar agreement or arrangement designed to protect any Borrower or any
Subsidiary against fluctuations in interest rates, and not entered into for
speculation.
"Issuing Bank" shall mean CSFB and BankBoston, N.A.
"Issuing Bank Fees" shall have the meaning assigned to such term in
Section 2.05(c).
"Italian Facilities" shall mean the credit facilities of the Italian
Borrower existing on the date of this agreement with Medio Credito, Min
Industria, PO MI, Carisp, Rolobanca, Banco Sicilia, First S. Paolo Torino,
<PAGE>
19
Credito Bergamasco, S. Geminiano, Banco Nazionale del Lavaro and Pop Emilia.
"Italian Fixed Rate" shall mean, with respect to any A/C Fronted Fixed
Rate Loan denominated in Lire, the rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1% and adjusted for reserve requirements, if any)
determined by the Italian Fronting Lender at approximately 11:00 a.m. (London
time) on the date which is two Business Days prior to or the beginning of the
relevant Interest Period (as specified in the applicable Borrowing Request) by
reference to page 3740 of the Telerate screen, or such other page as may replace
such rate as the Telerate screen which displays the British Bankers' Association
Interest Settlement Rates for deposits in Lire, for a period equal to such
Interest Period; provided that, to the extent that an interest rate is not
ascertainable pursuant to the foregoing provisions of this definition, the
"Italian Fixed Rate" shall be the interest rate per annum determined by the
Italian Fronting Lender to be the average of the rates per annum (rounded
upwards, if necessary, to the next 1/16 of 1% and adjusted for reserve
requirements, if any) at which deposits in Lire are offered for such relevant
Interest Period to major banks in the London interbank market in London, England
by the Italian Fronting Lender at approximately 11:00 a.m. (London time) on the
date which is two Business Days prior to the beginning of such Interest Period.
"Italian Fronting Lender" shall mean BankBoston, N.A., and its
successors and assigns in such capacity.
"Judgment Currency" shall have the meaning assigned to such term in
Section 9.16.
"L/C Commitment" shall mean the commitment of each Issuing Bank to
issue Letters of Credit pursuant to Section 2.23.
"L/C Disbursement" shall mean a payment or disbursement made by an
Issuing Bank pursuant to a Letter of Credit.
"L/C Exposure" shall mean at any time the sum of (a) the aggregate
undrawn amount of all outstanding Letters of Credit denominated in dollars at
such time, (b) the Dollar Equivalent of the aggregate undrawn amount of all
outstanding Letters of Credit denominated in Alternative Currencies at such
time, (c) the aggregate principal amount of all L/C Disbursements in respect of
Letters of Credit denominated in dollars that have not yet been reimbursed at
such time and (d) the Dollar Equivalent of the aggregate principal amount of all
L/C Disbursements in respect of Letters of Credit denominated in Alternative
Currencies that have not yet been reimbursed at such time. The L/C Exposure of
any Revolving Credit Lender at any time shall mean its Pro Rata Percentage of
the total L/C Exposure at such time.
"L/C Participation Fee" shall have the meaning assigned to such term in
Section 2.05(c).
"Lenders" shall mean (a) the financial institutions listed on Schedule
2.01(a) (other than any such financial institution that has ceased to be a party
hereto pursuant to an Assignment and Acceptance) and (b) any financial
institution that has become a party hereto pursuant to an Assignment and
Acceptance. Unless the context clearly indicates otherwise, the term "Lenders"
shall include the A/C Fronting Lenders and the Swingline Lender.
<PAGE>
20
"Letter of Credit" shall mean (a) any letter of credit issued pursuant
to Section 2.23 and (b) any Existing Letter of Credit.
"LIBO Rate" shall mean, with respect to any Eurocurrency Borrowing, the
rate per annum determined by the Administrative Agent at approximately 11:00
a.m. (London time) on the date which is two Business Days prior to or, with
respect to Eurocurrency Borrowings denominated in Pounds, at approximately 11:00
a.m. (London time) on the same day as, the beginning of the relevant Interest
Period (as specified in the applicable Borrowing Request) by reference to the
British Bankers' Association Interest Settlement Rates for deposits in dollars
or the relevant Alternative Currency, as applicable (as set forth by any service
selected by the Administrative Agent which has been nominated by the British
Bankers' Association as an authorized information vendor for the purpose of
displaying such rates), for a period equal to such Interest Period; provided
that, to the extent that an interest rate is not ascertainable pursuant to the
foregoing provisions of this definition, the "LIBO Rate" shall be the interest
rate per annum determined by the Administrative Agent to be the average of the
rates per annum at which deposits in dollars or the relevant Alternative
Currency, as applicable, are offered for such relevant Interest Period to major
banks in the London interbank market in London, England by the Administrative
Agent at approximately 11:00 a.m. (London time) on the date which is two
Business Days prior to or, with respect to Eurocurrency Borrowings denominated
in Pounds, at approximately 11:00 a.m. (London time) on the same day as, the
beginning of such Interest Period.
"Lien" shall mean, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, encumbrance, charge or security interest in or on such
asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.
"Lire" and "Lit" shall mean lire in lawful currency of Italy.
"Loan Documents" shall mean this Agreement, the Guarantee Agreements,
the Security Documents and the Indemnity, Subrogation and Contribution
Agreement.
"Loan Parties" shall mean the Borrowers and the Guarantors.
"Loans" shall mean the Revolving Loans, the Term Loans, the A/C Fronted
Loans and the Swingline Loans.
"Margin Stock" shall have the meaning assigned to such term in
Regulation U.
"Marks" and "DM" shall mean deutsche marks in lawful currency of
Germany.
"Material Adverse Effect" shall mean (a) a materially adverse effect on
the business, assets, operations, prospects or condition, financial or
otherwise, of Terex and its Subsidiaries, taken as a whole, (b) material
impairment of the ability of the Loan Parties to perform their obligations under
the Loan Documents or (c) material impairment of the rights of or benefits
available to the Lenders under any Loan Document.
<PAGE>
21
"Mortgaged Properties" shall mean the owned real properties and
leasehold and subleasehold interests specified on Schedule 1.01(c).
"Mortgages" shall mean the mortgages, deeds of trust, leasehold
mortgages, assignments of leases and rents, modifications and other security
documents delivered pursuant to clause (i) of Section 4.02(j) or pursuant to
Section 5.11, each substantially in the form of Exhibit F.
"Multiemployer Plan" shall mean a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Net Cash Proceeds" shall mean (a) with respect to any Asset Sale, the
cash proceeds (including cash proceeds subsequently received (as and when
received) in respect of non-cash consideration initially received and including
all insurance settlements and condemnation awards in excess of $250,000 from any
single event or series of related events), net of (i) transaction expenses
(including reasonable broker's fees or commissions, legal fees, accounting fees,
investment banking fees and other professional fees, transfer and similar taxes
and Terex's good faith estimate of income taxes paid or payable in connection
with the receipt of such cash proceeds), (ii) amounts provided as a reserve, in
accordance with GAAP, including pursuant to any escrow arrangement, against any
liabilities under any indemnification obligations associated with such Asset
Sale (provided that, to the extent and at the time any such amounts are released
from such reserve, such amounts shall constitute Net Cash Proceeds), (iii) in
the case of insurance settlements and condemnation awards, amounts previously
paid by Terex and its Subsidiaries to replace or restore the affected property,
and (iv) the principal amount, premium or penalty, if any, interest and other
amounts on any Indebtedness for borrowed money which is secured by the asset
sold in such Asset Sale and is required to be repaid with such proceeds (other
than any such Indebtedness assumed by the purchaser of such asset); provided,
however, that, with respect to the proceeds of any Asset Sale or series of
related Asset Sales in an amount of less than or equal to $50,000,000 in the
aggregate, if (A) Terex shall deliver a certificate of a Financial Officer to
the Administrative Agent at the time of receipt thereof setting forth Terex's
intent to reinvest such proceeds in productive assets of a kind then used or
usable in the business of Terex and its Subsidiaries within 300 days of receipt
of such proceeds and (B) no Default or Event of Default shall have occurred and
shall be continuing at the time of such certificate or at the proposed time of
the application of such proceeds, such proceeds shall not constitute Net Cash
Proceeds except to the extent not so used at the end of such 300-day period, at
which time such proceeds shall be deemed to be Net Cash Proceeds, and (b) with
respect to any Equity Issuance or any other issuance or disposition of
Indebtedness, the cash proceeds thereof, net of all taxes and customary fees,
commissions, costs and other expenses (including reasonable broker's fees or
commissions, legal fees, accounting fees, investment banking fees and other
professional fees, and underwriter's discounts and commissions) incurred in
connection therewith.
"O&K Mining" shall mean O&K Mining GmbH, a company organized under the
laws of the Federal Republic of Germany.
"Obligations" shall mean all obligations defined as "Obligations" in
any of the Guarantee Agreements and the Security Documents.
<PAGE>
22
"Payment Location" shall mean an office, branch or other place of
business of any Borrower.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to
and defined in ERISA.
"Perfection Certificate" shall mean the Perfection Certificate
substantially in the form of Annex 2 to the Security Agreement.
"Permitted Acquisitions" shall mean acquisitions of not less than 100%
(other than directors' qualifying shares) of the outstanding capital stock or
other equity interests of any corporation, partnership, a division of any
corporation or any similar business unit (or of all or substantially all the
assets and business of any of the foregoing) engaged in a Related Business so
long as (a) in the case of each such acquisition of capital stock or other
equity interests, such acquisition was not preceded by an unsolicited tender
offer for such capital stock or other equity interests by Terex or any of its
Affiliates, (b) Terex shall have delivered to the Administrative Agent a
certificate certifying that at the time of and immediately after giving effect
to such acquisition, no Default or Event of Default shall have occurred and be
continuing, and (c) either (i) the total consideration with respect to such
acquisition shall not exceed $2,500,000, (ii) Terex shall have delivered to the
Administrative Agent a certificate certifying that at the time of and
immediately after giving effect to such acquisition, the Pro Forma Acquisition
EBITDA of the entity acquired pursuant to such acquisition shall not exceed 25%
of the sum of such Pro Forma Acquisition EBITDA plus Consolidated EBITDA, in
each case for the period of four fiscal quarters ended on the last day of the
most recent fiscal quarter ended prior to the date of such acquisition or (iii)
(A) Terex shall have delivered to the Administrative Agent a certificate
certifying that at the time of and immediately after giving effect to such
acquisition, the ratio of (1) the Total Debt of Terex and its Subsidiaries on
the date of such acquisition (including all Indebtedness incurred in connection
with or resulting from such acquisition that would constitute Total Debt) to (2)
the sum of (x) Pro Forma Acquisition EBITDA of the entity acquired pursuant to
such acquisition, (y) Pro Forma Acquisition EBITDA for all other Acquired
Persons acquired during the period of four consecutive fiscal quarters most
recently ended prior to the date of such acquisition and (z) Consolidated
EBITDA, in each case for the period of four fiscal quarters most recently ended
prior to the date of such acquisition, shall be at least 0.15 to 1.00 less than
the Consolidated Leverage Ratio required pursuant to Section 6.11 on such date
and (B) such corporation, partnership, division, business or assets, as
applicable, are located in the United States (or the principal place of business
with respect thereto and substantially all of the applicable assets are located
in the United States) or in any country included on Schedule 1.01(e) or on a
list approved by the Required Lenders prior to the date of such acquisition. For
purposes of determining compliance with clause (c)(i) above, the principal
amount of Indebtedness assumed in connection with an acquisition shall be
included in calculating the consideration therefor.
"Permitted Investments" shall mean:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States
of America (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States of America),
in each case maturing within one year from the date of acquisition
thereof;
<PAGE>
23
(b) investments in commercial paper maturing within 270 days
from the date of acquisition thereof and having, at such date of
acquisition, the highest credit rating obtainable from Standard &
Poor's Ratings Service or from Moody's Investors Service, Inc.;
(c) investments in certificates of deposit, banker's
acceptances and time deposits maturing within one year from the date of
acquisition thereof issued or guaranteed by or placed with, and money
market deposit accounts issued or offered by, (i) the Administrative
Agent or any domestic office of any commercial bank organized under the
laws of the United States of America or any State thereof or (ii) a
commercial banking institution organized and located in a country
recognized by the United States of America, in each case that has a
combined capital and surplus and undivided profits of not less than
$250,000,000 (or the Dollar Equivalent thereof in another currency);
(d) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clause (a)
above entered into with any bank meeting the qualifications specified
in clause (c) above;
(e) investments in money market funds which invest
substantially all their assets in securities of the types described in
clauses (a) through (d) above; and
(f) other short-term investments utilized by Foreign
Subsidiaries in accordance with normal investment practices for cash
management not exceeding $1.0 million in aggregate principal amount
outstanding at any time.
"person" shall mean any natural person, corporation, business trust,
joint venture, association, company, limited liability company, partnership,
other business entity or government, or any agency or political subdivision
thereof.
"Plan" shall mean any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 307 of ERISA, and in respect of which Terex or any
ERISA Affiliate is (or, if such plan were terminated, would under Section 4069
of ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Pledge Agreement" shall mean the Pledge Agreement, substantially in
the form of Exhibit G, between Terex, its Subsidiaries party thereto and the
Collateral Agent for the benefit of the Secured Parties.
"Pounds" and "(pound)" shall mean pounds sterling in lawful currency of
the United Kingdom.
"Pro Forma Acquisition EBITDA" shall mean with respect to any entity or
business unit acquired or to be acquired in a Permitted Acquisition, the amount
of Consolidated EBITDA of such entity or business unit (as if such entity or
business unit were Terex) determined by Terex and acceptable to the
Administrative Agent in its reasonable discretion, based upon and derived from
financial information delivered to Administrative Agent prior to consummation of
such Permitted Acquisition for the four-quarter period ending on the last day of
the immediately preceding fiscal quarter of such entity or business unit for
<PAGE>
24
which such financial information for such entity or business unit has been
delivered to the Administrative Agent, adjusted by the estimated amount of
non-recurring revenues and expenditures with respect to the business of such
entity or business unit, as calculated by Terex and acceptable to Administrative
Agent in its reasonable discretion. On each subsequent determination date
occurring within one year after the consummation of a Permitted Acquisition, the
entity's Pro Forma Acquisition EBITDA shall include the Pro Forma Acquisition
EBITDA only for those fiscal quarters in the trailing four-quarter period
occurring prior to the closing of such Permitted Acquisition.
"Pro Rata Percentage" of any Revolving Credit Lender at any time shall
mean the percentage of the Total Revolving Credit Commitment represented by such
Lender's Revolving Credit Commitment.
"Purchase Money Indebtedness" shall mean any Indebtedness of a person
to any seller or other person incurred to finance the acquisition (including in
the case of a Capital Lease Obligation, the lease) of any after acquired real or
personal tangible property or assets related to the business of Terex or the
Subsidiaries and which is incurred substantially concurrently with such
acquisition and is secured only by the assets so financed.
"Refinancing Indebtedness" shall have the meaning assigned to such term
in Section 6.01(n).
"Register" shall have the meaning given such term in Section 9.04(d).
"Regulation G" shall mean Regulation G of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation U" shall mean Regulation U of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation X" shall mean Regulation X of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Related Business" shall mean any business in the manufacture or sale
of capital goods or parts or services, or otherwise reasonably related,
ancillary or complementary to the businesses of Terex and the Subsidiaries on
the date hereof.
"Release" shall mean any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposing,
depositing, dispersing, emanating or migrating of any Hazardous Material in,
into, onto or through the environment.
"Remedial Action" shall mean (a) "remedial action" as such term is
defined in CERCLA, 42 U.S.C. Section 9601(24), and (b) all other actions
required by any Governmental Authority or voluntarily undertaken to: (i) clean
up, remove, treat, abate or in any other way address any Hazardous Material in
the environment; (ii) prevent the Release or threat of Release, or minimize the
further Release of any Hazardous Material so it does not migrate or endanger or
threaten to endanger public health, welfare or the environment; or (iii) perform
studies and investigations in connection with, or as a precondition to, (i) or
(ii) above.
<PAGE>
25
"Required Lenders" shall mean, at any time, Lenders having Loans
(excluding Swingline Loans and A/C Fronted Loans), L/C Exposure, Swingline
Exposure, A/C Fronted Exposure and unused Revolving Credit and Term Loan
Commitments representing at least 51% of the sum of all Loans outstanding
(excluding Swingline Loans and A/C Fronted Loans), L/C Exposure, Swingline
Exposure, A/C Fronted Exposure and unused Revolving Credit and Term Loan
Commitments at such time. For purposes of determining the Required Lenders on
any date, any amounts denominated in an Alternative Currency shall be translated
into dollars at the Dollar Equivalent in effect on the most recent Calculation
Date.
"Responsible Officer" of any corporation shall mean any executive
officer or Financial Officer of such corporation and any other officer or
similar official thereof responsible for the administration of the obligations
of such corporation in respect of this Agreement.
"Revolving Credit Borrowing" shall mean a Borrowing comprised of
Revolving Loans.
"Revolving Credit Commitment" shall mean, with respect to each Lender,
the commitment of such Lender to make Revolving Loans and to acquire
participations in L/C Disbursements, Swingline Loans and A/C Fronted Loans
hereunder as set forth on Schedule 2.01(a), or in the Assignment and Acceptance
pursuant to which such Lender assumed its Revolving Credit Commitment, as
applicable, as the same may be (a) reduced from time to time pursuant to Section
2.09 and (b) reduced or increased from time to time pursuant to assignments by
or to such Lender pursuant to Section 9.04.
"Revolving Credit Exposure" shall mean, with respect to any Lender at
any time, the sum of (a) the aggregate principal amount of all outstanding
Dollar Revolving Loans of such Lender at such time, (b) the Dollar Equivalent of
the aggregate principal amount of all outstanding Revolving Loans of such Lender
that are Alternative Currency Loans at such time and (c) the aggregate amount of
such Lender's L/C Exposure, Swingline Exposure and A/C Fronted Exposure at such
time.
"Revolving Credit Lender" shall mean a Lender with a Revolving Credit
Commitment.
"Revolving Credit Maturity Date" shall mean March 6, 2004.
"Revolving Loans" shall mean the revolving loans made by the Lenders to
any Borrower pursuant to clause (c) of Section 2.01. Each Revolving Loan shall
be a Eurocurrency Revolving Loan or an ABR Revolving Loan.
"Sale and Leaseback" shall have the meaning set forth in Section 6.03.
"Secured Parties" shall have the meaning assigned to such term in the
Security Agreement.
"Security Agreement" shall mean the Security Agreement, substantially
in the form of Exhibit H, between Terex, its Subsidiaries party thereto and the
Collateral Agent for the benefit of the Secured Parties.
<PAGE>
26
"Security Documents" shall mean the Mortgages, the Security Agreement,
the Pledge Agreement and each of the security agreements, mortgages and other
instruments and documents executed and delivered pursuant to any of the
foregoing or pursuant to Section 5.11.
"Senior Subordinated Notes" shall mean the senior subordinated notes to
be issued by Terex in an aggregate principal amount not to exceed $200,000,000;
provided that such senior subordinated notes shall (a) require no scheduled
payments of principal prior to the date that is 12 months later than the Tranche
B Maturity Date, (b) be subject to subordination provisions no less favorable to
the Lenders than those described in Schedule 1.01(g) and be reasonably
satisfactory in all other respects to the Administrative Agent.
"Statutory Reserves" shall mean a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by any Governmental Authority to which banks are subject for any
category of deposits or liabilities customarily used to fund loans or by
reference to which interest rates applicable to Loans are determined. Such
reserve, liquid asset or similar percentages shall include those imposed
pursuant to Regulation D of the Board (and for purposes of Regulation D,
Eurocurrency Loans denominated in dollars shall be deemed to constitute
Eurocurrency Liabilities). Loans shall be deemed to be subject to such reserve
requirements without benefit of or credit for proration, exemptions or offsets
that may be available from time to time to any Lender under Regulation D or any
other applicable law, rule or regulation. Statutory Reserves shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
"subsidiary" shall mean, with respect to any person (herein referred to
as the "parent"), any corporation, partnership, association or other business
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or more
than 50% of the general partnership interests are, at the time any determination
is being made, owned, controlled or held, or (b) that is, at the time any
determination is made, otherwise Controlled, by the parent or one or more
subsidiaries of the parent or by the parent and one or more subsidiaries of the
parent.
"Subsidiary" shall mean any subsidiary of Terex.
"Subsidiary Borrowers" shall mean, collectively, the Scottish Borrower,
the French Borrower, the Australian Borrower, the Italian Borrower and, after
its accession to this Agreement pursuant to Section 9.19, the German Borrower.
"Subsidiary Guarantee Agreement" shall mean the Guarantee Agreement,
substantially in the form of Exhibit I, made by the Subsidiary Guarantors in
favor of the Collateral Agent for the benefit of the Secured Parties.
"Subsidiary Guarantors" shall mean each person listed on Schedule
1.01(b) and each other person that becomes party to a Subsidiary Guarantee
Agreement as a Guarantor, and the permitted successors and assigns of each such
person.
<PAGE>
27
"Swingline Commitment" shall mean the commitment of the Swingline
Lender to make loans pursuant to Section 2.22.
"Swingline Exposure" shall mean at any time the aggregate principal
amount at such time of all outstanding Swingline Loans. The Swingline Exposure
of any Revolving Credit Lender at any time shall equal its Pro Rata Percentage
of the aggregate Swingline Exposure at such time.
"Swingline Lender" shall mean CSFB.
"Swingline Loan" shall mean any loan made by the Swingline Lender
pursuant to its Swingline Commitment.
"Terex Guarantee Agreement" shall mean the Guarantee Agreement
substantially in the form of Exhibit K, made by Terex in favor of the Collateral
Agent for the benefit of the Secured Parties.
"Term Borrowing" shall mean a Borrowing comprised of Tranche A Term
Loans or Tranche B Term Loans.
"Term Loan Commitments" shall mean the Tranche A Commitments and the
Tranche B Commitments.
"Term Loan Repayment Dates" shall mean the Tranche A Term Loan
Repayment Dates and the Tranche B Term Loan Repayment Dates.
"Term Loans" shall mean the Tranche A Term Loans and the Tranche B Term
Loans.
"Total Debt" shall mean, as of any date of determination, without
duplication, the aggregate principal amount of Indebtedness of Terex and its
Subsidiaries outstanding as of such date, determined on a consolidated basis
(other than Indebtedness of the type referred to in clause (i) of the definition
of the term "Indebtedness", except to the extent of any unreimbursed drawings
thereunder). For purposes of calculating the Leverage Ratio on any date, the
amount of Total Debt on such date shall be reduced by the amount, if any, that
cash on the balance sheet of Terex and its consolidated Subsidiaries on such
date exceeds $5,000,000.
"Total Revolving Credit Commitment" shall mean, at any time, the
aggregate amount of the Revolving Credit Commitments, as in effect at such time.
"Total Senior Secured Debt" shall mean, as of any date of
determination, the sum of the aggregate principal amount of all (a) Loans
outstanding as of such date, (b) unreimbursed L/C Disbursements as of such date,
(c) Capital Lease Obligations of Terex and the Subsidiaries outstanding as of
such date and (d) other Indebtedness of Terex and the Subsidiaries that is
secured by any assets of Terex and the Subsidiaries.
"Tranche A Commitment" shall mean, with respect to each Lender, the
commitment of such Lender to make Tranche A Term Loans hereunder as set forth on
Schedule 2.01(a), or in the Assignment and Acceptance pursuant to which such
Lender assumed its Tranche A Commitment, as applicable, as the same may be (a)
reduced from time to time pursuant to Section 2.09 and (b) reduced or increased
<PAGE>
28
from time to time pursuant to assignments by or to such Lender pursuant to
Section 9.04.
"Tranche A Maturity Date" shall mean March 6, 2004.
"Tranche A Term Borrowing" shall mean a Borrowing comprised of Tranche
A Term Loans.
"Tranche A Term Loan Availability Period" shall mean the period from
and including the Closing Date, to and including the earlier of (a) the date of
consummation of the Acquisition and (b) June 30, 1998.
"Tranche A Term Loan Closing Date" shall mean each date on which
Tranche A Term Loans are made.
"Tranche A Term Loan Repayment Date" shall have the meaning assigned to
such term in Section 2.11(a)(i).
"Tranche A Term Loans" shall mean the term loans made by the Lenders to
any Borrower pursuant to clause (a) of Section 2.01. Each Tranche A Term Loan
shall be either a Eurocurrency Term Loan or an ABR Term Loan.
"Tranche B Commitment" shall mean, with respect to each Lender, the
commitment of such Lender to make Tranche B Term Loans hereunder as set forth on
Schedule 2.01(a), or in the Assignment and Acceptance pursuant to which such
Lender assumed its Tranche B Commitment, as applicable, as the same may be (a)
reduced from time to time pursuant to Section 2.09 and (b) reduced or increased
from time to time pursuant to assignments by or to such Lender pursuant to
Section 9.04.
"Tranche B Maturity Date" shall mean March 6, 2005.
"Tranche B Term Borrowing" shall mean a Borrowing comprised of Tranche
B Term Loans.
"Tranche B Term Loan Closing Date" shall mean the Closing Date.
"Tranche B Term Loan Repayment Date" shall have the meaning assigned to
such term in Section 2.11(a)(ii).
"Tranche B Term Loans" shall mean the term loans made by the Lenders to
Terex pursuant to clause (b) of Section 2.01. Each Tranche B Term Loan shall be
either a Eurocurrency Term Loan or an ABR Term Loan.
"Transactions" shall have the meaning assigned to such term in Section
3.02.
"Type", when used in respect of any Loan or Borrowing, shall refer to
the Rate by reference to which interest on such Loan or on the Loans comprising
such Borrowing is determined and the currency in which such Loan or the Loans
comprising such Borrowing is denominated. For purposes hereof, the term "Rate"
shall include the Adjusted LIBO Rate, the Alternate Base Rate and the rate with
<PAGE>
29
respect to any Foreign Base Rate Loan, and currency shall include dollars and
any Alternative Currency permitted hereunder.
"wholly owned Subsidiary" of any person shall mean a subsidiary of such
person of which securities (except for directors' qualifying shares) or other
ownership interests representing 100% of the equity or 100% of the ordinary
voting power or 100% of the general partnership interests are, at the time any
determination is being made, owned, controlled or held by such person or one or
more wholly owned subsidiaries of such person or by such person and one or more
wholly owned subsidiaries of such person; provided that 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 shall be deemed to be wholly owned Subsidiaries, in each
case so long as Terex 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 date
hereof or (b) the date such entity is incorporated or acquired by Terex or one
or more wholly owned Subsidiaries.
"Withdrawal Liability" shall mean liability to a Multiemployer Plan as
a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Terms Generally. The definitions in Section 1.01 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
All references herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and Schedules to,
this Agreement unless the context shall otherwise require. Except as otherwise
expressly provided herein, (a) any reference in this Agreement to any Loan
Document shall mean such document as amended, restated, supplemented or
otherwise modified from time to time and (b) all terms of an accounting or
financial nature shall be construed in accordance with GAAP, as in effect from
time to time; provided, however, that if Terex notifies the Administrative Agent
that Terex wishes to amend any covenant in Article VI or any related definition
to eliminate the effect of any change in GAAP occurring after the date of this
Agreement on the operation of such covenant (or if the Administrative Agent
notifies Terex that the Required Lenders wish to amend Article VI or any related
definition for such purpose), then Terex's compliance with such covenant shall
be determined on the basis of GAAP in effect immediately before the relevant
change in GAAP became effective, until either such notice is withdrawn or such
covenant is amended in a manner satisfactory to Terex and the Required Lenders.
SECTION 1.03. Exchange Rates. On each Calculation Date, the
Administrative Agent shall determine the Exchange Rate as of such Calculation
Date to be used for calculating relevant Dollar Equivalent and Alternative
Currency Equivalent amounts. The Exchange Rates so determined shall become
effective on such Calculation Date, shall remain effective until the next
succeeding Calculation Date and shall for all purposes of this Agreement (other
than any provision expressly requiring the use of a current Exchange Rate) be
the Exchange Rates employed in converting any amounts between the applicable
currencies.
<PAGE>
30
ARTICLE II
The Credits
SECTION 2.01. Commitments. Subject to the terms and conditions and
relying upon the representations and warranties herein set forth, each Lender
agrees, severally and not jointly, (a) to make Tranche A Term Loans to the
Borrowers, in dollars (in the case of Terex), Marks (in the case of the German
Borrower), Pounds (in the case of the Scottish Borrower) and Francs (in the case
of the French Borrower) on the Closing Date and on a single additional date
prior to the earlier of the expiration of the Tranche A Term Loan Availability
Period and the termination of the Tranche A Term Commitment of such Lender in
accordance with the terms hereof, in an aggregate principal amount not to exceed
its Tranche A Term Commitment; provided, however, that the Dollar Equivalent of
the Alternative Currency Term Loans in any Alternative Currency made by all
Tranche A Lenders shall not exceed the sublimit for such Alternative Currency
set forth on Schedule 2.01(b), (b) to make Tranche B Term Loans to Terex, in
dollars, on the Closing Date in accordance with the terms hereof, in an
aggregate principal amount not to exceed its Tranche B Term Commitment, and (c)
to make Revolving Loans to the Borrowers, at any time and from time to time on
or after the date hereof, and until the earlier of the Revolving Credit Maturity
Date and the termination of the Revolving Credit Commitment of such Lender in
accordance with the terms hereof, in dollars (in the case of Terex), Marks (in
the case of the German Borrower), Pounds (in the case of the Scottish Borrower)
and Francs (in the case of the French Borrower) in an aggregate principal amount
at any time outstanding that will not result in such Lender's Revolving Credit
Exposure exceeding such Lender's Revolving Credit Commitment; provided, however,
that the Alternative Currency Revolving Credit Exposure with respect to any
Alternative Currency shall not exceed the sublimit for such Alternative Currency
set forth in Schedule 2.01(b). Within the limits set forth in clause (c) of the
preceding sentence and subject to the terms, conditions and limitations set
forth herein, the Borrowers may borrow, pay or prepay and reborrow Revolving
Loans. Amounts paid or prepaid in respect of Term Loans may not be reborrowed.
SECTION 2.02. Loans. (a) Each Loan (other than A/C Fronted Loans and
Swingline Loans) shall be made as part of a Borrowing consisting of Loans made
by the Lenders ratably in accordance with their applicable Tranche A
Commitments, Tranche B Commitments or Revolving Credit Commitments, as
applicable; provided, however, that the failure of any Lender to make any Loan
shall not in itself relieve any other Lender of its obligation to lend hereunder
(it being understood, however, that no Lender shall be responsible for the
failure of any other Lender to make any Loan required to be made by such other
Lender). Except for Loans deemed made pursuant to Section 2.02(f), the Loans
comprising any Borrowing shall be in an aggregate principal amount that is (i)
an integral multiple of $100,000 (or the Alternative Currency Equivalent
thereof) and not less than $2,500,000 (or the Alternative Currency Equivalent
thereof) or (ii) equal to the remaining available balance of the applicable
Commitments. As provided in Section 2.03, each request for a Borrowing shall
state the amount requested in dollars (whether or not such Borrowing is to be an
Alternative Currency Borrowing). To the extent any Tranche A Term Loans are made
as Alternative Currency Loans, such Loans shall continue to be Alternative
Currency Loans (denominated and payable in the Alternative Currency in which
such Loans are advanced) for as long as they are outstanding under this
Agreement.
<PAGE>
31
(b) Subject to Sections 2.08, 2.15 and 2.24, (i) each Dollar Borrowing
shall be comprised entirely of ABR Loans or Eurocurrency Loans as Terex may
request pursuant to Section 2.03 and (ii) each Alternative Currency Borrowing
shall be comprised entirely of Eurocurrency Loans. Each Lender may at its option
make any Eurocurrency Loan by causing any domestic or foreign branch of such
Lender to make such Loan; provided that any exercise of such option shall not
affect the obligation of the applicable Borrower to repay such Loan in
accordance with the terms of this Agreement. Borrowings of more than one Type
may be outstanding at the same time; provided, however, that no Borrower shall
be entitled to request any Borrowing that, if made, would result in more than 15
Eurocurrency Borrowings outstanding hereunder at any time. For purposes of the
foregoing, Borrowings having different Interest Periods or denominated in
different currencies, regardless of whether they commence on the same date,
shall be considered separate Borrowings.
(c) Except with respect to Loans made pursuant to Section 2.02(f), each
Lender shall make each Dollar Loan to be made by it hereunder on the proposed
date thereof by wire transfer of immediately available funds to such account in
New York City as the Administrative Agent may designate not later than 11:00
a.m., New York City time, and the Administrative Agent shall, promptly upon
receipt thereof, credit the amounts so received to an account as designated by
Terex, in the applicable Borrowing Request or, if a Borrowing shall not occur on
such date because any condition precedent herein specified shall not have been
met, return the amounts so received to the respective Lenders. Each Lender shall
make each Alternative Currency Loan to be made by it hereunder on the proposed
date thereof by wire transfer of immediately available funds to such account in
the jurisdiction of the applicable Alternative Currency as the Administrative
Agent may designate for such purposes not later than 11:00 a.m., local time of
such jurisdiction, and the Administrative Agent shall, promptly upon receipt
thereof, credit the amounts so received to an account as designated by the
applicable Borrower in the applicable Borrowing Request or, if a Borrowing shall
not occur on such date because any condition precedent herein specified shall
not have been met, return the amounts so received to the respective Lenders.
(d) Unless the Administrative Agent shall have received notice from a
Lender prior to the date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender's portion of such Borrowing,
the Administrative Agent may assume that such Lender has made such portion
available to the Administrative Agent on the date of such Borrowing in
accordance with paragraph (c) above and the Administrative Agent may, in
reliance upon such assumption, make available to the applicable Borrower on such
date a corresponding amount. If the Administrative Agent shall have so made
funds available then, to the extent that such Lender shall not have made such
portion available to the Administrative Agent, such Lender and the applicable
Borrower severally agree to repay to the Administrative Agent forthwith on
demand such corresponding amount together with interest thereon, for each day
from the date such amount is made available to such Borrower until the date such
amount is repaid to the Administrative Agent at (i) in the case of any Borrower,
the interest rate applicable at the time to the Loans comprising such Borrowing
and (ii) in the case of such Lender, a rate determined by the Administrative
Agent to represent its cost of overnight or short-term funds in the applicable
currency (which determination shall be conclusive absent manifest error). If
such Lender shall repay to the Administrative Agent such corresponding amount,
such amount shall constitute such Lender's Loan as part of such Borrowing for
purposes of this Agreement.
<PAGE>
32
(e) Notwithstanding any other provision of this Agreement, no Borrower
shall be entitled to request any Interest Period with respect to any
Eurocurrency Borrowing or A/C Fronted Fixed Rate Loan that would end after the
Revolving Credit Maturity Date or the Tranche A Maturity Date or the Tranche B
Maturity Date, as the case may be.
(f) If any Issuing Bank shall not have received from any Borrower the
payment required to be made by it pursuant to Section 2.23(e) within the time
specified in such Section, such Issuing Bank will promptly notify the
Administrative Agent of the L/C Disbursement and the Administrative Agent will
promptly notify each Revolving Credit Lender of such L/C Disbursement and its
Pro Rata Percentage thereof. In the case of Letters of Credit denominated in
dollars, each Revolving Credit Lender shall pay by wire transfer of immediately
available funds to the Administrative Agent not later than 2:00 p.m., New York
City time, on such date (or, if such Revolving Credit Lender shall have received
such notice later than 12:00 (noon), New York City time, on any day, not later
than 10:00 a.m., New York City time, on the immediately following Business Day),
an amount in dollars equal to such Lender's Pro Rata Percentage of such L/C
Disbursement (it being understood that such amount shall be deemed to constitute
an ABR Revolving Loan of such Lender and such payment shall be deemed to have
reduced the L/C Exposure), and the Administrative Agent will promptly pay to the
applicable Issuing Bank amounts so received by it from the Revolving Credit
Lenders. In the case of Letters of Credit denominated in Marks, Pounds or
Francs, each Revolving Credit Lender shall pay by wire transfer of immediately
available funds to the Administrative Agent not later than 2:00 p.m., local time
of the jurisdiction of such Alternative Currency, on such date (or if such
Revolving Credit Lender shall have received such notice later than 12:00 (noon),
local time of such jurisdiction, on the immediately following Business Day), an
amount in such Alternative Currency equal to such Lender's Pro Rata Percentage
of such L/C Disbursement (it being understood that such amount shall be deemed
to constitute an Alternative Currency Revolving Loan of such Lender and such
payment shall be deemed to have reduced the L/C Exposure), and the
Administrative Agent will promptly pay to the applicable Issuing Bank amounts so
received by it from the Revolving Credit Lenders. In the case of Letters of
Credit denominated in any Alternative Currency except for Marks, Pounds or
Francs, the Administrative Agent shall notify each Revolving Credit Lender of
the Dollar Equivalent of the L/C Disbursement and of such Revolving Credit
Lender's Pro Rata Percentage thereof, and each Revolving Credit Lender shall pay
by wire transfer of immediately available funds to the Administrative Agent not
later than 2:00 p.m., New York City time, on such date (or, if such Revolving
Credit Lender shall have received such notice later than 12:00 (noon), New York
City time, on any day, not later than 10:00 a.m., New York city time, on the
immediately following Business Day), an amount in dollars equal to such Lender's
Pro Rata Percentage of such L/C Disbursement (it being understood that such
amount shall be deemed to constitute an ABR Revolving Loan of such Lender and
such payment shall be deemed to have reduced the L/C Exposure), and the
Administrative Agent will promptly pay to the applicable Issuing Bank amounts so
received by it from the Revolving Credit Lenders. The Administrative Agent will
promptly pay to the applicable Issuing Bank any amounts received by it from any
Borrower pursuant to Section 2.23(e) prior to the time that any Revolving Credit
Lender makes any payment pursuant to this paragraph (f); any such amounts
received by the Administrative Agent thereafter will be promptly remitted by the
Administrative Agent to the Revolving Credit Lenders that shall have made such
payments and to the applicable Issuing Bank, as their interests may appear. If
any Revolving Credit Lender shall not have made its Pro Rata Percentage of such
L/C Disbursement available to the Administrative Agent as provided above, such
Lender and the applicable Borrower severally agree to pay interest on such
<PAGE>
33
amount, for each day from and including the date such amount is required to be
paid in accordance with this paragraph to but excluding the date such amount is
paid, to the Administrative Agent for the account of the applicable Issuing Bank
at (i) in the case of any Borrower, a rate per annum equal to the interest rate
applicable to Revolving Loans pursuant to Section 2.06(a), and (ii) in the case
of such Lender, for the first such day, a rate determined by the Administrative
Agent to represent its cost of overnight funds in the applicable currency, and
for each day thereafter, (x) if such L/C Disbursement is denominated in dollars,
the Alternate Base Rate, and (y) if such L/C Disbursement is denominated in an
Alternative Currency, the applicable Foreign Base Rate.
SECTION 2.03. Borrowing Procedure. In order to request a Borrowing
(other than a Swingline Loan, an A/C Fronted Loan or a deemed Borrowing pursuant
to Section 2.02(f), as to which this Section 2.03 shall not apply), the
applicable Borrower shall hand deliver or telecopy to the Administrative Agent a
duly completed Borrowing Request (or telephone the Administrative Agent,
promptly confirmed with a written and duly completed Borrowing Request) (a) in
the case of a Eurocurrency Borrowing (other than an Alternative Currency
Borrowing), not later than 12:00 (noon), New York City time, three Business Days
before a proposed Borrowing, (b) in the case of an Alternative Currency
Borrowing, not later than 12:00 (noon), local time of the jurisdiction of such
Alternative Currency, three Business Days before the date of the proposed
Borrowing and (c) in the case of an ABR Borrowing, not later than 1:00 p.m., New
York City time, one Business Day before a proposed Borrowing. Each Borrowing
Request (including a telephonic Borrowing Request) shall be irrevocable, shall
be signed by or on behalf of such Borrower and shall specify the following
information: (i) whether such Borrowing is to be a Dollar Borrowing or an
Alternative Currency Borrowing; (ii) whether the Borrowing then being requested
is to be a Tranche A Term Borrowing, Tranche B Term Borrowing or a Revolving
Credit Borrowing; (iii) if such Borrowing is to be denominated in dollars,
whether it is to be a Eurocurrency Borrowing or an ABR Borrowing; (iv) the date
of such Borrowing (which shall be a Business Day); (v) the number and location
of the account to which funds are to be disbursed (which shall be an account
that complies with the requirements of Section 2.02(c)); (vi) the amount of such
Borrowing (which shall be specified in dollars, even if such Borrowing is to be
made in an Alternative Currency); (vii) subject to the limitations of Section
2.01, the currency of such Borrowing; and (viii) if such Borrowing is to be a
Eurocurrency Borrowing, the initial Interest Period with respect thereto;
provided, however, that, notwithstanding any contrary specification in any
Borrowing Request, each requested Borrowing shall comply with the requirements
set forth in Section 2.02. If no election as to the currency of Borrowing is
specified in any such notice, then the requested Borrowing shall be denominated
in the only currency permitted to be borrowed by such Borrower pursuant to
Section 2.01. If no election as to the Type of Borrowing is specified in any
such notice, then the requested Borrowing shall be an ABR Borrowing if
denominated in dollars or a Eurocurrency Borrowing if denominated in an
Alternative Currency. If no Interest Period with respect to any Eurocurrency
Borrowing is specified in any such notice, then such Borrower shall be deemed to
have selected an Interest Period of one month's duration. The Administrative
Agent shall promptly advise the applicable Lenders of any notice given pursuant
to this Section 2.03 (and the contents thereof), of each Lender's portion of the
requested Borrowing and the account to which Loans made in connection with the
requested Borrowing are to be wired.
SECTION 2.04. Evidence of Debt; Repayment of Loans. (a) Each Borrower
hereby unconditionally promises to pay to the Administrative Agent for the
account of the Swingline Lender or each other Lender entitled thereto (i) the
then unpaid principal amount of each Swingline Loan, on the last day of the
<PAGE>
34
Interest Period applicable to such Loan or, if earlier, on the Revolving Credit
Maturity Date, (ii) the principal amount of each Term Loan of such Lender as
provided in Section 2.11 and (iii) the then unpaid principal amount of each
Revolving Loan and A/C Fronted Loan on the Revolving Credit Maturity Date.
(b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of each Borrower to such Lender
resulting from each Loan made by such Lender from time to time, including the
amounts of principal and interest payable and paid such Lender from time to time
under this Agreement.
(c) The Administrative Agent shall maintain accounts in which it will
record (i) the amount of each Loan made hereunder, the Type thereof and the
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from each Borrower to each Lender
hereunder and (iii) the amount of any sum received by the Administrative Agent
hereunder from each Borrower or any Guarantor and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to paragraphs
(b) and (c) above shall be prima facie evidence of the existence and amounts of
the obligations therein recorded; provided, however, that the failure of any
Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligations of any Borrower to repay
the Loans in accordance with their terms.
(e) Any Lender may request that Loans made by it be evidenced by a
promissory note. In such event, the Borrower shall execute and deliver to such
Lender a promissory note payable to the order of such Lender (or, if requested
by such Lender, to such Lender and its registered assigns) and in a form and
substance reasonably acceptable to the Administrative Agent and the Borrower.
Notwithstanding any other provision of this Agreement, in the event any Lender
shall request and receive a promissory note payable to such Lender and its
registered assigns, the interests represented by such note shall at all times
(including after any assignment of all or part of such interests pursuant to
Section 9.04) be represented by one or more promissory notes payable to the
payee named therein or its registered assigns.
SECTION 2.05. Fees. (a) Terex agrees to pay to each Lender in dollars,
through the Administrative Agent, on the last day of March, June, September and
December in each year and on each date on which any Tranche A Commitment or
Revolving Credit Commitment of such Lender shall expire or be terminated as
provided herein, a facility fee (a "Facility Fee") equal to the Applicable
Percentage per annum in effect from time to time on the total amount of the
Tranche A Commitments and, without duplication, Tranche A Term Loans and the
total amount (whether used or unused) of the Revolving Credit Commitments of
such Lender (but not the Tranche B Commitments, the A/C Fronting Commitments or
the Swingline Commitments) during the preceding quarter (or other period
commencing with the date hereof or ending with the Revolving Credit Maturity
Date or Tranche A Maturity Date, as applicable, or the date on which the Tranche
A Commitments and Revolving Credit Commitments of such Lender shall expire or be
terminated); provided, however, that if any Revolving Credit Exposure remains
outstanding following any such expiration or termination of the Revolving Credit
Commitments, the Facility Fees with respect to such Revolving Credit Exposure
shall continue to accrue for so long as such Revolving Credit Exposure remains
outstanding and shall be payable on demand. All Facility Fees shall be computed
on the basis of the actual number of days elapsed in a year of 360 days. The
<PAGE>
35
Facility Fee due to each Lender shall commence to accrue on the date hereof and
shall cease to accrue on the date on which the Tranche A Commitment or Revolving
Credit Commitment, as the case may be, of such Lender shall expire or be
terminated as provided herein and there is not any remaining Revolving Credit
Exposure.
(b) Each Borrower agrees to pay to the Administrative Agent in dollars,
for its own account, the administrative fees set forth in the Fee Letter at the
times and in the amounts specified therein (the "Administrative Agent Fees").
(c) Each Borrower agrees to pay (i) to each Revolving Credit Lender,
through the Administrative Agent, on the last day of March, June, September and
December of each year and on the date on which the Revolving Credit Commitment
of such Lender shall be terminated as provided herein, a fee (an "L/C
Participation Fee") calculated on such Lender's Pro Rata Percentage of the
average daily aggregate L/C Exposure (excluding the portion thereof attributable
to unreimbursed L/C Disbursements) during the preceding quarter (or shorter
period commencing with the date hereof or ending with the Revolving Credit
Maturity Date or the date on which all Letters of Credit have been canceled or
have expired and the Revolving Credit Commitments of all Lenders shall have been
terminated) at a rate equal to the Applicable Percentage from time to time used
to determine the interest rate on Revolving Credit Borrowings comprised of
Eurocurrency Loans pursuant to Section 2.06, and (ii) to each Issuing Bank with
respect to each Letter of Credit issued by it on the last day of March, June,
September and December in each year and on each date on which any Revolving
Credit Commitment shall expire or be terminated as set forth herein a fronting
fee equal to 0.125% per annum on the amount of Letters of Credit issued by such
Issuing Bank and outstanding during the preceding quarter (or other period
commencing on the date hereof or ending with the Revolving Credit Maturity Date
or the date on which the Revolving Credit Commitments shall expire or be
terminated) (the "Issuing Bank Fees"). All L/C Participation Fees and Issuing
Bank Fees shall be computed on the basis of the actual number of days elapsed in
a year of 360 days and shall be payable in dollars.
(d) Except as provided in Section 2.24(e), each A/C Fronting Lender
agrees to pay to each Revolving Credit Lender, through the Administrative Agent,
on each Interest Payment Date with respect to each A/C Fronted Loan made by such
A/C Fronting Lender, a fee (an "A/C Participation Fee") equal to such Revolving
Credit Lender's Pro Rata Percentage of the Applicable Percentage received by
such A/C Fronting Lender from or on behalf of the applicable Borrower on such
Interest Payment Date in respect of such A/C Fronted Loan. All A/C Participation
Fees shall be payable (i) in the currency in which they were received by the A/C
Fronting Lender and (ii) only to the extent received by the A/C Fronting Lender.
(e) Each of the Australian Borrower and the Italian Borrower severally
agrees to pay to the Australian Fronting Lender and the Italian Fronting Lender,
respectively, on the last day of March, June, September and December in each
year and on each date on which the A/C Fronting Commitment of such Lender shall
expire or be terminated as set forth herein a fronting fee equal to 0.125% per
annum on the aggregate principal amount of A/C Fronted Loans of such Lender
outstanding during the preceding quarter (or other period commencing on the date
hereof or ending with the Revolving Credit Maturity Date or the date on which
the A/C Fronting Commitment shall expire or be terminated) (the "A/C Fronting
Fees"). All A/C Fronting Fees shall be computed on the basis of the actual
number of days elapsed in a year of 360 days and shall be payable in Australian
Dollars or Lire, as the case may be.
<PAGE>
36
(f) All Fees shall be paid on the dates due, in immediately available
funds, to the Administrative Agent for distribution, if and as appropriate,
among the Lenders, except that the Issuing Bank Fees shall be paid directly to
the applicable Issuing Bank. Once paid, none of the Fees shall be refundable
under any circumstances.
SECTION 2.06. Interest on Loans. (a) Subject to the provisions of
Section 2.07, the Loans comprising each ABR Borrowing, including each Swingline
Loan, shall bear interest (computed on the basis of the actual number of days
elapsed over a year of 365 or 366 days, as the case may be, when the Alternate
Base Rate is determined by reference to the Prime Rate and over a year of 360
days at all other times) at a rate per annum equal to the sum of (i) the
Alternate Base Rate and (ii) the Applicable Percentage for such Loans in effect
from time to time.
(b) Subject to the provisions of Section 2.07, each Foreign Base Rate
Loan shall bear interest (computed on the basis of the actual number of days
elapsed over a year of 360 days or, in the case of Foreign Base Rate Loans
denominated in Pounds, 365 or 366 days, as the case may be) at a rate per annum
equal to the sum of (i) the rate set forth in the definition of the term
"Foreign Base Rate Loans" and (ii) the Applicable Percentage for ABR Revolving
Loans in effect from time to time.
(c) Subject to the provisions of Section 2.07, the Loans comprising
each Eurocurrency Borrowing shall bear interest (computed on the basis of the
actual number of days elapsed over a year of 360 days or, in the case of
Eurocurrency Loans denominated in Pounds, 365 or 366 days, as the case may be)
at a rate per annum equal to the sum of (i) the Adjusted LIBO Rate for the
Interest Period in effect for such Borrowing and (ii) the Applicable Percentage
for such Loans in effect from time to time.
(d) Interest on each Loan shall be payable (i) on the Interest Payment
Dates applicable to such Loan except as otherwise provided in this Agreement and
(ii) in the currency in which such Loan is denominated. The applicable Alternate
Base Rate or Adjusted LIBO Rate for each Interest Period or day within an
Interest Period, as the case may be, shall be determined by the Administrative
Agent, and such determination shall be conclusive absent manifest error.
SECTION 2.07. Default Interest. If any Borrower shall default in the
payment of the principal of or interest on any Loan or any other amount becoming
due hereunder, by acceleration or otherwise, or under any other Loan Document,
such Borrower shall on demand from time to time pay interest, to the extent
permitted by law, on such defaulted amount to but excluding the date of actual
payment (after as well as before judgment) (a) in the case of the Loans, the
rate that would otherwise be applicable thereto pursuant to Section 2.06 plus
2%, (b) in the case of reimbursement obligations with respect to L/C
Disbursements owing in dollars, the rate applicable to ABR Revolving Loans plus
2% and (c) in the case of reimbursement obligations with respect to L/C
Disbursements owing in Alternative Currencies, the rate applicable to Foreign
Base Rate Loans that are Revolving Credit Loans for the Applicable Alternative
Currency plus 2%, (d) in the case of any interest payable on any Loan or
reimbursement obligation with respect to any L/C Disbursement or any Facility
Fee or other amount payable hereunder, at a rate per annum equal to the rate
applicable to ABR Loans (or, in the case of interest, fees or amounts owing on
account of obligations denominated in Alternative Currencies, Foreign Base Rate
Loans) that are Tranche A Term Loans, Tranche B Term Loans or Revolving Loans,
as applicable, plus 2% (or, in the case of fees, reimbursements or any such
<PAGE>
37
other amounts that do not relate to Tranche A Term Loans, Tranche B Term Loans
or the Revolving Credit Exposure, the Alternate Base Rate plus 3.00%).
SECTION 2.08. Alternate Rate of Interest. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurocurrency Borrowing the Administrative Agent shall have
determined that (a) deposits in the principal amounts of the Loans comprising
such Borrowing are not generally available in the relevant market, or (b) the
rates at which such deposits are being offered will not adequately and fairly
reflect the cost to any Lender of making or maintaining its Eurocurrency Loan
during such Interest Period, or (c) reasonable means do not exist for
ascertaining the Adjusted LIBO Rate, the Administrative Agent shall, as soon as
practicable thereafter, give written or telecopy notice explaining such
determination to the applicable Borrower and the Lenders. In the event of any
such determination, until the Administrative Agent shall have advised such
Borrower and the Lenders that the circumstances giving rise to such notice no
longer exist, any request by such Borrower for a Eurocurrency Borrowing
denominated in dollars pursuant to Section 2.03 or 2.10 shall be deemed to be a
request for an ABR Borrowing. Each determination by the Administrative Agent
hereunder shall be conclusive absent manifest error and any request by such
Borrower for a Eurocurrency Borrowing denominated in any Alternative Currency
pursuant to Section 2.03 or 2.10 shall be deemed to be a request for a Foreign
Base Rate Loan.
SECTION 2.09. Termination and Reduction of Commitments. (a) The Tranche
B Commitments shall automatically terminate at 5:00 p.m., New York City time, on
the Closing Date. The Tranche A Commitments shall automatically be reduced on
the date of each borrowing of Tranche A Term Loans by an amount equal to the
Dollar Equivalent of the aggregate principal amount of Tranche A Term Loans so
borrowed, and any remaining unused Tranche A Commitments shall automatically
terminate at 5:00 p.m., New York City time, on the last day of the Tranche A
Term Loan Availability Period; provided, however, that upon not less than five
Business Days' prior irrevocable written or telecopy notice from Terex, Terex
may elect to convert the unused Tranche A Commitments to Revolving Credit
Commitments on or prior to the last day of the Tranche A Term Loan Availability
Period. The Revolving Credit Commitments, the Swingline Commitments, the A/C
Fronting Commitments and the L/C Commitment shall automatically terminate on the
Revolving Credit Maturity Date. Notwithstanding the foregoing, all the
Commitments shall automatically terminate at 5:00 p.m., New York City time, on
April 30, 1998, if the initial Credit Event shall not have occurred by such
time.
(b) Upon at least three Business Days' prior irrevocable written or
telecopy notice to the Administrative Agent, Terex may at any time in whole
permanently terminate, or from time to time in part permanently reduce, the
Tranche A Commitments, the Tranche B Commitments or the Revolving Credit
Commitments; provided, however, that (i) each partial reduction of either of the
Term Loan Commitments or the Revolving Credit Commitments shall be in an
integral multiple of $1,000,000 and in a minimum amount of $5,000,000 and (ii)
the Total Revolving Credit Commitment shall not be reduced to an amount that is
less than the sum of the Aggregate Revolving Credit Exposure at the time.
(c) Each reduction in either of the Term Loan Commitments or the
Revolving Credit Commitments hereunder shall be made ratably among the Lenders
in accordance with their respective applicable Commitments. Terex shall pay to
the Administrative Agent for the account of the applicable Lenders, on the date
<PAGE>
38
of each termination or reduction, the Facility Fees on the amount of any Tranche
A Commitments or Revolving Credit Commitments so terminated or reduced accrued
to but excluding the date of such termination or reduction.
SECTION 2.10. Conversion and Continuation of Borrowings. Each Borrower
shall have the right at any time upon prior irrevocable notice to the
Administrative Agent (a) not later than 1:00 p.m., New York City time, one
Business Day prior to conversion, to convert any Eurocurrency Borrowing
denominated in dollars into an ABR Borrowing, (b) not later than 12:00 (noon),
New York City time (or local time in the jurisdiction of the applicable
Alternative Currency, in the case of a continuation of the Interest Period for a
Eurocurrency Borrowing in an Alternative Currency), three Business Days prior to
conversion or continuation, to convert any ABR Borrowing into a Eurocurrency
Borrowing denominated in dollars or to continue any Eurocurrency Borrowing as a
Eurocurrency Borrowing in the same currency for an additional Interest Period,
and (c) not later than 12:00 (noon), New York City time (or local time in the
jurisdiction of the applicable Alternative Currency), three Business Days prior
to conversion, to convert the Interest Period with respect to any Eurocurrency
Borrowing to another permissible Interest Period, subject in each case to the
following:
(i) each conversion or continuation shall be made pro rata
among the Lenders in accordance with the respective principal amounts
of the Loans comprising the converted or continued Borrowing;
(ii) if less than all the outstanding principal amount of any
Borrowing shall be converted or continued, then each resulting
Borrowing shall satisfy the limitations specified in Sections 2.02(a)
and 2.02(b) regarding the principal amount and maximum number of
Borrowings of the relevant Type;
(iii) each conversion shall be effected by each Lender and the
Administrative Agent by recording for the account of such Lender the
new Loan of such Lender resulting from such conversion and reducing the
Loan (or portion thereof) of such Lender being converted by an
equivalent principal amount; accrued interest on any Eurocurrency Loan
(or portion thereof) being converted shall be paid by such Borrower at
the time of conversion;
(iv) if any Eurocurrency Borrowing is converted at a time
other than the end of the Interest Period applicable thereto, such
Borrower shall pay, upon demand, any amounts due to the Lenders
pursuant to Section 2.16;
(v) any portion of a Borrowing (other than an Alternative
Currency Borrowing) maturing or required to be repaid in less than one
month may not be converted into or continued as a Eurocurrency
Borrowing;
(vi) any portion of a Eurocurrency Borrowing denominated in
dollars that cannot be converted into or continued as a Eurocurrency
Borrowing by reason of the immediately preceding clause shall be
automatically converted at the end of the Interest Period in effect for
such Borrowing into an ABR Borrowing, and any portion of an Alternative
Currency Borrowing required to be repaid in less than one month may be
converted, with the consent of the Administrative Agent (which shall
not be unreasonably withheld), to an Interest Period ending on the
<PAGE>
39
date that such Borrowing is required to be repaid;
(vii) no Interest Period may be selected for any Eurocurrency
Borrowing that is a Tranche A Term Borrowing or a Tranche B Term
Borrowing that would end later than a Tranche A Term Loan Repayment
Date or Tranche B Term Loan Repayment Date, respectively, occurring on
or after the first day of such Interest Period if, after giving effect
to such selection, the aggregate outstanding amount of (A) the
Eurocurrency Term Borrowings that are Tranche A Term Borrowings or
Tranche B Term Borrowings, as applicable, with Interest Periods ending
on or prior to such Tranche A Term Loan Repayment Date or Tranche B
Term Loan Repayment Date and (B) the ABR Term Borrowings would not be
at least equal to the principal amount of Term Borrowings to be paid on
such Tranche A Term Loan Repayment Date or Tranche B Term Loan
Repayment Date; and
(viii) upon notice to any Borrower from the Administrative
Agent given at the request of the Required Lenders, after the
occurrence and during the continuance of a Default or Event of Default,
(A) no outstanding Dollar Borrowing may be converted into, or continued
as, a Eurocurrency Borrowing, (B) unless repaid, each Eurocurrency
Borrowing denominated in dollars shall be converted to an ABR Borrowing
at the end of the Interest Period applicable thereto and (C) no
Interest Period in excess of one month may be selected for any
Alternative Currency Borrowing.
Each notice pursuant to this Section 2.10 shall be irrevocable and
shall refer to this Agreement and specify (i) the identity and amount of the
Borrowing that the applicable Borrower requests be converted or continued, (ii)
whether such Borrowing is to be converted to or continued as a Eurocurrency
Borrowing or an ABR Borrowing, (iii) if such notice requests a conversion, the
date of such conversion (which shall be a Business Day) and (iv) if such
Borrowing is to be converted to or continued as a Eurocurrency Borrowing, the
Interest Period with respect thereto. If no Interest Period is specified in any
such notice with respect to any conversion to or continuation as a Eurocurrency
Borrowing, such Borrower shall be deemed to have selected an Interest Period of
one month's duration. The Administrative Agent shall advise the Lenders of any
notice given pursuant to this Section 2.10 and of each Lender's portion of any
converted or continued Borrowing. If such Borrower shall not have given notice
in accordance with this Section 2.10 to continue any Borrowing into a subsequent
Interest Period (and shall not otherwise have given notice in accordance with
this Section 2.10 to convert such Borrowing), such Borrowing shall, at the end
of the Interest Period applicable thereto (unless repaid pursuant to the terms
hereof), (i) in the case of a Dollar Borrowing, automatically be continued into
a new Interest Period as an ABR Borrowing and (ii) in the case of an Alternative
Currency Borrowing, automatically be continued into a new Interest Period of one
month. Notwithstanding any contrary provisions herein, the currency of an
outstanding Borrowing may not be changed in connection with any conversion or
continuation of such Borrowing.
SECTION 2.11. Repayment of Term Borrowings. (a) (i) Each Borrower shall
pay to the Administrative Agent, for the account of the Lenders, on the dates
set forth below, or if any such date is not a Business Day, on the next
succeeding Business Day (each such date being a "Tranche A Term Loan Repayment
Date"), a principal amount of the Tranche A Term Loans (as adjusted from time to
time pursuant to Sections 2.12(b) and 2.13(g)) equal to the percentage set
<PAGE>
40
forth below opposite such date multiplied by the aggregate principal amount of
all Tranche A Term Loans made to such Borrower hereunder and outstanding on the
last Tranche A Term Loan Closing Date, together in each case with accrued and
unpaid interest on the principal amount to be paid to but excluding the date of
such payment:
Date Percentage
- ---- ----------
June 30, 1999 4.00%
September 30, 1999 4.00%
December 31, 1999 4.00%
March 31, 2000 4.00%
June 30, 2000 4.00%
September 30, 2000 4.00%
December 31, 2000 4.00%
March 31, 2001 4.00%
June 30, 2001 5.25%
September 30, 2001 5.25%
December 31, 2001 5.25%
March 31, 2002 5.25%
June 30, 2002 5.25%
September 30, 2002 5.25%
December 31, 2002 5.25%
March 31, 2003 5.25%
June 30, 2003 6.50%
September 30, 2003 6.50%
December 31, 2003 6.50%
Tranche A Maturity Date 6.50%
(ii) Terex shall pay to the Administrative Agent, for the account of
the Lenders, on the dates set forth below or, if any such date is not a Business
Day, on the next succeeding Business Day (each such date being a "Tranche B Term
Loan Repayment Date"), a principal amount of the Tranche B Term Loans (as
adjusted from time to time pursuant to Sections 2.12(b) and 2.13(g)) equal to
the percentage set forth below opposite such date multiplied by the aggregate
principal amount of all Tranche B Term Loans made on the Closing Date, together
in each case with accrued and unpaid interest on the principal amount to be paid
to but excluding the date of such payment:
Date Percentage
- ---- ----------
June 30, 1998 0.25%
September 30, 1998 0.25%
December 31, 1998 0.25%
March 31, 1999 0.25%
June 30, 1999 0.25%
<PAGE>
41
Date Percentage
- ---- ----------
June 30, 1998 0.25%
September 30, 1999 0.25%
December 31, 1999 0.25%
March 31, 2000 0.25%
June 30, 2000 0.25%
September 30, 2000 0.25%
December 31, 2000 0.25%
March 31, 2001 0.25%
June 30, 2001 0.25%
September 30, 2001 0.25%
December 31, 2001 0.25%
March 31, 2002 0.25%
June 30, 2002 0.25%
September 30, 2002 0.25%
December 31, 2002 0.25%
March 31, 2003 0.25%
June 30, 2003 0.25%
September 30, 2003 0.25%
December 31, 2003 0.25%
March 31, 2004 0.25%
June 30, 2004 23.5%
September 30, 2004 23.5%
December 31, 2004 23.5%
Tranche B Maturity Date 23.5%
(b) To the extent not previously paid, all Tranche A Term Loans and
Tranche B Term Loans shall be due and payable on the Tranche A Maturity Date and
Tranche B Matu rity Date, respectively, together with accrued and unpaid
interest on the principal amount to be paid to but excluding the date of
payment.
(c) All repayments pursuant to this Section 2.11 shall be subject to
Section 2.16, but shall otherwise be without premium or penalty.
SECTION 2.12. Prepayment. (a) Each Borrower shall have the right at any
time and from time to time to prepay any Borrowing, in whole or in part, upon
prior written or telecopy notice (or telephone notice promptly confirmed by
written or telecopy notice) to the Administrative Agent (i) in the case of a
prepayment of a Eurocurrency Borrowing, given before 12:00 (noon), New York City
time (or, in the case of prepayment of an Alternative Currency Borrowing, local
time of the jurisdiction of such Alternative Currency) three Business Days
before such prepayment and (ii) in the case of a prepayment of ABR Loans or
Foreign Base Rate Loans, given before 1:00 p.m. local time, one Business Day
before such prepayment; provided, however, that each partial prepayment shall be
in an amount that is an integral multiple of $100,00 (or the Alternative
<PAGE>
42
Currency Equivalent thereof) and not less than $2,500,000 (or the Alternative
Currency Equivalent thereof).
(b) Optional prepayments of Term Loans shall be allocated against the
then-outstanding Tranche A Term Loans and Tranche B Term Loans pro rata, and
such prepayments shall be applied (i) first, against the remaining scheduled
installments of principal due in respect of the Tranche A Term Loans and Tranche
B Term Loans under Sections 2.11(a)(i) and (ii), respectively, in the next
twelve months in the order of maturity and (ii) second, pro rata against such
remaining scheduled installments of principal.
(c) Each notice of prepayment shall specify the prepayment date and the
principal amount of each Borrowing (or portion thereof) to be prepaid, shall be
irrevocable and shall commit the applicable Borrower to prepay such Borrowing by
the amount stated therein on the date stated therein. All prepayments under this
Section 2.12 shall be subject to Section 2.16 but otherwise without premium or
penalty. All prepayments under this Section 2.12 shall be accompanied by accrued
interest on the principal amount being prepaid to the date of payment.
SECTION 2.13. Mandatory Prepayments. (a) In the event of any
termination of all the Revolving Credit Commitments, each Borrower shall repay
or prepay all its outstanding Revolving Credit Borrowings, all outstanding
Swingline Loans and all outstanding A/C Fronted Loans on the date of such
termination. In the event of any partial reduction of the Revolving Credit
Commitments, then at or prior to the effective date of such reduction, the
Administrative Agent shall notify the Borrowers and the Revolving Credit Lenders
of the Aggregate Revolving Credit Exposure after giving effect thereto. If at
any time, as a result of such a partial reduction or termination, as a result of
fluctuations in exchange rates or otherwise, the Aggregate Revolving Credit
Exposure would exceed the Total Revolving Credit Commitment or the Alternative
Currency Revolving Credit Exposure in any Alternative Currency would exceed the
sublimit for such Alternative Currency set forth on Schedule 2.01(b), then the
Borrowers shall (i) on the date of such reduction or termination of Revolving
Credit Commitments or (ii) within three Business Day following notice from the
Administrative Agent of any such fluctuation in exchange rate or otherwise,
repay or prepay Revolving Credit Borrowings, Swingline Loans or A/C Fronted
Loans (or a combination thereof) in an amount sufficient to eliminate such
excess.
(b) Not later than the third Business Day following the receipt of Net
Cash Proceeds in respect of any Asset Sale (other than (i) any Asset Sale the
Net Cash Proceeds of which are not greater than $250,000 from any single event
or series of related events and (ii) Asset Sales the aggregate Net Cash Proceeds
of which are not greater than $5,000,000 in any fiscal year of Terex), the
outstanding Term Loans shall be prepaid in accordance with Section 2.13(g) in an
aggregate principal amount equal to 100% of such Net Cash Proceeds.
(c) In the event and on each occasion that an Equity Issuance occurs,
then substantially simultaneously with (and in any event not later than the
third Business Day next following) the receipt of Net Cash Proceeds in respect
of such Equity Issuance, outstanding Term Loans shall be prepaid in accordance
with Section 2.13(g) in an aggregate principal amount equal to 100% of such Net
Cash Proceeds; provided, however, that no such prepayment shall be required if
(i) the Consolidated Leverage Ratio as of the end of the most recent four fiscal
quarters for which financial statements shall have been delivered pursuant to
Section 5.04(a) or (b), as applicable, shall be less than 3.00 to 1.00, (ii)
Terex shall have received at least $150,000,000 in gross cash proceeds from
<PAGE>
43
the issuance of Senior Subordinated Notes and shall have used the Net Cash
Proceeds thereof either to prepay Term Loans pursuant to Section 2.13(e) or to
finance the Acquisition or another Permitted Acquisition or (iii) (A) Terex
shall have received at least $100,000,000 in gross cash proceeds from the
issuance of Senior Subordinated Notes and shall have used the Net Cash Proceeds
thereof to prepay Term Loans pursuant to Section 2.13(e) and (B) the
Consolidated Senior Secured Leverage Ratio as of the end of the most recent four
fiscal quarters for which financial statements have been delivered pursuant to
Section 5.04(a) or (b), as applicable, shall be less than 2.75 to 1.00.
(d) No later than the earlier of (i) 90 days after the end of each
fiscal year of Terex, commencing with the fiscal year ending on December 31,
1998, and (ii) the date on which the financial statements with respect to such
fiscal year are delivered pursuant to Section 5.04(a), outstanding Term Loans
shall be prepaid in accordance with Section 2.13(g) in an aggregate principal
amount equal to 50% of Excess Cash Flow for the fiscal year then ended;
provided, however, that no such prepayment shall be required if the Consolidated
Leverage Ratio as of the end of such fiscal year shall be less than 3.85 to
1.00.
(e) In the event that Terex or any Subsidiary shall receive Net Cash
Proceeds from (i) the issuance of any Senior Subordinated Notes or Additional
Subordinated Notes or (ii) the issuance or incurrence of any other Indebtedness
for money borrowed (other than Indebtedness for money borrowed permitted
pursuant to Section 6.01), then, substantially simultaneously with (and in any
event not later than the third Business Day next following) the receipt of such
Net Cash Proceeds, 100% of such Net Cash Proceeds shall be used either (i) to
fund the consideration for the Acquisition or, in the case of the Senior
Subordinated Notes or Additional Subordinated Notes, another Permitted
Acquisition, and/or (ii) to prepay outstanding Term Loans in accordance with
Section 2.13(g) in an aggregate principal amount equal to 100% of such Net Cash
Proceeds.
(f) In the event that there shall occur any Casualty or Condemnation
and, pursuant to the applicable Mortgage, the Casualty Proceeds or Condemnation
Proceeds, as the case may be, are required to be used to prepay the Term Loans,
then the outstanding Term Loans shall be prepaid in accordance with Section
2.13(g) in an aggregate principal amount equal to 100% of such Casualty Proceeds
or Condemnation Proceeds, as the case may be.
(g) Subject to paragraph (j) below, each prepayment of outstanding Term
Loans required to be made pursuant to any paragraph of this Section 2.13 shall
be made by all Borrowers of their respective Term Loans pro rata among the
then-outstanding Tranche A Term Loans and Tranche B Term Loans, and, subject to
paragraph (j) below, shall be applied (i) first against the remaining scheduled
installments of principal due in respect of Tranche A Term Loans and Tranche B
Term Loans under Sections 2.11(a)(i) and (ii), respectively, in the next twelve
months in the order of maturity and (ii) second, pro rata against such remaining
scheduled installments of principal.
(h) Terex shall deliver to the Administrative Agent, at the time of
each prepayment required under this Section 2.13, (i) a certificate signed by a
Financial Officer of Terex setting forth in reasonable detail the calculation of
the amount of such prepayment and (ii) to the extent practicable, at least three
Business Days' prior written notice of such prepayment. Each notice of
prepayment shall specify the prepayment date, the Type of each Loan being
prepaid and the principal amount of each Loan (or portion thereof) to be
prepaid.
<PAGE>
44
All pre payments of Borrowings under this Section 2.13 shall be subject to
Section 2.16, but shall otherwise be without premium or penalty.
(i) To the extent possible consistent with Section 2.13(g), amounts to
be applied pursuant to this Section 2.13 to the prepayment of Term Loans and
Revolving Loans shall be applied, as applicable, first to prepay outstanding ABR
Term Loans and ABR Revolving Loans. Any amounts remaining after each such
application shall, at the option of the applicable Borrower, be applied to
prepay Eurocurrency Term Loans or Eurocurrency Revolving Loans, as the case may
be, immediately and/or shall be deposited in the Pre payment Account (as defined
below). The Administrative Agent shall apply any cash deposited in the
Prepayment Account (i) allocable to Term Loans to prepay Eurocurrency Term Loans
and (ii) allocable to Revolving Loans to prepay Eurocurrency Revolving Loans, in
each case on the last day of their respective Interest Periods (or, at the
direction of such Borrower, on any earlier date) until all outstanding Term
Loans or Revolving Loans, as the case may be, have been prepaid or until all the
allocable cash on deposit with respect to such Loans has been exhausted. For
purposes of this Agreement, the term "Prepayment Account" shall mean an account
established by such Borrower with the Administrative Agent and over which the
Administrative Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal for application in accordance with this paragraph
(i). The Administrative Agent will, at the request of such Borrower, invest
amounts on deposit in the Prepayment Account in Permitted Investments that
mature prior to the last day of the applicable Interest Periods of the
Eurocurrency Term Borrowings or Eurocurrency Revolving Borrowings to be prepaid,
as the case may be; provided, however, that (i) the Administrative Agent shall
not be required to make any investment that, in its sole judgment, would require
or cause the Administrative Agent to be in, or would result in any, violation of
any law, statute, rule or regulation and (ii) the Administrative Agent shall
have no obligation to invest amounts on deposit in the Prepayment Account if a
Default or Event of Default shall have occurred and be continuing. Such Borrower
shall indemnify the Administrative Agent for any losses relating to the
investments so that the amount available to prepay Eurocurrency Borrowings on
the last day of the applicable Interest Period is not less than the amount that
would have been available had no investments been made pursuant thereto. Other
than any interest earned on such investments (which shall be for the account of
the applicable Borrower, to the extent not necessary for the prepayment of
Eurocurrency Loans in accordance with this Section 2.13), the Prepayment Account
shall not bear interest. Interest or profits, if any, on such investments shall
be deposited in the Prepayment Account and reinvested and disbursed as specified
above. If the maturity of the Loans has been accelerated pursuant to Article
VII, the Administrative Agent may, in its sole discretion, apply all amounts on
deposit in the Prepayment Account to satisfy any of the Obligations. Each
Borrower hereby grants to the Administrative Agent, for its benefit and the
benefit of the Issuing Banks, the Swingline Lender and the Lenders, a security
interest in its Prepay ment Account to secure the Obligations. This paragraph
(i) shall not be construed to alter the application required by Section 2.13(g).
(j) Any Tranche B Lender may elect, by notice to the Administrative
Agent in writing (or by telephone or telecopy promptly confirmed in writing)
prior to 12:00 (noon), New York City time, at least three Business Days prior to
any prepayment of Tranche B Term Loans required to be made by any Borrower for
the account of such Lender pursuant to this Section 2.13, to cause all or a
portion of such prepayment to be applied instead to prepay Tranche A Term Loans
in accordance with paragraph (g) above. Any such prepayment of Tranche A Term
Loans shall be made by all Borrowers of their respective Tranche A Term Loans
<PAGE>
45
pro rata among the then outstanding Tranche A Term Loans and in the order set
forth in Section 2.13(g).
SECTION 2.14. Reserve Requirements; Change in Circumstances. (a)
Notwithstanding any other provision of this Agreement, if after the date of this
Agreement any change in applicable law or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall change the basis of taxation of payments to any Lender or any Issuing
Bank of the principal of or interest on any Eurocurrency Loan or A/C Fronted
Fixed Rate Loan made by such Lender or any Fees or other amounts payable
hereunder (other than changes in respect of taxes imposed on the overall net
income of such Lender or such Issuing Bank by the jurisdiction in which such
Lender or such Issuing Bank has its principal office or by any political
subdivision or taxing authority therein), or shall impose, modify or deem
applicable any reserve, special deposit or similar requirement against assets
of, deposits with or for the account of or credit extended by any Lender or any
Issuing Bank (except any such reserve requirement which is reflected in the
Adjusted LIBO Rate, the Bank Bill Rate or the Italian Fixed Rate, as the case
may be) or shall impose on such Lender or such Issuing Bank or the London
interbank market (or other relevant interbank market) any other condition
affecting this Agreement or Eurocurrency Loans or A/C Fronted Fixed Rate Loans
made by such Lender or any Letter of Credit or participation therein, and the
result of any of the foregoing shall be to increase the cost to such Lender or
such Issuing Bank of making or maintaining any Eurocurrency Loan or A/C Fronted
Fixed Rate Loan or increase the cost to any Lender of issuing or maintaining any
Letter of Credit or purchasing or maintaining a participation therein or to
reduce the amount of any sum received or receivable by such Lender or such
Issuing Bank hereunder (whether of principal, interest or otherwise) by an
amount deemed by such Lender or such Issuing Bank to be material, then the
Borrowers will pay to such Lender or such Issuing Bank, as the case may be, upon
demand such additional amount or amounts as will compensate such Lender or such
Issuing Bank, as the case may be, for such additional costs incurred or
reduction suffered.
(b) If any Lender or any Issuing Bank shall have determined that the
adoption after the date hereof of any law, rule, regulation, agreement or
guideline regarding capital adequacy, or any change after the date hereof in any
such law, rule, regulation, agreement or guideline (whether such law, rule,
regulation, agreement or guideline has been adopted) or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by any Lender (or any
lending office of such Lender) or any Issuing Bank or any Lender's or any
Issuing Bank's holding company with any request or directive regarding capital
adequacy (whether or not having the force of law) of any Governmental Authority
has or would have the effect of reducing the rate of return on such Lender's or
such Issuing Bank's capital or on the capital of such Lender's or such Issuing
Bank's holding company, if any, as a consequence of this Agreement or the Loans
made or participations in Letters of Credit purchased by such Lender pursuant
hereto or the Letters of Credit issued by such Issuing Bank pursuant hereto to a
level below that which such Lender or such Issuing Bank or such Lender's or such
Issuing Bank's holding company could have achieved but for such applicability,
adoption, change or compliance (taking into consideration such Lender's or such
Issuing Bank's policies and the policies of such Lender's or such Issuing Bank's
holding company with respect to capital adequacy) by an amount deemed by such
Lender or such Issuing Bank to be material, then from time to time the Borrowers
shall pay to such Lender or such Issuing Bank, as the case may be, such
<PAGE>
46
additional amount or amounts as will compensate such Lender or such Issuing Bank
or such Lender's or such Issuing Bank's holding company for any such reduction
suffered.
(c) A certificate of a Lender or an Issuing Bank setting forth the
amount or amounts necessary to compensate such Lender or such Issuing Bank or
its holding company, as applicable, as specified in paragraph (a) or (b) above
shall be delivered to the Borrowers and shall be conclusive absent manifest
error. The Borrowers shall pay such Lender or such Issuing Bank the amount shown
as due on any such certificate delivered by it within 10 days after its receipt
of the same.
(d) Failure or delay on the part of any Lender or any Issuing Bank to
demand compensation for any increased costs or reduction in amounts received or
receivable or reduction in return on capital shall not constitute a waiver of
such Lender's or such Issuing Bank's right to demand such compensation. The
protection of this Section shall be available to each Lender and each Issuing
Bank regardless of any possible contention of the invalidity or inapplicability
of the law, rule, regulation, agreement, guideline or other change or condition
that shall have occurred or been imposed.
SECTION 2.15. Change in Legality. (a) Notwithstanding any other
provision of this Agreement, if, after the date hereof, any change in any law or
regulation or in the interpretation thereof by any Governmental Authority
charged with the administration or interpretation thereof shall make it unlawful
for any Lender to make or maintain any Eurocurrency Loan or to give effect to
its obligations as contemplated hereby with respect to any Eurocurrency Loan,
then, by written notice to the Borrowers and to the Administrative Agent:
(i) such Lender may declare that Eurocurrency Loans will not
thereafter (for the duration of such unlawfulness) be made by such
Lender hereunder (or be continued for additional Interest Periods and
ABR Loans and Foreign Base Rate Loans will not thereafter (for such
duration) be converted into Eurocurrency Loans), whereupon any request
for a Eurocurrency Borrowing (or to convert an ABR Borrowing or a
Foreign Base Rate Loan to a Eurocurrency Borrowing or to continue a
Eurocurrency Borrowing for an additional Interest Period) shall, as to
such Lender only, be deemed a request for an ABR Loan (in the case of
Dollar Loans) or Foreign Base Rate Loans (in the case of Alternative
Currency Loans) (or a request to continue an ABR Loan or a Foreign Base
Rate Loan as such for an additional Interest Period or to convert a
Eurocurrency Loan into an ABR Loan or a Foreign Base Rate Loan, as the
case may be), unless such declaration shall be subsequently withdrawn;
and
(ii) such Lender may require that all outstanding
Eurocurrency Loans made by it be converted to ABR Loans (in the case of
Dollar Loans) or Foreign Base Rate Loans (in the case of Alternative
Currency Loans) in which event all such Eurocurrency Loans shall be
automatically converted to such ABR Loans or Foreign Base Rate Loans as
of the effective date of such notice as provided in paragraph (b)
below.
In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal that would otherwise have been applied to
repay the Eurocurrency Loans that would have been made by such Lender or the
converted Eurocurrency Loans of such Lender shall instead be applied to repay
<PAGE>
47
ABR Loans made by such Lender in lieu of, or resulting from the conversion of,
such Eurocurrency Loans.
(b) For purposes of this Section 2.15, a notice to Terex by any Lender
shall be effective as to each Eurocurrency Loan made by such Lender, if lawful,
on the last day of the Interest Period currently applicable to such Eurocurrency
Loan; in all other cases such notice shall be effective on the date of receipt
by Terex.
SECTION 2.16. Indemnity. Each Borrower shall indemnify each Lender
against any loss or expense, including any break-funding cost or any loss
sustained in converting between any Alternative Currency and dollars, as the
case may be, that such Lender may sustain or incur as a consequence of (a) any
event, other than a default by such Lender in the performance of its obligations
hereunder, which results in (i) such Lender receiving or being deemed to receive
any amount on account of the principal of any Eurocurrency Loan or A/C Fronted
Fixed Rate Loan prior to the end of the Interest Period in effect therefor, (ii)
the conversion of any Eurocurrency Loan or A/C Fronted Fixed Rate Loan to an ABR
Loan, or Fronted Base Rate Loan, respectively, or the conversion of the Interest
Period with respect to any Eurocurrency Loan or A/C Fronted Fixed Rate Loan, in
each case other than on the last day of the Interest Period in effect therefor,
or (iii) any Eurocurrency Loan or A/C Fronted Fixed Rate Loan to be made by such
Lender (including any Eurocurrency Loan or A/C Fronted Fixed Rate Loan to be
made pursuant to a conversion or continuation under Section 2.10) not being made
after notice of such Loan shall have been given by the applicable Borrower
hereunder (any of the events referred to in this clause (a) being called a
"Breakage Event") or (b) any default in the making of any payment or prepayment
required to be made hereunder. In the case of any Breakage Event, such loss
shall include an amount equal to the excess, as reasonably determined by such
Lender, of (i) its cost of obtaining funds for the Eurocurrency Loan or A/C
Fronted Fixed Rate Loan that is the subject of such Breakage Event for the
period from the date of such Breakage Event to the last day of the Interest
Period in effect (or that would have been in effect) for such Loan over (ii) the
amount of interest likely to be realized by such Lender in redeploying the funds
released or not utilized by reason of such Breakage Event for such period. A
certificate of any Lender setting forth any amount or amounts which such Lender
is entitled to receive pursuant to this Section 2.16, together with a reasonably
detailed calculation thereof, shall be delivered to the applicable Borrower and
shall be conclusive absent manifest error.
SECTION 2.17. Pro Rata Treatment. Except as provided below in this
Section 2.17 with respect to Swingline Loans and as required under Sections
2.13(j) and 2.15, each Borrowing, each payment or prepayment of principal of any
Borrowing, each payment of interest on the Loans, each payment of the Facility
Fees, each reduction of the Term Loan Commitments or the Revolving Credit
Commitments and each conversion of any Borrowing to or continuation of any
Borrowing as a Borrowing of any Type shall be allocated pro rata among the
Lenders in accordance with their respective applicable Commitments (or, if such
Commitments shall have expired or been terminated, in accordance with the
respective principal amounts of their outstanding Loans). For purposes of
determining the available Revolving Credit Commitments of the Lenders at any
time, each outstanding Swingline Loan shall be deemed to have utilized the
Revolving Credit Commitments of the Lenders (including those Lenders which shall
not have made Swingline Loans) pro rata in accordance with such respective
Revolving Credit Commitments. Each Lender agrees that in computing such Lender's
portion of any Borrowing to be made hereunder, the Administrative Agent may, in
its discretion, round each Lender's percentage of such Borrowing to the next
<PAGE>
48
higher or lower whole dollar or applicable Alternative Currency amount.
SECTION 2.18. Sharing of Setoffs. Each Lender agrees that if it shall,
through the exercise of a right of banker's lien, setoff or counterclaim against
any Borrower or any other Loan Party, or pursuant to a secured claim under
Section 506 of Title 11 of the United States Code or other security or interest
arising from, or in lieu of, such secured claim, received by such Lender under
any applicable bankruptcy, insolvency or other similar law or otherwise, or by
any other means, obtain payment (voluntary or involuntary) in respect of any
Loan or Loans or L/C Disbursement as a result of which the unpaid principal
portion of its Tranche A Term Loans, Tranche B Term Loans and Revolving Loans
and participations in L/C Disbursements and A/C Fronted Loans shall be
proportionately less than the unpaid principal portion of the Tranche A Term
Loans, Tranche B Term Loans and Revolving Loans and participations in L/C
Disbursements and A/C Fronted Loans of any other Lender, it shall be deemed
simultaneously to have purchased from such other Lender at face value, and shall
promptly pay to such other Lender the purchase price for, a participation in the
Tranche A Term Loans, Tranche B Term Loans and Revolving Loans and L/C Exposure
and A/C Fronted Exposure, as the case may be of such other Lender, so that the
aggregate unpaid principal amount of the Tranche A Term Loans, Tranche B Term
Loans and Revolving Loans and L/C Exposure and A/C Fronted Exposure and
participations in Tranche A Term Loans, Tranche B Term Loans and Revolving Loans
and L/C Exposure and A/C Fronted Exposure held by each Lender shall be in the
same proportion to the aggregate unpaid principal amount of all Tranche A Term
Loans, Tranche B Term Loans and Revolving Loans and L/C Exposure and A/C Fronted
Exposure then outstanding as the principal amount of its Tranche A Term Loans,
Tranche B Term Loans and Revolving Loans and L/C Exposure and A/C Fronted
Exposure prior to such exercise of banker's lien, setoff or counterclaim or
other event was to the principal amount of all Tranche A Term Loans, Tranche B
Term Loans and Revolving Loans and L/C Exposure and A/C Fronted Exposure
outstanding prior to such exercise of banker's lien, setoff or counterclaim or
other event; provided, however, that if any such purchase or purchases or
adjustments shall be made pursuant to this Section 2.18 and the payment giving
rise thereto shall thereafter be recovered, such purchase or purchases or
adjustments shall be rescinded to the extent of such recovery and the purchase
price or prices or adjustment restored without interest. Each Borrower expressly
consents to the foregoing arrangements and agrees that any Lender holding a
participation in a Term Loan or Revolving Loan or L/C Disbursement and A/C
Fronted Loan deemed to have been so purchased may exercise any and all rights of
banker's lien, setoff or counterclaim with respect to any and all moneys owing
by such Borrower to such Lender by reason thereof as fully as if such Lender had
made a Loan directly to such Borrower in the amount of such participation.
SECTION 2.19. Payments. (a) Each Borrower shall make each payment
(including principal of or interest on any Borrowing or any L/C Disbursement or
any Fees or other amounts) hereunder and under any other Loan Document from a
Payment Location in the United States or the jurisdiction of any Alternative
Currency prior to (i) 1:00 p.m., New York City time on the date when due, in the
case of any amount payable in dollars, and (ii) 12:00 (noon), local time of such
other jurisdiction, on the date when due, in the case of any amount payable in
any Alternative Currency, in each case, in immediately available funds, without
setoff, defense or counterclaim. Each such payment (other than (i) Issuing Bank
Fees, which shall be paid directly to applicable Issuing Bank, (ii) principal of
and interest on Swingline Loans, which shall be paid directly to the Swingline
Lender except as otherwise provided in Section 2.22 (e) and (iii) A/C Fronting
<PAGE>
49
Fees, which shall be paid directly to the applicable A/C Fronting Lender except
as otherwise provided in Section 2.24(e)) shall be made to such account as shall
from time to time be specified in a writing delivered to Terex and each Borrower
by the Administrative Agent. Except as provided in Section 2.24 (Conversion of
A/C Fronted Loans) with respect to defaulted A/C Fronted Loans, all Alternative
Currency Loans hereunder shall be denominated and made, and all payments
hereunder or under any other Loan Document in respect thereof (whether of
principal, interest, fees or otherwise) shall be made, in such Alternative
Currency. All Dollar Loans hereunder shall be denominated and made, and all
payments of principal and interest, Fees or otherwise hereunder or under any
other Loan Document in respect thereof shall be made, in dollars, except as
otherwise expressly provided herein. Unless otherwise agreed by the applicable
Borrower and each Lender to receive any such payment, all other amounts due
hereunder or under any other Loan Document shall be payable in dollars.
(b) Whenever any payment (including principal of or interest on any
Borrowing or any Fees or other amounts) hereunder or under any other Loan
Document shall become due, or otherwise would occur, on a day that is not a
Business Day, such payment may be made on the next succeeding Business Day, and
such extension of time shall in such case be included in the computation of
interest or Fees, if applicable.
SECTION 2.20. Taxes. (a) Any and all payments by or on behalf of any
Borrower or any Loan Party (or, with respect to payments by an A/C Fronting
Lender of the A/C Participation Fee, an A/C Fronting Lender) hereunder and under
any other Loan Document shall be made, in accordance with Section 2.19, free and
clear of and without deduction for any and all current or future taxes, levies,
imposts, deductions, charges or withholdings imposed by any Governmental
Authority in the United States, the jurisdiction of any Alternative Currency or
the jurisdiction of any Payment Location, and all liabilities with respect
thereto, excluding (i) income taxes imposed on the net income of the
Administrative Agent, any Lender or an Issuing Bank (or any transferee or
assignee thereof, including a participation holder (any such entity a
"Transferee")) and (ii) franchise taxes imposed on the net income of the
Administrative Agent, any Lender or an Issuing Bank (or Transferee), in each
case by the jurisdiction under the laws of which the Administrative Agent, such
Lender or an Issuing Bank (or Transferee) is organized or any political
subdivision thereof (all such nonexcluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities, collectively or individually, being
called "Taxes"). If any Borrower or any Loan Party shall be required to deduct
any Taxes from or in respect of any sum payable hereunder or under any other
Loan Document to the Administrative Agent, any Lender or an Issuing Bank (or any
Transferee), (i) the sum payable shall be increased by the amount (an
"additional amount") necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.20) the Administrative Agent, such Lender or such Issuing Bank (or
Transferee), as the case may be, shall receive an amount equal to the sum it
would have received had no such deductions been made, (ii) such Borrower or such
Loan Party shall make such deductions and (iii) such Borrower or such Loan Party
shall pay the full amount deducted to the relevant Governmental Authority in
accordance with applicable law. If any A/C Fronting Lender shall be required to
deduct any Taxes from or in respect of any A/C Participation Fee, Terex or the
applicable Borrower shall pay to the applicable Revolving Credit Lender the
"additional amount" referred to in the preceding sentence.
<PAGE>
50
(b) In addition, each Borrower agrees to pay to the relevant
Governmental Authority in accordance with applicable law any current or future
stamp, documentary, excise, transfer, sales, property or similar taxes, charges
or levies (including, without limitation, mortgage recording taxes and similar
fees) that arise from any payment made hereunder or under any other Loan
Document or from the execution, delivery, enforcement or registration of, or
otherwise with respect to, this Agreement or any other Loan Document imposed by
any Governmental Authority in the United States, the jurisdiction of any
Alternative Currency or the jurisdiction of any Payment Location ("Other
Taxes").
(c) Each Borrower will indemnify the Administrative Agent, each Lender
and each Issuing Bank (or Transferee) for the full amount of Taxes and Other
Taxes paid by the Administrative Agent, such Lender or such Issuing Bank (or
Transferee), as the case may be, and any liability (including penalties,
interest and expenses (including reasonable attorney's fees and expenses))
arising therefrom or with respect thereto, whether or not such Taxes or Other
Taxes were correctly or legally asserted by the relevant Governmental Authority.
A certificate as to the amount of such payment or liability prepared by the
Administrative Agent, a Lender or an Issuing Bank (or Transferee), or the
Administrative Agent on its behalf, absent manifest error, shall be final,
conclusive and binding for all purposes. Such indemnification shall be made
within 30 days after the date the Administrative Agent, any Lender or an Issuing
Bank (or Transferee), as the case may be, makes written demand therefor.
(d) As soon as practicable after the date of any payment of Taxes or
Other Taxes by any Borrower or any other Loan Party to the relevant Governmental
Authority, such Borrower or such other Loan Party will deliver to the
Administrative Agent, at its address referred to in Section 9.01, the original
or a certified copy of a receipt issued by such Governmental Authority
evidencing payment thereof.
(e) Each Lender (or Transferee) that is organized under the laws of a
jurisdiction other than the United States, any State thereof or the District of
Columbia (a "Non-U.S. Lender") that is entitled to an exemption from, or
reduction of, withholding tax under the law of the jurisdiction in which any
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments by such Borrower under this Agreement and the other Loan
Documents shall deliver to such Borrower (with a copy to the Administrative
Agent), at the time or times prescribed by applicable law, such properly
completed and executed documentation prescribed by applicable law or reasonably
requested by such Borrower as will permit such payments to be made without
withholding or at a reduced rate; provided that such Non-U.S. Lender has
received written notice from such Borrower advising it of the availability of
such exemption or reduction and containing all applicable documentation. In
addition, each Non-U.S. Lender shall deliver such documentation promptly upon
the obsolescence or invalidity of any documentation previously delivered by such
Non-U.S. Lender. Notwithstanding any other provision of this Section 2.20(e), a
Non-U.S. Lender shall not be required to deliver any documentation pursuant to
this Section 2.20(e) that such Non-U.S. Lender is not legally able to deliver.
(f) No Borrower shall be required to indemnify any Non-U.S. Lender or
to pay any additional amounts to any Non-U.S. Lender, in respect of United
States Federal withholding tax pursuant to paragraph (a) or (c) above to the
extent that (i) the obligation to withhold amounts with respect to United States
Federal withholding tax existed and would apply to payments made to such
Non-U.S. Lender on the date such Non-U.S. Lender became a party to this
<PAGE>
51
Agreement (or, in the case of a Transferee that is a participation holder, on
the date such participation holder became a Transferee hereunder) or, with
respect to payments to a New Lending Office, the date such Non-U.S. Lender
designated such New Lending Office with respect to a Loan; provided, however,
that this paragraph (f) shall not apply (x) to any Transferee or New Lending
Office that becomes a Transferee or New Lending Office as a result of an
assignment, participation, transfer or designation made at the request of any
Borrower and (y) to the extent the indemnity payment or additional amounts any
Transferee, or any Lender (or Transferee), acting through a New Lending Office,
would be entitled to receive (without regard to this paragraph (f)) do not
exceed the indemnity payment or additional amounts that the person making the
assignment, participation or transfer to such Transferee, or Lender (or
Transferee) making the designation of such New Lending Office, would have been
entitled to receive in the absence of such assignment, participation, transfer
or designation or (ii) the obligation to pay such additional amounts would not
have arisen but for a failure by such Non-U.S. Lender to comply with the
provisions of paragraph (e) above.
(g) Nothing contained in this Section 2.20 shall require any Lender or
an Issuing Bank (or any Transferee) or the Administrative Agent to make
available any of its tax returns (or any other information that it deems to be
confidential or proprietary).
SECTION 2.21. Assignment of Commitments Under Certain Circumstances;
Duty to Mitigate. (a) In the event (i) any Lender or an Issuing Bank delivers a
certificate requesting compensation pursuant to Section 2.14, (ii) any Lender or
an Issuing Bank delivers a notice described in Section 2.15 or (iii) any
Borrower is required to pay any additional amount to any Lender or an Issuing
Bank or any Governmental Authority on account of any Lender or an Issuing Bank
pursuant to Section 2.20, such Borrower may, at its sole expense and effort
(including with respect to the processing and recordation fee referred to in
Section 9.04(b)), upon notice to such Lender or such Issuing Bank and the
Administrative Agent, require such Lender or such Issuing Bank to transfer and
assign, without recourse (in accordance with and subject to the restrictions
contained in Section 9.04), all of its interests, rights and obligations under
this Agreement to an assignee that shall assume such assigned obligations (which
assignee may be another Lender, if a Lender accepts such assignment); provided
that (x) such assignment shall not conflict with any law, rule or regulation or
order of any court or other Governmental Authority having jurisdiction, (y) such
Borrower shall have received the prior written consent of the Administrative
Agent (and, if a Revolving Credit Commitment is being assigned, of the Issuing
Banks and the Swingline Lender), which consent shall not unreasonably be
withheld, and (z) such Borrower or such assignee shall have paid to the affected
Lender or Issuing Bank in immediately available funds (and in the currency or
currencies in which payment would be required if all amounts were to be paid by
such Borrower) an amount equal to the sum of the principal of and interest
accrued to the date of such payment on the outstanding Loans or L/C
Disbursements of such Lender or such Issuing Bank, respectively, plus all Fees
and other amounts accrued for the account of such Lender or such Issuing Bank
hereunder (including any amounts under Section 2.14 and Section 2.16); provided
further that, if prior to any such transfer and assignment the circumstances or
event that resulted in such Lender's or such Issuing Bank's claim for
compensation under Section 2.14 or notice under Section 2.15 or the amounts paid
pursuant to Section 2.20, as the case may be, cease to cause such Lender or such
Issuing Bank to suffer increased costs or reductions in amounts received or
receivable or reduction in return on capital, or cease to have the consequences
specified in Section 2.15, or cease to result in amounts being payable under
Section 2.20, as the case may be (including as a result of any action taken by
such Lender or such Issuing Bank pursuant to paragraph (b) below), or it such
<PAGE>
52
Lender or such Issuing Bank shall waive its right to claim further compensation
under Section 2.14 in respect of such circumstances or event or shall withdraw
its notice under Section 2.15 or shall waive its right to further payments under
Section 2.20 in respect of such circumstances or event, as the case may be, then
such Lender or such Issuing Bank shall not thereafter be required to make any
such transfer and assignment hereunder.
(b) If (i) any Lender or an Issuing Bank shall request compensation
under Section 2.14, (ii) any Lender or an Issuing Bank delivers a notice
described in Section 2.15 or (iii) any Borrower is required to pay any
additional amount to any Lender or an Issuing Bank or any Governmental Authority
on account of any Lender or an Issuing Bank, pursuant to Section 2.20, then such
Lender or such Issuing Bank shall use reasonable efforts (which shall not
require such Lender or such Issuing Bank to incur an unreimbursed loss or
unreimbursed cost or expense or otherwise take any action inconsistent with its
internal policies or legal or regulatory restrictions or suffer any disadvantage
or burden deemed by it to be significant) (x) to file any certificate or
document reasonably requested in writing by such Borrower or (y) to assign its
rights and delegate and transfer its obligations hereunder to another of its
offices, branches or affiliates, if such filing or assignment would materially
reduce its claims for compensation under Section 2.14 or enable it to withdraw
its notice pursuant to Section 2.15 or would materially reduce amounts payable
pursuant to Section 2.20, as the case may be, in the future. Terex hereby agrees
to pay all reasonable costs and expenses incurred by any Lender or any Issuing
Bank in connection with any such filing or assignment, delegation and transfer.
SECTION 2.22. Swingline Loans. (a) Swingline Commitment. Subject to the
terms and conditions and relying upon the representations and warranties herein
set forth, the Swingline Lender agrees to make loans, in dollars, to Terex at
any time and from time to time on and after the Closing Date and until the
earlier of the Revolving Credit Maturity Date and the termination of the
Revolving Credit Commitments in accordance with the terms hereof, in an
aggregate principal amount at any time outstanding that will not result in (i)
the aggregate principal amount of all Swingline Loans exceeding $10,000,000 in
the aggregate or (ii) the Aggregate Revolving Credit Exposure, after giving
effect to any Swingline Loan, exceeding the Total Revolving Credit Commitment.
Each Swingline Loan shall be in a principal amount that is an integral multiple
of $250,000. The Swingline Commitments may be terminated or reduced from time to
time as provided herein. Within the foregoing limits, Terex may borrow, pay or
prepay and reborrow Swingline Loans hereunder, subject to the terms, conditions
and limitations set forth herein.
(b) Swingline Loans. Terex shall notify the Swingline Lender, with a
copy to the Administrative Agent, by telecopy, or by telephone (confirmed by
telecopy), not later than 2:00 p.m., New York City time, on the day of a
proposed Swingline Loan. Such notice shall be delivered on a Business Day, shall
be irrevocable and shall refer to this Agreement and shall specify the requested
date (which shall be a Business Day) and amount of such Swingline Loan.
(c) Prepayment. Terex shall have the right at any time and from time to
time to prepay any Swingline Loan, in whole or in part, upon giving written or
telecopy notice (or telephone notice promptly confirmed by written, or telecopy
notice) to the Swingline Lender and to the Administrative Agent before 1:00
p.m., New York City time, on the date of prepayment at the Swingline Lender's
address for notices specified on Schedule 2.01. All principal payments of
<PAGE>
53
Swingline Loans shall be accompanied by accrued interest on the principal amount
being repaid to the date of payment.
(d) Interest. Each Swingline Loan shall be an ABR Loan and, subject to
the provisions of Section 2.07, shall bear interest as provided in Section
2.06(a).
(e) Participations. If Terex does not fully repay a Swingline Loan on
or prior to the last day of the Interest Period with respect thereto, the
Swingline Lender shall notify the Administrative Agent thereof by 2:00 p.m., New
York City time (by telecopy or by telephone, confirmed in writing), and the
Administrative Agent shall promptly notify each Revolving Credit Lender thereof
(by telecopy or by telephone, confirmed in writing) and of its Pro Rata
Percentage of such Swingline Loan. Upon such notice but without any further
action, the Swingline Lender hereby agrees to grant to each Revolving Credit
Lender, and each Revolving Credit Lender hereby agrees to acquire from the
Swingline Lender, a participation in such defaulted Swingline Loan equal to such
Revolving Credit Lender's Pro Rata Percentage of the aggregate principal amount
of such defaulted Swingline Loan. In furtherance of the foregoing, each
Revolving Credit Lender hereby absolutely and unconditionally agrees, upon
receipt of notice as provided above, to pay to the Administrative Agent, for the
account of the Swingline Lender, such Revolving Credit Lender's Pro Rata
Percentage of each Swingline Loan that is not repaid on the last day of the
Interest Period with respect thereto. Each Revolving Credit Lender acknowledges
and agrees that its obligation to acquire participations in Swingline Loans
pursuant to this paragraph is absolute and unconditional and shall not be
affected by any circumstance whatsoever, including the occurrence and
continuance of a Default or an Event of Default, and that each such payment
shall be made without any offset, abatement, withholding or reduction
whatsoever. Each Revolving Credit Lender shall comply with its obligation under
this paragraph by wire transfer of immediately available funds, in the same
manner as provided in Section 2.02(c) with respect to Loans made by such
Revolving Credit Lender (and Section 2.02(c) shall apply, mutatis mutandis, to
the payment obligations of the Revolving Credit Lenders) and the Administrative
Agent shall promptly pay to the Swingline Lender the amounts so received by it
from the Revolving Credit Lenders. The Administrative Agent shall notify Terex
of any participations in any Swingline Loan acquired pursuant to this paragraph
and thereafter payments in respect of such Swingline Loan shall be made to the
Administrative Agent and not to the Swingline Lender. Any amounts received by
the Swingline Lender from Terex (or other party on behalf of Terex) in respect
of a Swingline Loan after receipt by the Swingline Lender of the proceeds of a
sale of participations therein shall be promptly remitted to the Administrative
Agent; any such amounts received by the Administrative Agent shall be promptly
remitted by the Administrative Agent to the Revolving Credit Lenders that shall
have made their payments pursuant to this paragraph and to the Swingline Lender,
as their interests may appear. The purchase of participations in a Swingline
Loan pursuant to this paragraph shall not relieve Terex (or other party liable
for obligations of Terex) of any default in the payment thereof.
SECTION 2.23. Letters of Credit. (a) Subject to the terms and
conditions set forth herein, (i) each of the Existing Letters of Credit shall,
upon the initial funding of Loans on the Closing Date and without any further
action on the part of the applicable Issuing Bank or any other person, be deemed
for all purposes to have been issued by the applicable Issuing Bank on the
Closing Date as a Letter of Credit hereunder and (ii) any Borrower may request
the issuance of a Letter of Credit for its own account, in a form reasonably
acceptable to the Administrative Agent and the applicable Issuing Bank, at any
time and from time to time while the Revolving Credit Commitments remain in
<PAGE>
54
effect. This Section shall not be construed to impose an obligation upon an
Issuing Bank to issue any Letter of Credit that is inconsistent with the terms
and conditions of this Agreement.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. In order to request the issuance of a Letter of Credit (or to amend,
renew or extend an existing Letter of Credit), the applicable Borrower shall
hand deliver or telecopy to the applicable Issuing Bank and the Administrative
Agent (three Business Days in advance of the requested date of issuance,
amendment, renewal or extension, or such shorter period as the applicable
Borrower, the Administrative Agent and the applicable Issuing Bank shall agree)
a notice requesting the issuance of a Letter of Credit, or identifying the
Letter of Credit to be amended, renewed or extended, the date of issuance,
amendment, renewal or extension, the date on which such Letter of Credit is to
expire (which shall comply with paragraph (c) below), the amount and currency
(which must be dollars or an Alternative Currency) of such Letter of Credit, the
name and address of the beneficiary thereof and such other information as shall
be necessary to prepare such Letter of Credit. A Letter of Credit shall be
issued, amended, renewed or extended only if, and upon issuance, amendment,
renewal or extension of each Letter of Credit the applicable Borrower shall be
deemed to represent and warrant that, after giving effect to such issuance,
amendment, renewal or extension (A) the L/C Exposure shall not exceed
$35,000,000, (B) the Aggregate Revolving Credit Exposure shall not exceed the
Total Revolving Credit Commitment and (C) the Alternative Currency Revolving
Credit Exposure with respect to any Alternative Currency shall not exceed the
sublimit for such Alternative Currency set forth in Schedule 2.01(b).
(c) Expiration Date. Each Letter of Credit shall expire at the close of
business on the earlier of the date one year after the date of the issuance of
such Letter of Credit and the date that is five Business Days prior to the
Revolving Credit Maturity Date, unless such Letter of Credit expires by its
terms on an earlier date.
(d) Participations. By the issuance of a Letter of Credit (or, in the
case of the Existing Letters of Credit, deemed issuance) and without any further
action on the part of such Issuing Bank or the Lenders, the applicable Issuing
Bank hereby grants to each Revolving Credit Lender, and each such Lender hereby
acquires from the applicable Issuing Bank, a participation in such Letter of
Credit equal to such Lender's Pro Rata Percentage of the aggregate amount
available to be drawn under such Letter of Credit, effective upon the issuance
of such Letter of Credit. In consideration and in furtherance of the foregoing,
each Revolving Credit Lender hereby absolutely and unconditionally agrees to pay
to the Administrative Agent, for the account of the applicable Issuing Bank,
such Lender's Pro Rata Percentage of each L/C Disbursement made by such Issuing
Bank and not reimbursed by the applicable Borrower (or, if applicable, another
party pursuant to its obligations under any other Loan Document) forthwith on
the date due as provided in Section 2.02(f) and in the same currency as such L/C
Disbursement. Each Revolving Credit Lender acknowledges and agrees that its
obligation to acquire participations pursuant to this paragraph in respect of
Letters of Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default
or an Event of Default or the fact that, as a result of fluctuations in exchange
rates, such Revolving Credit Lender's Revolving Credit Exposure at any time
might exceed its Revolving Credit Commitment at such time (in which case Section
2.13(a) would apply), and that each such payment shall be made without any
offset, abatement, withholding or reduction whatsoever.
<PAGE>
55
(e) Reimbursement. If an Issuing Bank shall make any L/C Disbursement
in respect of a Letter of Credit denominated in dollars, the applicable Borrower
shall pay to the Administrative Agent an amount equal to such L/C Disbursement
not later than two hours after such Borrower shall have received notice from the
applicable Issuing Bank that payment of such draft will be made, or, if such
Borrower shall have received such notice later than 10:00 a.m., New York City
time, on any Business Day, not later than 10:00 a.m., New York City time, on the
immediately following Business Day. If an Issuing Bank shall make any L/C
Disbursement in respect of a Letter of Credit denominated in any Alternative
Currency, the applicable Borrower shall pay to the Administrative Agent an
amount equal to such L/C Disbursement not later than two hours after such
Borrower shall have received notice from the applicable Issuing Bank that
payment of such draft will be made, or, if such Borrower shall have received
such notice later than 10:00 a.m., London time, on any Business Day, not later
than 10:00 a.m., London time, on the immediately following Business Day.
(f) Obligations Absolute. Each Borrower's obligations to reimburse L/C
Disbursements as provided in paragraph (e) above shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement, under any and all circumstances whatsoever,
and irrespective of:
(i) any lack of validity or enforceability of any Letter of
Credit or any Loan Document, or any term or provision therein;
(ii) any amendment or waiver of or any consent to departure
from all or any of the provisions of any Letter of Credit or any Loan
Document;
(iii) the existence of any claim, setoff, defense or other
right that any Borrower, any other party guaranteeing, or otherwise
obligated with, such Borrower, any Subsidiary or other Affiliate
thereof or any other person may at any time have against the
beneficiary under any Letter of Credit, the applicable Issuing Bank,
the Administrative Agent or any Lender or any other person, whether in
connection with this Agreement, any other Loan Document or any other
related or unrelated agreement or transaction;
(iv) any draft or other document presented under a Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any
respect;
(v) payment by an Issuing Bank under a Letter of Credit
against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit; and
(vi) any other act or omission to act or delay of any kind of
an Issuing Bank, the Lenders, the Administrative Agent or any other
person or any other event or circumstance whatsoever, whether or not
similar to any of the foregoing, that might, but for the provisions of
this Section, constitute a legal or equitable discharge of any
Borrower's obligations hereunder.
Without limiting the generality of the foregoing, it is expressly
understood and agreed that the absolute and unconditional obligation of each
Borrower hereunder to reimburse L/C Disbursements will not be excused by the
<PAGE>
56
gross negligence or wilful misconduct of an Issuing Bank. However, the foregoing
shall not be construed to excuse an Issuing Bank from liability to any Borrower
to the extent of any direct damages (as opposed to consequential damages, claims
in respect of which are hereby waived by each Borrower to the extent permitted
by applicable law) suffered by any Borrower that are caused by an Issuing Bank's
gross negligence or wilful misconduct in determining whether drafts and other
documents presented under a Letter of Credit comply with the terms thereof; it
is understood that an Issuing Bank may accept documents that appear on their
face to be in order, without responsibility for further investigation and, in
making any payment under any Letter of Credit (i) an Issuing Bank's exclusive
reliance on the documents presented to it under such Letter of Credit as to any
and all matters set forth therein, including reliance on the amount of any draft
presented under such Letter of Credit, whether or not the amount due to the
beneficiary thereunder equals the amount of such draft and whether or not any
document presented pursuant to such Letter of Credit proves to be insufficient
in any respect, if such document on its face appears to be in order, and whether
or not any other statement or any other document presented pursuant to such
Letter of Credit proves to be forged or invalid or any statement therein proves
to be inaccurate or untrue in any respect whatsoever and (ii) any noncompliance
in any immaterial respect of the documents presented under such Letter of Credit
with the terms thereof shall, in each case, be deemed not to constitute wilful
misconduct or gross negligence of an Issuing Bank.
(g) Disbursement Procedures. The applicable Issuing Bank shall,
promptly following its receipt thereof, examine all documents purporting to
represent a demand for payment under a Letter of Credit. Such Issuing Bank shall
as promptly as possible give telephonic notification, confirmed by telecopy, to
the Administrative Agent and the applicable Borrower of such demand for payment
and whether such Issuing Bank has made or will make an L/C Disbursement
thereunder; provided that any failure to give or delay in giving such notice
shall not relieve any Borrower of its obligation to reimburse such Issuing Bank
and the Revolving Credit Lenders with respect to any such L/C Disbursement. The
Administrative Agent shall promptly give each Revolving Credit Lender notice
thereof.
(h) Interim Interest. If an Issuing Bank shall make any L/C
Disbursement in respect of a Letter of Credit, then, unless the applicable
Borrower shall reimburse such L/C Disbursement in full on such date, the unpaid
amount thereof shall bear interest for the account of such Issuing Bank, for
each day from and including the date of such L/C Disbursement, to but excluding
the earlier of the date of payment by such Borrower or the date on which
interest shall commence to accrue thereon as provided in Section 2.02(f), at the
rate per annum that would apply to such amount if such amount were (i) in the
case of a Dollar Loan, an ABR Revolving Loan and (ii) in the case of an
Alternative Currency, a Eurocurrency Revolving Loan with an Interest Period of
one month's duration.
(i) Resignation or Removal of an Issuing Bank. An Issuing Bank may
resign at any time by giving 180 days' prior written notice to the
Administrative Agent, the Lenders and Terex, and may be removed at any time by
Terex by notice to such Issuing Bank, the Administrative Agent and the Lenders.
Subject to the next succeeding paragraph, upon the acceptance of any appointment
as an Issuing Bank hereunder by a Lender that shall agree to serve as a
successor Issuing Bank, such successor shall succeed to and become vested with
all the interests, rights and obligations of the retiring Issuing Bank and the
retiring Issuing Bank shall be discharged from its obligations to issue
additional Letters of Credit hereunder. At the time such removal or resignation
shall become effective, the Borrowers shall pay all accrued and unpaid fees
<PAGE>
57
pursuant to Section 2.05(c)(ii). The acceptance of any appointment as an Issuing
Bank hereunder by a successor Lender shall be evidenced by an agreement entered
into by such successor, in a form satisfactory to the Borrowers and the
Administrative Agent, and, from and after the effective date of such agreement,
(i) such successor Lender shall have all the rights and obligations of the
previous Issuing Bank under this Agreement and the other Loan Documents and (ii)
references herein and in the other Loan Documents to the term "Issuing Bank"
shall be deemed to refer to such successor or to any previous Issuing Bank, or
to such successor and all previous Issuing Banks, as the context shall require.
After the resignation or removal of an Issuing Bank hereunder, the retiring
Issuing Bank shall remain a party hereto and shall continue to have all the
rights and obligations of an Issuing Bank under this Agreement and the other
Loan Documents with respect to Letters of Credit issued by it prior to such
resignation or removal, but shall not be required to issue additional Letters of
Credit.
(j) Cash Collateralization. If (i) any Event of Default shall occur and
be continuing or (ii) to the extent and so long as the L/C Exposure exceeds the
Total Revolving Credit Commitment, the Borrowers shall, on the Business Day
after Terex receives notice from the Administrative Agent or the Required
Lenders (or, if the maturity of the Loans has been accelerated, Revolving Credit
Lenders holding participations in outstanding Letters of Credit representing
greater than 50% of the aggregate undrawn amount of all outstanding Letters of
Credit) thereof and of the amount to be deposited, deposit in an account with
the Collateral Agent, for the benefit of the Revolving Credit Lenders, an amount
in cash in the currency determined by the Collateral Agent equal to the L/C
Exposure as of such date. Such deposit shall be held by the Collateral Agent as
collateral for the payment and performance of the Obligations. The Collateral
Agent shall have exclusive dominion and control, including the exclusive right
of withdrawal, over such account. Other than any interest earned on the
investment of such deposits in Permitted Investments, which investments shall be
made at the option and sole discretion of the Collateral Agent, such deposits
shall not bear interest. Interest or profits, if any, on such investments shall
accumulate in such account. Moneys in such account shall (i) automatically be
applied by the Administrative Agent to reimburse any Issuing Bank for L/C
Disbursements for which it has not been reimbursed, (ii) be held for the
satisfaction of the reimbursement obligations of the Borrowers for the L/C
Exposure at such time and (iii) if the maturity of the Loans has been
accelerated (but subject to the consent of Revolving Credit Lenders holding
participations in outstanding Letters of Credit representing greater than 50% of
the aggregate undrawn amount of all outstanding Letters of Credit), be applied
to satisfy the Obligations. If any Borrower is required to provide an amount of
cash collateral hereunder as a result of the occurrence of an Event of Default,
such amount (to the extent not applied as aforesaid) shall be returned to such
Borrower within three Business Days after all Events of Default have been cured
or waived. If any Borrower is required to provide an amount of cash collateral
pursuant to clause (ii) of the first sentence of this paragraph (j), such amount
shall be returned to such Borrower from time to time to the extent that the
amount of such cash collateral held by the Collateral Agent exceeds the excess,
if any, of the L/C Exposure over the Total Revolving Credit Commitment so long
as no Event of Default shall have occurred and be continuing.
SECTION 2.24. A/C Fronted Loans. (a) Subject to the terms and
conditions and relying upon the representations and warranties herein set forth,
(i) the Australian Fronting Lender agrees to make loans to the Australian
Borrower in Australian Dollars and (ii) the Italian Fronting Lender agrees to
make loans to the Italian Borrower in Lire, in each case, at any time and from
<PAGE>
58
time to time on and after the Closing Date and until the earlier of the
Revolving Credit Maturity Date and the termination of the A/C Fronting
Commitment of such A/C Fronting Lender in accordance with the terms hereof, in
an aggregate principal amount at any time outstanding that will not result in
(i) the Dollar Equivalent of the aggregate principal amount of such A/C Fronting
Lender's A/C Fronting Loans exceeding its A/C Fronting Commitment or (ii) the
Aggregate Revolving Credit Exposure, after giving effect to any A/C Fronted
Loan, exceeding the Total Revolving Credit Commitment; provided however that the
Italian Borrower shall not be entitled to make any Borrowings hereunder until
all amounts under the Italian Facilities shall have been paid in full and the
commitments thereunder terminated. Each A/C Fronted Loan shall be in a principal
amount that is an integral multiple of the Alternative Currency Equivalent of
$100,000 and not less than $2,500,000. The A/C Fronting Commitments may be
terminated or reduced from time to time as provided herein. Within the foregoing
limits, the applicable Borrower may borrow, pay or prepay and reborrow A/C
Fronted Loans hereunder, subject to the terms, conditions and limitations set
forth herein.
(b) A/C Fronted Loans. The Australian Borrower or the Italian Borrower,
as applicable, shall notify the applicable A/C Fronting Lender, with a copy to
the Administrative Agent, by telecopy, or by telephone (confirmed by telecopy)
(i) in the case of the Australian Borrower, not later than 10:00 a.m., Sydney
time, on the day of a proposed A/C Fronted Loan or (ii) in the case of the
Italian Borrower, not later than 10:00 a.m., Boston time, three Business Days
before the date of a proposed A/C Fronted Loan. Such notice shall be delivered
on a Business Day, shall be irrevocable and shall refer to this Agreement, shall
specify the requested date (which shall be a Business Day) and amount of such
A/C Fronted Loan (which shall be expressed in dollars), shall specify whether
such A/C Fronted Loan is to be an A/C Fronted Base Rate Loan or an AC/ Fronted
Fixed Rate Loan and, if such Loan is to be an A/C Fronted Fixed Rate Loan, the
Interest Period therefor (which shall comply with the definition of the term
"Bank Bill Rate" or "Italian Fixed Rate", as applicable. If no Rate is selected
with respect to any A/C Fronted Loan, the applicable Borrower shall be deemed to
have selected an A/C Fronted Base Rate Loan.
(c) Prepayment. The applicable Borrower shall have the right at any
time from time to time to prepay any A/C Fronted Loan, in whole or in part, upon
giving written or telecopy notice (or telephone notice promptly confirmed by
written, or telecopy notice) to the applicable A/C Fronting Lender and to the
Administrative Agent before 12:00 (noon), local time on the date of prepayment
at the applicable A/C Fronting Lender's address for notices specified on
Schedule 2.01(a). All principal payments of A/C Fronted Loans shall be
accompanied by accrued interest on the principal amount being repaid to the date
of payment. All prepayments of A/C Fronted Loans shall be subject to Section
2.16 but otherwise without premium or penalty.
(d) Interest. Subject to the provisions of Section 2.07, each A/C
Fronted Base Rate Loan shall bear interest (computed on the basis of the actual
number of days elapsed over a year of 360 days) at a rate per annum equal to the
A/C Fronted Base Rate with respect to such A/C Fronted Loan plus the Applicable
Percentage with respect to such Loan. Subject to the provisions of Section 2.07,
each A/C Fronted Fixed Rate Loan shall bear interest (computed on the basis of
the actual number of days elapsed over a year of 360 days) at a rate per annum
equal to the A/C Fronted Fixed Rate for the Interest Period in effect for such
Loan plus the Applicable Percentage with respect to such Loan. Interest on each
A/C Fronted Loan shall be payable on the Interest Payment Date with respect
thereto. Each A/C Fronting Lender shall notify the applicable Borrower and the
<PAGE>
59
Administrative Agent of the A/C Fronting Base Rate or the A/C Fronted Fixed Rate
applicable to such A/C Fronting Lender's A/C Fronted Loans promptly following
each determination thereof.
(e) Participations. If the applicable Borrower shall default in the
payment of principal of or interest on any A/C Fronted Loan when and as the same
shall become due and payable, whether at the due date thereof or by acceleration
or otherwise, then the applicable A/C Fronting Lender shall promptly notify the
Administrative Agent thereof and, upon notice from the Administrative Agent or
the applicable A/C Fronting Lender to the applicable Borrower, the principal
amount of all A/C Fronted Loans to such Borrower, together with all accrued and
unpaid interest thereon, shall be converted to Dollar Loans and obligations to
pay interest in dollars, respectively, at the Exchange Rate prevailing on the
date of such default, and the Administrative Agent shall promptly notify each
Revolving Credit Lender of such default (by telecopy or by telephone, confirmed
in writing) and of its Pro Rata Percentage in dollars of such A/C Fronted Loan.
Upon such notice but without any further action, the applicable A/C Fronting
Lender hereby agrees to grant to each Revolving Credit Lender, and each
Revolving Credit Lender hereby agrees to acquire from the applicable A/C
Fronting Lender, a participation in such defaulted A/C Fronted Loan equal to
such Lender's Pro Rata Percentage in dollars of the aggregate principal amount
of such defaulted A/C Fronting Loan. In furtherance of the foregoing, each
Revolving Credit Lender hereby absolutely and unconditionally agrees, upon
receipt of notice as provided above, to pay to the Administrative Agent, for the
account of the applicable A/C Fronting Lender, such Lender's Pro Rata Percentage
of each such defaulted A/C Fronted Loan. Each Lender acknowledges and agrees
that its obligation to acquire participations in A/C Fronted Loans pursuant to
this paragraph is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default
or an Event of Default, and that each such payment shall be made without any
offset, abatement, withholding or reduction whatsoever. Each Lender shall comply
with its obligation under this paragraph by wire transfer of immediately
available funds in the same manner as provided in Section 2.02(c) with respect
to Loans made by such Lender (and Section 2.02(c) shall apply, mutatis mutandis,
to the payment obligations of the Lenders) and the Administrative Agent shall
promptly pay to the applicable A/C Fronting Lender the amounts so received by it
from the Lenders. The Administrative Agent shall notify the applicable Borrower
of any participations in any A/C Fronted Loan acquired pursuant to this
paragraph and thereafter payments in respect of such A/C Fronted Loan shall be
made in dollars and to the Administrative Agent and not to the applicable A/C
Fronting Lender. Any amounts received by an A/C Fronting Lender from any
Borrower (or other party on behalf of such Borrower) in respect of an A/C
Fronted Loan after receipt by such A/C Fronting Lender of the proceeds of a sale
of participations therein shall be promptly remitted to the Administrative
Agent; any such amounts received by the Administrative Agent shall be promptly
remitted by the Administrative Agent to the Lenders that shall have made their
payments pursuant to this paragraph and to the applicable A/C Fronting Lender,
as their interests may appear. The purchase of participations in an A/C Fronted
Loan pursuant to this paragraph shall not relieve any Borrower (or other party
liable for obligations of such Borrower) of any default in the payment thereof.
(f) Termination and Reduction of A/C Fronting Commitments. Upon written
or telecopy notice to the applicable A/C Fronting Lender and to the
Administrative Agent, Terex may at any time permanently terminate, or from time
to time in part permanently reduce, the A/C Fronting Commitment of any A/C
Fronting Lender; provided, however, that the A/C Fronting Commitment of such
<PAGE>
60
A/C Fronting Lender shall not be reduced to an amount that is less than the A/C
Fronting Loans of such A/C Fronting Lender at such time.
SECTION 2.25. Reporting Requirements of A/C Fronting Lenders and
Issuing Banks. (a) Within two Business Days following the last day of each
calendar month, each A/C Fronting Lender shall deliver to the Administrative
Agent a statement showing the average daily principal amount of the A/C Fronted
Loans outstanding in each currency during the calendar quarter most recently
ended.
(b) Within two Business Days following the last day of each calendar
month, each Issuing Bank shall deliver to the Administrative Agent a report
detailing all activity during the preceding month with respect to any Letters of
Credit issued by such Issuing Bank, including the face amount, the account
party, the beneficiary and the expiration date of such Letters of Credit and any
other information with respect thereto as may be requested by the Administrative
Agent.
SECTION 2.26. Additional Issuing Banks. The Borrowers may, at any time
and from time to time with the consent of the Administrative Agent (which
consent shall not be unreasonably withheld) and such Lender, designate one or
more additional Lenders to act as an issuing bank under the terms of this
Agreement solely for the purpose of issuing Letters of Credit denominated in
Alternative Currencies other than Marks, Pounds, Francs, Australian Dollars and
Lire. Any Lender designated as an issuing bank pursuant to this Section 2.26
shall be deemed to be an "Issuing Bank" (in addition to being a Lender) in
respect of Letters of Credit issued or to be issued by such Lender and, with
respect to such Letters of Credit, such term shall thereafter apply to the
Issuing Bank and such Lender.
ARTICLE III
Representations and Warranties
Each Borrower represents and warrants to the Administrative Agent, the
Collateral Agent, each of the Issuing Banks and each of the Lenders that:
SECTION 3.01. Organization; Powers. Terex and each of the Subsidiaries
(including each Borrower) (a) is a corporation or partnership duly incorporated
or formed, as the case may be, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, (b) has all requisite corporate
power and authority to own its property and assets and to carry on its business
as now conducted and as proposed to be conducted, (c) is qualified to do
business in, and is in good standing in, every jurisdiction where such
qualification is required, except where the failure so to qualify could not
reasonably be expected to result in a Material Adverse Effect, and (d) has the
corporate power and authority to execute, deliver and perform its obligations
under each of the Loan Documents and each other agreement or instrument
contemplated hereby to which it is or will be a party and, in the case of each
Borrower, to borrow hereunder. Each Borrower (other than Terex) is a wholly
owned Subsidiary.
SECTION 3.02. Authorization. The execution, delivery and performance by
each Loan Party of each of the Loan Documents and the borrowings hereunder
(collectively, the "Transactions") (a) have been duly authorized by all
requisite corporate and, if required, stockholder action and (b) will not
<PAGE>
61
(i) violate (A) any provision of law, statute, rule or regulation, (B) the
certificate or articles of incorporation or other constitutive documents or
By-laws of Terex or any Subsidiary, (C) any order of any Governmental Authority
applicable to Terex or such Subsidiary or (D) any provision of any indenture,
agreement or other instrument to which Terex or any Subsidiary is a party or by
which any of them or any of their property is or may be bound, (ii) result in a
breach of or constitute (alone or with notice or lapse of time or both) a
default under, or give rise to any right to accelerate or to require the
prepayment, repurchase or redemption of any obligation under any such indenture,
agreement or other instrument, except, in the case of each of clause (i)(A),
(i)(D) and (ii), where such violation, breach or default could not reasonably be
expected to result in a Material Adverse Effect or (iii) result in the creation
or imposition of any Lien upon or with respect to any property or assets now
owned or hereafter acquired by Terex or any Subsidiary (other than any Lien
created hereunder or under the Security Documents).
SECTION 3.03. Enforceability. This Agreement has been duly executed and
delivered by each Borrower and constitutes, and each other Loan Document when
executed and delivered by each Loan Party thereto will constitute, a legal,
valid and binding obligation of such Loan Party enforceable against such Loan
Party in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors' rights
generally and subject to general principles of equity, regardless of whether
considered in a proceeding in equity or at law.
SECTION 3.04. Governmental Approvals. No action, consent or approval
of, registration or filing with or any other action by any Governmental
Authority is or will be required in connection with the Transactions, except for
(a) the filing of Uniform Commercial Code financing statements and filings with
the United States Patent and Trademark Office and the United States Copyright
Office, (b) recordation of the Mortgages and (c) such as have been made or
obtained and are in full force and effect, except where the failure to obtain
the same could not reasonably be expected to result in a Material Adverse
Effect.
SECTION 3.05. Financial Statements. (a) Terex has heretofore furnished
to the Lenders its consolidated and consolidating balance sheets and statements
of income and changes in financial condition as of and for each of the fiscal
years ended December 31, 1994, December 31, 1995 and December 31, 1996, audited
by and accompanied by the opinion of Price Waterhouse L.L.P., independent public
accountants, and as of and for the fiscal quarter and the portion of the fiscal
year ended September 30, 1997, certified by a Financial Officer. Such financial
statements present fairly in all material respects the financial condition and
results of operations and cash flows of Terex and its consolidated Subsidiaries
as of such dates and for such periods. Such balance sheets and the notes thereto
disclose all material liabilities, direct or contingent, of Terex and its
consolidated Subsidiaries as of the dates thereof required to be reflected in
accordance with GAAP. Such financial statements were prepared in accordance with
GAAP applied on a consistent basis.
(b) Terex has heretofore delivered to the Lenders its unaudited pro
forma consolidated balance sheet as of December 31, 1997, prepared giving effect
to the Refinancing and the Debt Tender Offer as if they had occurred on such
date. Such pro forma balance sheet has been prepared in good faith by Terex,
based on the assumptions used to prepare the pro forma financial information
contained in the Confidential Information Memorandum (which assumptions are
believed by Terex on the date hereof and on the Closing Date to be reasonable),
<PAGE>
62
is based on the best information available to Terex as of the date of delivery
thereof, accurately reflects all adjustments required to be made to give effect
to the Refinancing and the Debt Tender Offer and presents fairly on a pro forma
basis the estimated consolidated financial position of Terex and its
consolidated Subsidiaries as of such date, assuming that the Refinancing and the
Debt Tender Offer had actually occurred at such date.
SECTION 3.06. No Material Adverse Change. There has been no material
adverse change in the business, assets, operations, prospects, condition,
financial or otherwise, or material agreements of Terex and its Subsidiaries,
taken as a whole, since December 31, 1996.
SECTION 3.07. Title to Properties; Possession Under Leases. (a) Each of
Terex and its Subsidiaries has fee title to, or valid leasehold interests in,
all its material properties and assets (including all Mortgaged Property),
except for defects in title that do not interfere with its ability to conduct
its business as currently conducted or to utilize such properties and assets for
their intended purposes. All such material properties and assets are free and
clear of Liens, other than Liens expressly permitted by Section 6.02.
(b) Each of Terex and its Subsidiaries has complied in all material
respects with all obligations under all material leases to which it is a party
and all such leases are in full force and effect. Each of Terex and its
Subsidiaries enjoys peaceful and undisturbed possession under all such material
leases.
(c) No Borrower has received any written notice of, nor has any
knowledge of, any pending or contemplated condemnation proceeding affecting the
Mortgaged Properties or any sale or disposition thereof in lieu of condemnation.
(d) Neither Terex nor any of its Subsidiaries is obligated under any
right of first refusal, option or other contractual right to sell, assign or
otherwise dispose of any Mortgaged Property or any interest therein.
SECTION 3.08. Subsidiaries. Schedule 3.08 sets forth as of the Closing
Date a list of all Subsidiaries and the percentage ownership interest of Terex
therein. The shares of capital stock or other ownership interests so indicated
on Schedule 3.08 are fully paid and non assessable and are owned by Terex,
directly or indirectly through its Subsidiaries, free and clear of all Liens,
except for Liens created under the Security Documents. Each Subsidiary
identified on Schedule 1.01(f) as an Inactive Subsidiary (a) owns assets having
a fair market value not in excess of $50,000 in the aggregate, (b) does not
conduct any business activity and (c) is not an obligor with respect to any
Indebtedness.
SECTION 3.09. Litigation; Compliance with Laws. (a) Except as set forth
on Schedule 3.09, there are not any actions, suits or proceedings at law or in
equity or by or before any Governmental Authority now pending or, to the
knowledge of any Borrower, threatened against or affecting Terex or any of its
Subsidiaries or any business, property or rights of any such person (i) that
involve any Loan Document or the Transactions or (ii) as to which there is a
reasonable possibility of an adverse determination and that, if adversely
determined in the ordinary course of such action, suit or proceeding, at the
time of such determination, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect.
<PAGE>
63
(b) None of Terex or any of its Subsidiaries or any of their respective
material properties or assets is in violation of, nor will the continued
operation of their material properties and assets as currently conducted
violate, any law, rule or regulation (including any zoning, building,
Environmental Law, ordinance, code or approval or any building permits) or any
restrictions of record or agreements affecting the Mortgaged Property, or is in
default with respect to any judgment, writ, injunction, decree or order of any
Governmental Authority, where such violation or default could reasonably be
expected to result in a Material Adverse Effect.
(c) Certificates of occupancy and permits are in effect for each
Mortgaged Property as currently constructed, except where the failure to have
the same could not reasonably be expected to result in a Material Adverse
Effect.
(d) No exchange control law or regulation materially restricts any
Borrower from complying with its obligations in respect of any Alternative
Currency Loan or Letter of Credit or any other Loan Party with respect to its
obligations under any Loan Document.
SECTION 3.10. Agreements. (a) Neither Terex nor any of the Subsidiaries
is a party to any agreement or instrument or subject to any corporate
restriction that has resulted or could reasonably be expected to result in a
Material Adverse Effect.
(b) Neither Terex nor any of its Subsidiaries is in default in any
manner under any provision of any indenture or other agreement or instrument
evidencing Indebtedness, or any other material agreement or instrument to which
it is a party or by which it or any of its properties or assets are or may be
bound, where such default could reasonably be expected to result in a Material
Adverse Effect.
SECTION 3.11. Federal Reserve Regulations. (a) Neither Terex nor any of
its Subsidiaries is engaged principally, or as one of its important activities,
in the business of extending credit for the purpose of buying or carrying Margin
Stock.
(b) No part of the proceeds of any Loan or any Letter of Credit will be
used, whether directly or indirectly, and whether immediately, incidentally or
ultimately, for any purpose that entails a violation of, or that is inconsistent
with, the provisions of the Regulations of the Board, including Regulation G, U
or X.
SECTION 3.12. Investment Company Act; Public Utility Holding Company
Act. Neither Terex nor any of its Subsidiaries is (a) an "investment company" as
defined in, or subject to regulation under, the Investment Company Act of 1940
or (b) a "holding company" as defined in, or subject to regulation under, the
Public Utility Holding Company Act of 1935.
SECTION 3.13. Use of Proceeds. Each Borrower will use the proceeds of
the Loans and will request the issuance of Letters of Credit only for the
purposes specified in the preamble to this Agreement.
SECTION 3.14. Tax Returns. Each of Terex and its Subsidiaries has filed
or caused to be filed all Federal, state, local and foreign tax returns or
materials required to have been filed by it and has paid or caused to be paid
all taxes due and payable by it and all assessments received by it (in each case
giving effect to applicable extensions), except taxes that are being contested
<PAGE>
64
in good faith by appropriate proceedings and for which Terex or such Subsidiary,
as applicable, shall have set aside on its books reserves in accordance with
GAAP.
SECTION 3.15. No Material Misstatements. None of (a) the Confidential
Information Memorandum or (b) any other information, report, financial
statement, exhibit or schedule furnished by or on behalf of any Borrower in
writing to the Administrative Agent or any Lender in connection with the
negotiation of any Loan Document or included therein or delivered pursuant
thereto contained, contains or will contain any material misstatement of fact or
omitted, omits or will omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were, are
or will be made, not misleading; provided that to the extent any such
information, report, financial statement, exhibit or schedule was based upon or
constitutes a forecast or projection, such Borrower represents only that it
acted in good faith and utilized assumptions believed by it to be reasonable and
due care in the preparation of such information, report, financial statement,
exhibit or schedule.
SECTION 3.16. Employee Benefit Plans. (a) Each of Terex and its
respective ERISA Affiliates is in compliance in all material respects with the
applicable provisions of ERISA and the Code and the regulations and published
interpretations thereunder. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events,
could reasonably be expected to result in a Material Adverse Effect. The present
value of all benefit liabilities under each Plan (based on those assumptions
used to fund such Plan) did not, as of December 31, 1997, exceed by more than
$3,200,000 the fair market value of the assets of such Plan, and the present
value of all benefit liabilities of all underfunded Plans (based on those
assumptions used to fund each such Plan) did not, as of December 31, 1997,
exceed by more than $2,700,000 the fair market value of the assets of all such
underfunded Plans.
(b) Each Foreign Pension Plan is in compliance in all material respects
with all requirements of law applicable thereto and the respective requirements
of the governing documents for such plan except to the extent such
non-compliance could not reasonably be expected to result in a Material Adverse
Effect. With respect to each Foreign Pension Plan, none of Terex, its Affiliates
or any of its directors, officers, employees or agents has engaged in a
transaction which would subject Terex or any of its Subsidiaries, directly or
indirectly, to a material tax or civil penalty. With respect to each Foreign
Pension Plan, reserves have been established in the financial statements
furnished to Lenders in respect of any unfunded liabilities in accordance with
applicable law and prudent business practice or, where required, in accordance
with ordinary accounting practices in the jurisdiction in which such Foreign
Pension Plan is maintained. The aggregate unfunded liabilities, with respect to
such Foreign Pension Plans could not reasonably be expected to result in a
Material Adverse Effect. There are no actions, suits or claims (other than
routine claims for benefits) pending or threatened against Terex or any of its
Affiliates with respect to any Foreign Pension Plan which could reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect.
<PAGE>
65
SECTION 3.17. Environmental Matters. Except as set forth in Schedule
3.17:
(a) The properties owned, leased or operated by each of Terex and its
Subsidiaries (the "Properties") do not contain any Hazardous Materials in
amounts or concentrations which (i) constitute, or constituted a violation of,
(ii) require Remedial Action under, or (iii) could give rise to liability under,
Environmental Laws, which violations, Remedial Actions and liabilities, in the
aggregate, could reasonably be expected to result in a Material Adverse Effect;
(b) The Properties and all operations of each of Terex and its
Subsidiaries are in compliance in all material respects, and in the last five
years have been in compliance, with all Environmental Laws, and all necessary
Environmental Permits have been obtained and are in effect, except to the extent
that such non-compliance or failure to obtain any necessary permits, in the
aggregate, could reasonably be expected to not result in a Material Adverse
Effect;
(c) There have been no Releases or threatened Releases at, from, under
or proximate to the Properties or otherwise in connection with the current or
former operations of Terex or its Subsidiaries, which Releases or threatened
Releases, in the aggregate, could reasonably be expected to result in a Material
Adverse Effect;
(d) Neither Terex nor any of its Subsidiaries has received any notice
of an Environmental Claim in connection with the Properties or the current or
former operations of Terex or such Subsidiaries or with regard to any person
whose liabilities for environmental matters Terex or such Subsidiaries has
retained or assumed, in whole or in part, contractually, by operation of law or
otherwise, which, in the aggregate, could reasonably be expected to result in a
Material Adverse Effect, nor do Terex or its Subsidiaries have reason to believe
that any such notice will be received or is being threatened; and
(e) Hazardous Materials have not been transported from the Properties,
nor have Hazardous Materials been generated, treated, stored or disposed of at,
on or under any of the Properties in a manner that could give rise to liability
under any Environmental Law, nor have Terex or its Subsidiaries retained or
assumed any liability, contractually, by operation of law or otherwise, with
respect to the generation, treatment, storage or disposal of Hazardous
Materials, which liabilities, in the aggregate, could reasonably be expected to
result in a Material Adverse Effect.
SECTION 3.18. Insurance. Schedule 3.18 sets forth a true, complete and
correct description of all insurance maintained by Terex or any of its
Subsidiaries as of the date hereof and the Closing Date. As of each such date,
such insurance is in full force and effect and all premiums have been duly paid.
Each of Terex and its Subsidiaries has insurance in such amounts and covering
such risks and liabilities as are in accordance with normal industry practice.
SECTION 3.19. Security Documents. (a) The Pledge Agreement is effective
to create in favor of the Collateral Agent, for the ratable benefit of the
Secured Parties, a legal, valid and enforceable security interest in the
Collateral (as defined in the Pledge Agreement) and, when the Collateral is
delivered to the Collateral Agent, the Pledge Agreement shall constitute a fully
perfected first priority Lien on, and security interest in, all right, title and
<PAGE>
66
interest of the pledgors thereunder in such Collateral, in each case prior and
superior in right to any other person.
(b) The Security Agreement is effective to create in favor of the
Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid
and enforceable security interest in the Collateral (as defined in the Security
Agreement) and, when financing statements in appropriate form are filed in the
appropriate filing offices relating to the locations specified on Schedule 2 to
the Perfection Certificate, the Security Agreement shall constitute a fully
perfected Lien on, and security interest in, all right, title and interest of
the grantors thereunder in such Collateral (other than the Intellectual
Property, as defined in the Security Agreement), in each case prior and superior
in right to any other person, other than with respect to Liens expressly
permitted by Section 6.02.
(c) When the Security Agreement is filed in the United States Patent
and Trademark Office and the United States Copyright Office, the Security
Agreement shall constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the grantors thereunder in the Intellectual
Property (as defined in the Security Agreement), in each case prior and superior
in right to any other person (it being understood that subsequent recordings in
the United States Patent and Trademark Office and the United States Copyright
Office may be necessary to perfect a lien on registered trademarks, trademark
applications and copyrights acquired by the grantors after the date hereof).
(d) The Mortgages are effective to create in favor of the Collateral
Agent, for the ratable benefit of the Secured Parties, a legal, valid and
enforceable Lien on all of the Loan Parties' right, title and interest in and to
the Mortgaged Property thereunder and the proceeds thereof, and when the
Mortgages are filed in the offices specified on Schedule 3.19(d), the Mortgages
shall constitute a fully perfected Lien on, and security interest in, all right,
title and interest of the Loan Parties in such Mortgaged Property and the
proceeds thereof, in each case prior and superior in right to any other person,
other than with respect to the rights of persons pursuant to Liens expressly
permitted by Section 6.02.
SECTION 3.20. Location of Real Property and Leased Premises.
(a) Schedule 3.20(a) lists completely and correctly as of the Closing Date all
real property owned by Terex and the Subsidiaries and the addresses thereof.
Terex and the Subsidiaries own in fee all the real property set forth on
Schedule 3.20(a).
(b) Schedule 3.20(b) lists completely and correctly as of the Closing
Date all real property leased by Terex and the Subsidiaries and the addresses
thereof. Terex and the Subsidiaries have valid leases in all the real property
set forth on Schedule 3.20(b).
SECTION 3.21. Labor Matters As of the date hereof and the Closing Date,
there are no strikes, lockouts or slowdowns against Terex or any of its
Subsidiaries pending or, to the knowledge of any Borrower, threatened. The hours
worked by and payments made to employees of Terex and its Subsidiaries have not
been in violation of the Fair Labor Standards Act or any other applicable
Federal, state, local or foreign law dealing with such matters. All payments due
from Terex or any of its Subsidiaries, or for which any claim may be made
against Terex or any such Subsidiary, on account of wages and employee health
and welfare insurance and other benefits, have been paid or accrued as a
liability on the books of Terex or such Subsidiary. The consummation of the
Transactions will not give rise to any right of termination or right of
<PAGE>
67
renegotiation on the part of any union under any collective bargaining agreement
to which Terex or any of its Subsidiaries is bound.
SECTION 3.22. Solvency. Immediately after the consummation of the
Transactions to occur on the Closing Date and immediately following the making
of each Loan and after giving effect to the application of the proceeds of such
Loans, (a) the fair value of the assets of the Loan Parties, at a fair
valuation, will exceed their debts and liabilities, subordinated, contingent or
otherwise; (b) the present fair saleable value of the property of the Loan
Parties will be greater than the amount that will be required to pay the
probable liability of their debts and other liabilities, subordinated,
contingent or otherwise, as such debts and other liabilities become absolute and
matured; (c) each Loan Party will be able to pay its debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured; and (d) each Loan Party will not have unreasonably small
capital with which to conduct the business in which it is engaged as such
business is now conducted and is proposed to be conducted following the Closing
Date.
ARTICLE IV
Conditions of Lending
The obligations of the Lenders to make Loans and of the Issuing Banks
to issue Letters of Credit hereunder are subject to the satisfaction of the
following conditions:
SECTION 4.01. All Credit Events. On the date of each Borrowing,
including each Borrowing of a Swingline Loan or an A/C Fronted Loan, and on the
date of each issuance, amendment or renewal of a Letter of Credit (each such
event being called a "Credit Event"):
(a) The Administrative Agent shall have received a notice of such
Borrowing as required by Section 2.03 (or such notice shall have been deemed
given in accordance with Section 2.03) or, in the case of the issuance,
amendment or renewal of a Letter of Credit, the applicable Issuing Bank and the
Administrative Agent shall have received a notice requesting the issuance of
such Letter of Credit as required by Section 2.23(b) or, in the case of the
Borrowing of a Swingline Loan, the Swingline Lender and the Administrative Agent
shall have received a notice requesting such Swingline Loan as required by
Section 2.22(b) or, in the case of a Borrowing of an A/C Fronted Loan, the
applicable A/C Fronting Lender and the Administrative Agent shall have received
a notice requesting such A/C Fronted Loan as required by Section 2.24(b).
(b) The representations and warranties set forth in Article III hereof
shall be true and correct in all material respects on and as of the date of such
Credit Event with the same effect as though made on and as of such date, except
to the extent such representations and warranties expressly relate to an earlier
date.
(c) Each Borrower and each other Loan Party shall be in compliance with
all the terms and provisions set forth herein and in each other Loan Document on
its part to be observed or performed, and at the time of and immediately after
such Credit Event, no Event of Default or Default shall have occurred and be
continuing.
<PAGE>
68
Each Credit Event shall be deemed to constitute a representation and
warranty by each Borrower on the date of such Credit Event as to the matters
specified in paragraphs (b) (except as aforesaid) and (c) of this Section 4.01.
SECTION 4.02. First Credit Event. On the Closing Date:
(a) The Administrative Agent shall have received, on behalf of
itself, the Lenders and the Issuing Banks, a favorable written opinion
of (i) Eric Cohen, General Counsel of Terex, and counsel for the other
Borrowers, substantially to the effect set forth in Exhibit L-1, and
(ii) each local counsel listed on Schedule 4.02(a), substantially to
the effect set forth in Exhibit L-2, in each case (A) dated the Closing
Date, (B) addressed to the Issuing Banks, the Administrative Agent and
the Lenders, and (C) covering such other matters relating to the Loan
Documents and the Transactions as the Administrative Agent shall
reasonably request, and each Borrower hereby requests such counsel to
deliver such opinions.
(b) All legal matters incident to this Agreement, the
Borrowings and extensions of credit hereunder and the other Loan
Documents shall be reasonably satisfactory to the Lenders, to the
Issuing Banks and to the Administrative Agent.
(c) The Administrative Agent shall have received (i) a copy of
the certificate or articles of incorporation or other organizational
documents, including all amendments thereto, of each Loan Party,
certified as of a recent date by the Secretary of State or other
Governmental Authority of the state or other jurisdiction of its
organization, and a certificate as to the good standing of each Loan
Party as of a recent date, from such Secretary of State or other
Governmental Authority; (ii) a certificate of the Secretary or
Assistant Secretary of each Loan Party dated the Closing Date and
certifying (A) that attached thereto is a true and complete copy of the
By-laws or other organizational documents of such Loan Party as in
effect on the Closing Date and at all times since a date prior to the
date of the resolutions described in clause (B) below, (B) that
attached thereto is a true and complete copy of resolutions duly
adopted by the Board of Directors of such Loan Party authorizing the
execution, delivery and performance of the Loan Documents to which such
person is a party and, in the case of each Borrower, the borrowings
hereunder, and that such resolutions have not been modified, rescinded
or amended and are in full force and effect, (C) that the certificate
or articles of incorporation of such Loan Party have not been amended
since the date of the last amendment thereto shown on the certificate
of good standing furnished pursuant to clause (i) above, and (D) as to
the incumbency and specimen signature of each officer executing any
Loan Document or any other document delivered in connection herewith on
behalf of such Loan Party; (iii) a certificate of another officer as to
the incumbency and specimen signature of the Secretary or Assistant
Secretary executing the certificate pursuant to (ii) above; and (iv)
such other documents as the Lenders, the Issuing Banks or the
Administrative Agent may reasonably request.
(d) The Administrative Agent shall have received a
certificate, dated the Closing Date and signed by a Financial Officer
of Terex, confirming compliance with the conditions precedent set forth
in paragraphs (b) and (c) of Section 4.01.
<PAGE>
69
(e) The Administrative Agent shall have received all Fees and
other amounts due and payable on or prior to the Closing Date,
including, to the extent invoiced, reimbursement or payment of all
out-of-pocket expenses required to be reimbursed or paid by any
Borrower hereunder or under any other Loan Document.
(f) The Pledge Agreement shall have been duly executed by the
parties thereto and delivered to the Collateral Agent and shall be in
full force and effect, and all the outstanding capital stock of the
Subsidiaries shall have been duly and validly pledged thereunder to the
Collateral Agent for the ratable benefit of the Secured Parties and
certificates representing such shares, accompanied by instruments of
transfer and stock powers endorsed in blank, shall be in the actual
possession of the Collateral Agent; provided that to the extent to do
so would cause adverse tax consequences to Terex, (i) neither Terex nor
any Domestic Subsidiary of Terex shall be required to pledge more than
65% of the capital stock of any Foreign Subsidiary and (ii) no Foreign
Subsidiary shall be required to pledge the capital stock of any of its
Foreign Subsidiaries.
(g) The Security Agreement shall have been duly executed by
the Loan Parties party thereto and shall have been delivered to the
Collateral Agent and shall be in full force and effect on such date and
each document (including each Uniform Commercial Code financing
statement) required by law or reasonably requested by the
Administrative Agent to be filed, registered or recorded in order to
create in favor of the Collateral Agent for the benefit of the Secured
Parties a valid, legal and perfected first-priority security interest
in and lien on the Collateral (subject to any Lien expressly permitted
by Section 6.02) described in such agreement shall have been delivered
to the Collateral Agent.
(h) The Collateral Agent shall have received and shall be
reasonably satisfied with the results of a search of the Uniform
Commercial Code (or equivalent filings) filings made with respect to
the Loan Parties in the states (or other jurisdictions) in which the
chief executive office of each such person is located, any offices of
such persons in which records have been kept relating to Accounts (as
defined in the Security Agreement) and the other jurisdictions in which
Uniform Commercial Code filings (or equivalent filings) are to be made
pursuant to the preceding paragraph, together with copies of the
financing statements (or similar documents) disclosed by such search.
(i) The Collateral Agent shall have received a Perfection
Certificate with respect to the Loan Parties dated the Closing Date and
duly executed by a Responsible Officer of Terex.
(j)(i) Each of the Security Documents, in form and substance
reasonably satisfactory to the Lenders, relating to each of the
Mortgaged Properties shall have been duly executed by the parties
thereto and delivered to the Collateral Agent and shall be in full
force and effect, (ii) each of such Mortgaged Properties shall not be
subject to any Lien other than those permitted under Section 6.02,
(iii) each of such Security Documents shall have been filed and
recorded in the recording office as specified on Schedule 3.19(d) (or a
lender's title insurance policy, in form and substance acceptable to
the Collateral Agent, insuring such Security Document as a first lien
on such Mortgaged Property (subject to any Lien permitted by Section
6.02) shall have been received by the Collateral Agent) and, in
<PAGE>
70
connection therewith, the Collateral Agent shall have received evidence
reasonably satisfactory to it of each such filing and recordation and
(iv) the Collateral Agent shall have received such other documents,
including a policy or policies of title insurance issued by a
nationally recognized title insurance company, together with such
endorsements, coinsurance and reinsurance as may be reasonably
requested by the Collateral Agent and the Lenders, insuring the
Mortgages as valid first liens on the Mortgaged Properties, free of
Liens other than those permitted under Section 6.02, together with such
surveys, abstracts and appraisals reasonably available and legal
opinions required to be furnished pursuant to the terms of the
Mortgages or as reasonably requested by the Collateral Agent or the
Lenders.
(k) The Guarantee Agreements shall have been duly executed by
the parties thereto, shall have been delivered to the Collateral Agent
and shall be in full force and effect.
(l) The Indemnity, Subrogation and Contribution Agreement
shall have been duly executed by the parties thereto, shall have been
delivered to the Collateral Agent and shall be in full force and
effect.
(m) The Administrative Agent shall have received a copy of, or
a certificate as to coverage under, the insurance policies required by
Section 5.02 and the applicable provisions of the Security Documents,
each of which with respect to Terex or any Domestic Subsidiary shall be
endorsed or otherwise amended to include a "standard" or "New York"
lender's loss payable endorsement and to name the Collateral Agent as
additional insured, in form and substance reasonably satisfactory to
the Administrative Agent.
(n) The Lenders shall be reasonably satisfied as to the amount
and nature of any environmental and employee health and safety
exposures to which any of Terex and its Subsidiaries may be subject and
the plans of Terex with respect thereto.
(o) The Lenders shall have received evidence satisfactory to
them that (i) Terex shall have purchased, or with the proceeds of the
first Credit Event will purchase, at least 75% of the Existing Notes
for a purchase price per Existing Note not to exceed the amount
provided therefor in the Debt Tender Offer by any material amount on
the date hereof and (ii) if less than all the Existing Notes are
purchased in the Debt Tender Offer, the Existing Note Indenture shall
have been modified as provided in the Consent Solicitation to eliminate
all of the significant negative covenants contained therein and to
either (A) release all collateral securing the Existing Notes or (B)
permit junior liens in favor of the Collateral Agent on the collateral
securing the Existing Notes and make cash collateral or other
arrangements reasonably satisfactory to the Administrative Agent with
respect thereto and to eliminate any limitation contained therein on
the Borrowers' ability to consummate the Transactions and the Debt
Tender Offer.
(p)(i) After giving effect to the Refinancing and the other
transactions contemplated hereby, the Borrowers and their respective
Subsidiaries shall have outstanding no Indebtedness or preferred stock
other than (A) the extensions of credit under this Agreement, (B) the
Existing Notes in an aggregate principal amount not to exceed $100,000
<PAGE>
71
and (C) the Indebtedness listed on Schedule 6.01 and (ii) the
Administrative Agent shall have received evidence satisfactory to it
that all Indebtedness under the Existing Credit Agreement and the other
Indebtedness to be refinanced pursuant to the Refinancing shall have
been repaid in full or are being repaid in full with the proceeds of
the first Credit Event and any commitments thereunder shall have been
terminated and all Liens with respect thereto shall have been released.
(q) All requisite Governmental Authorities and third parties,
if any, shall have approved or consented to the Debt Tender Offer, the
Refinancing, the Transactions and the other transactions contemplated
hereby to the extent required, all applicable appeal periods shall have
expired and there shall be no governmental or judicial action, actual
or threatened, that has or could have a reasonable likelihood of
restraining, preventing or imposing materially burdensome conditions on
the Debt Tender Offer, the Refinancing, the Transactions or the other
transactions contemplated hereby.
ARTICLE V
Affirmative Covenants
Each Borrower covenants and agrees with each Lender that so long as
this Agreement shall remain in effect and until the Commitments have been
terminated and the principal of and interest on each Loan, all Fees and all
other expenses or amounts payable under any Loan Document shall have been paid
in full and all Letters of Credit have been canceled or have expired and all
amounts drawn thereunder have been reimbursed in full, unless the Required
Lenders shall otherwise consent in writing, each Borrower will, and will cause
each of its Subsidiaries to:
SECTION 5.01. Existence; Businesses and Properties. (a) Do or cause to
be done all things necessary to preserve, renew and keep in full force and
effect its legal existence, except as otherwise expressly permitted under
Section 6.05.
(b) Do or cause to be done all things necessary to obtain, preserve,
renew, extend and keep in full force and effect the rights, licenses, permits,
franchises, authorizations, patents, copyrights, trademarks and trade names
material to the conduct of its business; maintain and operate such business in
substantially the manner in which it is presently conducted and operated or in
an otherwise prudent manner; comply in all material respects with all applicable
laws, rules, regulations (including any zoning, building, Environmental Law,
ordinance, code or approval or any building permits or any restrictions of
record or agreements affecting the Mortgaged Properties) and decrees and orders
of any Governmental Authority, whether now in effect or hereafter enacted unless
failure to comply could not reasonably be expected to result in a Material
Adverse Effect; and at all times maintain and preserve all property material to
the conduct of such business and keep such property in working order and
condition and from time to time make, or cause to be made, all needful and
proper repairs, renewals, additions, improvements and replacements thereto
necessary in order that the business carried on in connection therewith may be
conducted at all times in a commercially reasonably manner.
<PAGE>
72
SECTION 5.02. Insurance. (a) Keep its insurable properties adequately
insured at all times by financially sound and reputable insurers; maintain such
other insurance (including self insurance), to such extent and against such
risks, including fire and other risks insured against by extended coverage, as
is customary with companies in the same or similar businesses operating in the
same or similar locations and of same or similar size, including public
liability insurance against claims for personal injury or death or property
damage occurring upon, in, about or in connection with the use of any properties
owned, occupied or controlled by it; and maintain such other insurance as may be
required by law.
(b) Cause all such policies of Terex or any Domestic Subsidiary to be
endorsed or otherwise amended to include a "standard" or "New York" lender's
loss payable endorsement, in form and substance reasonably satisfactory to the
Administrative Agent and the Collateral Agent, which endorsement shall provide
that, from and after the Closing Date, if the insurance carrier shall have
received written notice from the Administrative Agent or the Collateral Agent of
the occurrence of an Event of Default, the insurance carrier shall pay all
proceeds otherwise payable to Terex or any such Loan Parties under such policies
directly to the Collateral Agent; cause all such policies to provide that no
Borrower, the Administrative Agent, the Collateral Agent nor any other party
shall be a coinsurer thereunder and to contain a "Replacement Cost Endorsement",
without any deduction for depreciation, and such other provisions as the
Administrative Agent or the Collateral Agent may reasonably require from time to
time to protect their interests; deliver original or certified copies of all
such policies to the Collateral Agent; cause each such policy to provide that it
shall not be canceled, modified or not renewed for any other reason upon not
less than 30 days' prior written notice thereof by the insurer to the
Administrative Agent and the Collateral Agent; deliver to the Administrative
Agent and the Collateral Agent, prior to the cancelation, modification or
nonrenewal of any such policy of insurance, a copy of a renewal or replacement
policy (or other evidence of renewal of a policy previously delivered to the
Administrative Agent and the Collateral Agent) together with evidence
satisfactory to the Administrative Agent and the Collateral Agent of payment of
the premium therefor.
(c) If at any time the area in which the Premises (as defined in the
Mortgages) are located is designated (i) a "flood hazard area" in any Flood
Insurance Rate Map published by the Federal Emergency Management Agency (or any
successor agency), obtain flood insurance in such total amount as the
Administrative Agent, the Collateral Agent or the Required Lenders may from time
to time require, and otherwise comply with the National Flood Insurance Program
as set forth in the Flood Disaster Protection Act of 1973, as it may be amended
from time to time, or (ii) a "Zone 1" area, obtain earthquake insurance in such
total amount as the Administrative Agent, the Collateral Agent or the Required
Lenders may from time to time require.
(d) With respect to any Mortgaged Property, carry and maintain
comprehensive general liability insurance including the "broad form CGL
endorsement" and coverage on an occurrence basis against claims made for
personal injury (including bodily injury, death and property damage) and
umbrella liability insurance against any and all claims, in no event for a
combined single limit of less than that in effect on the Closing Date, naming
the Collateral Agent as an additional insured, on forms reasonably satisfactory
to the Collateral Agent.
(e) Notify the Administrative Agent and the Collateral Agent
immediately whenever any separate insurance concurrent in form or contributing
in the event of loss with that required to be maintained under this Section 5.02
<PAGE>
73
is taken out by any Borrower; and promptly deliver to the Administrative Agent
and the Collateral Agent a duplicate original copy of such policy or policies.
(f) In connection with the covenants set forth in this Section 5.02, it
is understood and agreed that:
(i) none of the Administrative Agent, the Lenders, the Issuing
Banks, or their respective agents or employees shall be liable for any
loss or damage insured by the insurance policies required to be
maintained under this Section 5.02, it being understood that (A) each
Borrower and the other Loan Parties shall look solely to their
insurance companies or any other parties other than the aforesaid
parties for the recovery of such loss or damage and (B) such insurance
companies shall have no rights of subrogation against the
Administrative Agent, the Collateral Agent, the Lenders, the Issuing
Banks or their agents or employees. If, however, the insurance policies
do not provide waiver of subrogation rights against such parties, as
required above, then each Borrower hereby agrees, to the extent
permitted by law, to waive its right of recovery, if any, against the
Administrative Agent, the Collateral Agent, the Lenders, the Issuing
Banks and their agents and employees; and
(ii) the designation of any form, type or amount of insurance
coverage by the Administrative Agent, the Collateral Agent or the
Required Lenders under this Section 5.02 shall in no event be deemed a
representation, warranty or advice by the Administrative Agent, the
Collateral Agent or the Lenders that such insurance is adequate for the
purposes of the business of any Borrower and its Subsidiaries or the
protection of their properties and the Administrative Agent, the
Collateral Agent and the Required Lenders shall have the right from
time to time to require the Borrowers and the other Loan Parties to
keep other insurance in such form and amount as the Administrative
Agent, the Collateral Agent or the Required Lenders may reasonably
request; provided that such insurance shall be obtainable on
commercially reasonable terms.
SECTION 5.03. Obligations and Taxes. Pay its Indebtedness and other
obligations promptly and in accordance with their terms and pay and discharge
promptly when due all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or in respect of its property,
before the same shall become delinquent or in default, as well as all lawful
claims for labor, materials and supplies or otherwise that, if unpaid, could
reasonably be expected to give rise to a Lien upon such properties or any part
thereof; provided, however, that such payment and discharge shall not be
required with respect to any such obligation, tax, assessment, charge, levy or
claim so long as the validity or amount thereof shall be contested in good faith
by appropriate proceedings and the applicable Borrower shall have set aside on
its books reserves with respect thereto in accordance with GAAP and such contest
operates to suspend collection of the contested obligation, tax, assessment or
charge and enforcement of a Lien and, in the case of a Mortgaged Property, there
is no risk of forfeiture of such property.
<PAGE>
74
SECTION 5.04. Financial Statements, Reports, etc. In the case of Terex,
furnish to the Administrative Agent for distribution by the Administrative Agent
to each Lender:
(a) within 90 days after the end of each fiscal year, its
consolidated and consolidating balance sheets and related statements of
operations, stockholders' equity and cash flows showing the financial
condition of Terex and its consolidated Subsidiaries as of the close of
such fiscal year and the results of its operations and the operations
of such Subsidiaries during such year, all audited by Price Waterhouse
L.L.P. or other independent public accountants of recognized national
standing or otherwise reasonably acceptable to the Required Lenders and
accompanied by an opinion of such accountants (which shall not be
qualified in any material respect) to the effect that such consolidated
financial statements fairly present the financial condition and results
of operations of Terex and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied;
(b) within 45 days after the end of each of the first three
fiscal quarters of each fiscal year, its consolidated and consolidating
balance sheets and related statements of operations, stockholders'
equity and cash flows showing the financial condition of Terex and its
consolidated Subsidiaries as of the close of such fiscal quarter and
the results of its operations and the operations of such Subsidiaries
during such fiscal quarter and the then elapsed portion of the fiscal
year, all certified by one of its Financial Officers as fairly
presenting in all material respects the financial condition and results
of operations of Terex and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied,
subject to normal year-end audit adjustments;
(c) concurrently with any delivery of financial statements
under sub- paragraph (a) or (b) above, a certificate of the accounting
firm (unless at such time it is the practice and policy of such
accounting firm not to deliver such certificates) or Financial Officer
opining on or certifying such statements (which certificate, when
furnished by an accounting firm, may be limited to accounting matters
and disclaim responsibility for legal interpretations) (i) certifying
that no Event of Default or Default has occurred or, if such an Event
of Default or Default has occurred, specifying the nature and extent
thereof and any corrective action taken or proposed to be taken with
respect thereto; and (ii) in the case of any such letter from such
Financial Officer, setting forth reasonably detailed calculations
demonstrating compliance with Sections 6.10, 6.11, 6.12 and 6.13;
(d) promptly after the same become publicly available, copies
of all periodic and other reports, proxy statements and other materials
filed by Terex or any Subsidiary with the Securities and Exchange
Commission, or any Governmental Authority succeeding to any or all of
the functions of said Commission, or with any national securities
exchange, or distributed to its shareholders, as the case may be;
(e) as promptly as practicable, but in no event later than 10
Business Days after the last day of each fiscal year of Terex, a copy
of the budget for its consolidated balance sheet and related statements
of income and selected working capital and capital expenditure analyses
for each quarter of the following fiscal year; and
<PAGE>
75
(f) promptly, from time to time, such other information
regarding the operations, business affairs and financial condition of
Terex or any Subsidiary, or compliance with the terms of any Loan
Document, as the Administrative Agent or any Lender may reasonably
request.
SECTION 5.05. Litigation and Other Notices. Furnish to the
Administrative Agent, the Issuing Banks and each Lender, promptly after
obtaining knowledge thereof, written notice of the following:
(a) any Event of Default or Default, specifying the nature and
extent thereof and the corrective action (if any) taken or proposed to
be taken with respect thereto;
(b) the filing or commencement of, or any threat or notice of
intention of any person to file or commence, any action, suit or
proceeding, whether at law or in equity or by or before any
Governmental Authority, against any Borrower or any Affiliate thereof
that could reasonably be expected to result in a Material Adverse
Effect; and
(c) any development with respect to Terex or any Subsidiary
that has resulted in, or could reasonably be expected to result in, a
Material Adverse Effect.
SECTION 5.06. Employee Benefits. (a) Comply in all material respects
with the applicable provisions of ERISA and the Code and the laws applicable to
any Foreign Benefit Plan and (b) furnish to the Administrative Agent (i) as soon
as possible after, and in any event within 10 days after any Responsible Officer
of any Borrower or any Affiliate knows that any ERISA Event has occurred that,
alone or together with any other ERISA Event could reasonably be expected to
result in liability of any Borrower in an aggregate amount exceeding $5,000,000
(or the Dollar Equivalent thereof in another currency), a statement of a
Financial Officer of such Borrower setting forth details as to such ERISA Event
and the action, if any, that such Borrower proposes to take with respect
thereto.
SECTION 5.07. Maintaining Records; Access to Properties and
Inspections. Keep proper books of record and account in which full, true and
correct entries in conformity in all material respects with GAAP and all
requirements of law are made of all dealings and transactions in relation to its
business and activities. Each Loan Party will, and will cause each of its
Subsidiaries to, permit any representatives designated by the Administrative
Agent or any Lender to visit and inspect the financial records and the
properties of any Borrower or any Subsidiary at reasonable times and as often as
reasonably requested (but in no event more than twice annually unless an Event
of Default shall have occurred and be continuing) and to make extracts from and
copies of such financial records, and permit any representatives designated by
the Administrative Agent or any Lender to discuss the affairs, finances and
condition of any Borrower or any Subsidiary with the officers thereof and
independent accountants therefor.
SECTION 5.08. Use of Proceeds. Use the proceeds of the Loans and
request the issuance of Letters of Credit only for the purposes set forth in the
preamble to this Agreement.
SECTION 5.09. Compliance with Environmental Laws. Comply, and cause all
lessees and other persons occupying its Properties to comply, in all material
respects with all Environmental Laws and Environmental Permits applicable to its
<PAGE>
76
operations and Properties; obtain and renew all Environmental Permits necessary
for its operations and Properties; and conduct any Remedial Action in accordance
with Environmental Laws; provided, however, that no Borrower nor any of the
Subsidiaries shall be required to undertake any Remedial Action to the extent
that its obligation to do so is being contested in good faith and by proper
proceedings and appropriate reserves are being maintained with respect to such
circumstances in accordance with GAAP.
SECTION 5.10. Preparation of Environmental Reports. If an Event of
Default caused by reason of a breach of Section 3.17 or 5.09 shall have occurred
and be continuing, at the request of the Required Lenders through the
Administrative Agent, provide to the Lenders within 45 days after such request,
at the expense of the applicable Borrower, an environmental site assessment
report for the Properties which are the subject of such default, prepared by an
environmental consulting firm reasonably acceptable to the Administrative Agent
and indicating the presence or absence of Hazardous Materials and the estimated
cost of any Remedial Action or any other activity required to bring the
Properties into compliance with Environmental Laws in connection with such
Properties.
SECTION 5.11. Further Assurances. (a) Execute any and all further
documents, financing statements, agreements and instruments, and take all
further action (including filing Uniform Commercial Code and other financing
statements, mortgages and deeds of trust) that may be required under applicable
law, or that the Required Lenders, the Administrative Agent or the Collateral
Agent may reasonably request, in order to effectuate the transactions
contemplated by the Loan Documents and in order to grant, preserve, protect and
perfect the validity and first priority of the security interests created or
intended to be created by the Security Documents. Terex will cause any
subsequently acquired or organized Domestic Subsidiary (other than an Inactive
Subsidiary) to execute a Subsidiary Guarantee Agreement, Indemnity Subrogation
and Contribution Agreement and each applicable Security Document in favor of the
Collateral Agent. In addition, from time to time, Terex will, at its cost and
expense, promptly secure the Obligations by pledging or creating, or causing to
be pledged or created, perfected security interests with respect to such of its
assets and properties as the Administrative Agent or the Required Lenders shall
reasonably designate (it being understood that it is the intent of the parties
that the Obligations shall be secured by, among other things, substantially all
the assets of Terex (including real and other properties acquired subsequent to
the Closing Date)). Such security interests and Liens will be created under the
Security Documents and other security agreements, mortgages, deeds of trust and
other instruments and documents in form and substance reasonably satisfactory to
the Collateral Agent, and Terex shall deliver or cause to be delivered to the
Lenders all such instruments and documents (including legal opinions, title
insurance policies and lien searches) as the Collateral Agent shall reasonably
request to evidence compliance with this Section.
(b) In the case of Terex and the Subsidiary Guarantors, promptly to
notify the Collateral Agent in writing of any change (i) in its corporate name
or in any trade name used to identify it in the conduct of its business or in
the ownership of its properties, (ii) in the location of its chief executive
office, its principal place of business, any office in which it maintains books
or records relating to Collateral owned by it or any office or facility at which
Collateral owned by it is located (including the establishment of any such new
office or facility), (iii) in its identity or corporate structure or (iv) in its
Federal Taxpayer Identification Number. Terex and each Subsidiary Guarantor
agrees not to effect or permit
<PAGE>
77
any change referred to in the preceding sentence unless all filings have been
made under the Uniform Commercial Code or otherwise that are required in order
for the Collateral Agent to continue at all times following such change to have
a valid, legal and perfected first priority security interest in all the
Collateral. Terex and each Subsidiary Guarantor agrees promptly to notify the
Collateral Agent if any material portion of the Collateral owned or held by such
Borrower is damaged or destroyed.
(c) On or before the date that is 90 days after the date of this
Agreement, the Borrowers shall cause all Indebtedness with respect to the Fiat
Collateral to be repaid in full and the financing arrangements existing on the
date hereof with respect to such Fiat Collateral to be terminated.
(d) On or before the date that is 180 days after the date of this
Agreement, Terex will either (i) if the Acquisition is consummated, cause its
wholly owned Subsidiary Unit Rig (S.A.) Pty. Ltd. to be merged with and into the
German Borrower with the German Borrower as the surviving entity or (ii) pledge
65% of the capital stock of Unit Rig (S.A.) Pty. Ltd. to the Secured Parties.
SECTION 5.12. Interest Rate Protection Agreements. In the case of
Terex, within 90 days following the Closing Date, enter into Interest Rate
Protection Agreements, with counterparties and on terms and conditions
reasonably satisfactory to the Administrative Agent, pursuant to which the
interest rate with respect to a notional amount equal to at least 50% of the sum
of (a) the Term Loans and (b) the Senior Subordinated Notes, if any, is fixed.
ARTICLE VI
Negative Covenants
Each Borrower covenants and agrees with each Lender that, so long as
this Agreement shall remain in effect and until the Commitments have been
terminated and the principal of and interest on each Loan, all Fees and all
other expenses or amounts payable under any Loan Document have been paid in full
and all Letters of Credit have been cancelled or have expired and all amounts
drawn thereunder have been reimbursed in full, unless the Required Lenders shall
otherwise consent in writing, such Borrower will not, and will not cause or
permit any of the Subsidiaries to:
SECTION 6.01. Indebtedness. Incur, create, assume or permit to exist
any Indebtedness, except that the Borrower and any Subsidiary (other than an
Inactive Subsidiary) may incur, create, assume or permit to exist:
(a) Indebtedness for borrowed money existing on the date
hereof and set forth in Schedule 6.01;
(b) Indebtedness created hereunder and under the other Loan
Documents;
(c) in the case of Terex, the Senior Subordinated Notes and
Additional Subordinated Notes; provided that the proceeds thereof are
used to prepay the Term Loans pursuant to Section 2.13(e) or to finance
<PAGE>
78
the Acquisition or other Permitted Acquisitions;
(d) Indebtedness pursuant to Hedging Agreements;
(e) Indebtedness of Terex or any wholly owned Subsidiary
(other than an Inactive Subsidiary) to any other wholly owned
Subsidiary (other than an Inactive Subsidiary), or of any wholly owned
Subsidiary (other than an Inactive Subsidiary) to Terex; provided that
any such Indebtedness of a Loan Party shall be subordinated to the
prior payment in full of the Obligations;
(f) Indebtedness resulting from endorsement of negotiable
instruments for collection in the ordinary course of business;
(g) Indebtedness arising under indemnity agreements to title
insurers to cause such title insurers to issue to the Collateral Agent
mortgagee title insurance policies;
(h) Indebtedness arising with respect to customary
indemnification and purchase price adjustment obligations incurred in
connection with Asset Sales and Permitted Acquisitions permitted
hereunder;
(i) Indebtedness incurred in the ordinary course of business
with respect to surety and appeal bonds, performance, insurance and
return-of-money bonds and other similar obligations;
(j) Indebtedness consisting of (i) Acquired Indebtedness or
(ii) Purchase Money Indebtedness or Capital Lease Obligations incurred
in the ordinary course of business after the Closing Date; provided
that the aggregate principal amount of any such Indebtedness pursuant
to this paragraph (j) shall not exceed $30,000,000;
(k) Indebtedness of O&K Mining existing on the date the
Acquisition is consummated; provided that the aggregate principal
amount of any such Indebtedness pursuant to this paragraph (k) shall
not exceed DM17,500,000;
(l) Floor Plan Guarantees;
(m) Indebtedness incurred under the Italian Facilities in an
amount not exceeding Lit12,850,000,000 in the aggregate at any time
outstanding;
(n) Indebtedness incurred to extend, renew or refinance
Indebtedness described in paragraph (a), (c), (j), (k) or (l) above
("Refinancing Indebtedness") so long as (i) such Refinancing
Indebtedness is in an aggregate principal amount not greater than the
aggregate principal amount of the Indebtedness being extended, renewed
or refinanced, plus the amount of any interest or premiums required to
be paid thereon plus fees and expenses associated therewith, (ii) such
Refinancing Indebtedness has a later or equal final maturity and a
longer or equal weighted average life than the Indebtedness being
extended, renewed or refinanced, (iii) if the Indebtedness being
extended, renewed or refinanced is subordinated to the Obligations, the
Refinancing Indebtedness is subordinated to the Obligations to the
extent of the Indebtedness being extended, renewed or refinanced and
(iv) the covenants, events of default and other non-pricing provisions
<PAGE>
79
of the Refinancing Indebtedness shall be no less favorable to the
Lenders than those contained in the Indebtedness being extended,
renewed or refinanced;
(o) Indebtedness classified as Capital Lease Obligations
incurred in connection with the purchase of inventory to be sold in the
ordinary course of business;
(p) Indebtedness related to the Fiat Collateral; and
(q) other unsecured Indebtedness in an aggregate principal
amount not exceeding $5,000,000 at any time outstanding.
SECTION 6.02. Liens. Create, incur, assume or permit to exist any Lien
on any property or assets (including stock or other securities of any person,
including any Subsidiary) now owned or hereafter acquired by it or on any income
or revenues or rights in respect of any thereof, except:
(a) Liens on property or assets of any Borrower and its
Subsidiaries existing on the date hereof and set forth in Schedule
6.02; provided that such Liens shall secure only those obligations
which they secure on the date hereof;
(b) any Lien created under the Loan Documents;
(c) any Lien existing on any property or asset prior to the
acquisition thereof by any Borrower or any Subsidiary; provided that
(i) such Lien is not created in contemplation of or in connection with
such acquisition, (ii) such Lien does not apply to any other property
or assets of any Borrower or any Subsidiary and (iii) such Lien does
not (A) materially interfere with the use, occupancy and operation of
any Mortgaged Property, (B) materially reduce the fair market value of
such Mortgaged Property but for such Lien or (C) result in any material
increase in the cost of operating, occupying or owning or leasing such
Mortgaged Property;
(d) Liens for taxes not yet due or which are being contested
in compliance with Section 5.03;
(e) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business and securing obligations that are not due and payable or which
are being contested in compliance with Section 5.03;
(f) pledges and deposits made in the ordinary course of
business in compliance with workmen's compensation, unemployment
insurance and other social security laws or regulations;
(g) (i) deposits to secure the performance of bids, trade
contracts (other than for Indebtedness), leases (other than Capital
Lease Obligations), statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in
the ordinary course of business and (ii) Liens on the receivables of
the Scottish Borrower to secure Indebtedness of the Scottish Borrower
<PAGE>
80
in respect of performance bonds and similar obligations in an aggregate
principal amount not to exceed (pound)3,000,000;
(h) zoning restrictions, easements, rights-of-way,
restrictions on use of real property and other similar encumbrances
incurred in the ordinary course of business which, in the aggregate,
are not substantial in amount and do not materially detract from the
value of the property subject thereto or interfere with the ordinary
conduct of the business of any Borrower or any of its Subsidiaries;
(i) purchase money security interests in real property,
improvements thereto or equipment hereafter acquired (or, in the case
of improvements, constructed) by any Borrower or any Subsidiary (other
than an Inactive Subsidiary) or in respect of Capital Lease
Obligations; provided that (i) such security interests secure
Indebtedness permitted by Section 6.01(j), (ii) such security interests
are incurred, and the Indebtedness secured thereby is created, within
90 days after such acquisition (or construction), (iii) the
Indebtedness secured thereby does not exceed 100% of the lesser of the
cost or the fair market value of such real property, improvements or
equipment at the time of such acquisition (or construction) and (iv)
such security interests do not apply to any other property or assets of
any Borrower or any Subsidiary;
(j) Liens arising from the rendering of a final judgment or
order that does not give rise to an Event of Default;
(k) Liens securing Acquired Indebtedness; provided that (i)
such Acquired Indebtedness was secured by such Liens at the time of the
relevant Permitted Acquisition and such Liens were not incurred in
contemplation thereof and (ii) such Liens do not extend to (x) any
property of Terex or the Subsidiaries (other than the Acquired Person)
or (y) to any property of the Acquired Person other than the property
securing such Liens on the date of the relevant Permitted Acquisition;
(l) Liens securing Refinancing Indebtedness, to the extent
that the Indebtedness being refinanced was originally secured in
accordance with this Section 6.02; provided that such Lien does not
apply to any additional property or assets of Terex or any Subsidiary;
(m) Liens in favor of Terex; and
(n) Liens relating to the Fiat Collateral.
SECTION 6.03. Sale and Lease-Back Transactions. Enter into any
arrangement, directly or indirectly, with any person whereby it shall sell or
transfer any property, real or personal, used or useful in its business, whether
now owned or hereafter acquired, and thereafter rent or lease such property or
other property which it intends to use for substantially the same purpose or
purposes as the property being sold or transferred (a "Sale and Leaseback");
provided that any Borrower or any Subsidiary may enter into any such transaction
to the extent that the Capital Lease Obligations and Liens associated therewith
would be permitted under this Agreement.
<PAGE>
81
SECTION 6.04. Investments, Loans and Advances. Purchase, hold or
acquire any capital stock, evidences of indebtedness or other securities of,
make or permit to exist any loans or advances to, or make or permit to exist any
investment or any other interest in, any other person, except:
(a) investments by Terex and its Subsidiaries existing on the
date hereof in the capital stock of the Subsidiaries and other
investments by Terex and its Subsidiaries existing on the date hereof
and set forth in Schedule 6.04;
(b) Permitted Investments;
(c) Terex may make the Acquisition; provided that Terex
complies and causes O&K Mining to comply, with the applicable
provisions of Section 5.11;
(d) Terex may make any Permitted Acquisition; provided that
Terex complies, and causes any acquired entity to comply, with the
applicable provisions of Section 5.11 and the Security Documents with
respect to the person or assets so acquired;
(e) the Borrowers and their respective Subsidiaries (other
than Inactive Subsidiaries) may make loans and advances to employees
for moving, entertainment, travel and other similar expenses in the
ordinary course of business not to exceed $1,000,000 in the aggregate
at any time outstanding;
(f) Capital Expenditures permitted pursuant to Section 6.10;
(g) cash collateral provided to the Collateral Agent pursuant
to the Loan Documents;
(h) promissory notes issued by any purchaser in connection
with any Asset Sale permitted pursuant to Section 6.05(b);
(i) provided that no Default or Event of Default shall have
occurred and be continuing at the time of such payment or after giving
effect thereto, (A) the purchase by Terex of shares of its common stock
(for not more than fair market value) in connection with the delivery
of such stock to grantees under any stock option plan (upon the
exercise by such grantees of their stock options) or any other deferred
compensation plan of Terex approved by the Board of Directors and (B)
the repurchase of shares of, or options to purchase shares of, common
stock of Terex or any of its Subsidiaries from employees, former
employees, directors or former directors of Terex or any of its
Subsidiaries (or permitted transferees of such employees, former
employees, directors or former directors) pursuant to the terms of the
agreements (including employment agreements) or plans (or amendments
thereto) approved by the Board of Directors under which such
individuals purchase or sell or are granted the option to purchase or
sell, such common stock; provided that the aggregate amount of all such
purchases and repurchases permitted under this paragraph (i) shall not
exceed $1,200,000 per year or $8,400,000 in the aggregate during the
term of this Agreement;
<PAGE>
82
(j) accounts receivable arising in the ordinary course of
business from the sale of inventory;
(k) Guarantees constituting Indebtedness permitted by Section
6.01;
(l) investments in joint ventures in Related Businesses in an
aggregate amount not exceeding $15,000,000 at any time outstanding;
(m) intercompany loans and advances constituting Indebtedness
permitted by Section 6.01(e); and
(n) other investments in an aggregate amount not exceeding
$10,000,000 at any time outstanding.
SECTION 6.05. Mergers, Consolidations, Sales of Assets and
Acquisitions. (a) Merge into or consolidate with any other person, or permit any
other person to merge into or consolidate with it, or sell, transfer, lease or
otherwise dispose of (in one transaction or in a series of transactions) all or
any substantial part of its assets (whether now owned or hereafter acquired) or
any capital stock of any Subsidiary, or purchase, lease or otherwise acquire (in
one transaction or a series of transactions) all or substantially all of the
assets of any other person, except that (i) any Borrower and any Subsidiary
(other than an Inactive Subsidiary) may purchase and sell inventory in the
ordinary course of business and (ii) if at the time thereof and immediately
after giving effect thereto no Event of Default or Default shall have occurred
and be continuing (A) any wholly owned Subsidiary may merge into Terex in a
transaction in which Terex is the surviving corporation, (B) any wholly owned
Subsidiary may merge into or consolidate with any other wholly owned Subsidiary
that is a Guarantor in a transaction in which the surviving entity is a wholly
owned Subsidiary that is a Guarantor and no person other than Terex or a wholly
owned Subsidiary that is a Guarantor receives any consideration and (C) in
connection with any Permitted Acquisition pursuant to Section 6.04(d), Terex or
any wholly owned Subsidiary that is a Guarantor may acquire or merge into or
consolidate with any entity acquired pursuant to such Permitted Acquisition in a
transaction in which the surviving entity is Terex or a wholly owned Subsidiary
that is a Guarantor.
(b) Engage in any Asset Sale not otherwise prohibited by Section
6.05(a) unless all of the following conditions are met: (i) the consideration
received is at least equal to the fair market value of such assets; (ii) at
least 80% of the consideration received is cash; (iii) the Net Cash Proceeds of
such Asset Sale are applied as required by Section 2.13(b); (iv) after giving
effect to the sale or other disposition of the assets included within the Asset
Sale and the repayment of Indebtedness with the proceeds thereof, Terex is in
compliance on a pro forma basis with the covenants set forth in Sections 6.11,
6.12 and 6.13 recomputed for the most recently ended fiscal quarter for which
information is available and is in compliance with all other terms and
conditions contained in this Agreement; and (v) no Default or Event of Default
shall result from such Asset Sale.
SECTION 6.06. Dividends and Distributions; Restrictions on Ability of
Subsidiaries to Pay Dividends. (a) Declare or pay, directly or indirectly, any
dividend or make any other distribution (by reduction of capital or otherwise),
whether in cash, property, securities or a combination thereof, with respect to
any shares of its capital stock or directly or indirectly redeem, purchase,
retire or otherwise acquire for value (or permit any Subsidiary to purchase
<PAGE>
83
or acquire) any shares of any class of its capital stock or set aside any amount
for any such purpose; provided, however, that (i) any Subsidiary may declare and
pay dividends or make other distributions to the Borrower of which it is a
Subsidiary and (ii) Terex may pay dividends on, and redeem and repurchase its
capital stock, provided that all of the following conditions are satisfied: (A)
at the time of such dividend, redemption or purchase and after giving effect
thereto, no Default or Event of Default has occurred and is continuing or would
arise as a result thereof; (B) the amount of all dividends, redemptions and
purchases made pursuant to this clause (ii) together with all distributions and
payments made pursuant to Section 6.09(b)(i), during the term of this Agreement
shall not exceed $25,000,000, and (c) on a pro forma basis and after giving
effect to such payment and all other payments pursuant to this clause (a) and
Section 6.09(b)(i) made after the last day of the most recent fiscal quarter for
which financial statements have been delivered pursuant to Section 5.04(a) or
(b), as applicable, as if such payments were made in the four-fiscal-quarter
period ending on such last day of such fiscal quarter, the Consolidated Leverage
Ratio as of the end of such four- fiscal-quarter period shall be less than 3.85
to 1.00 and provided further that Terex may at any time pay dividends with
respect to its capital stock solely in additional shares of its capital stock.
(b) Permit its Subsidiaries to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any such Subsidiary to (i) pay any dividends or
make any other distributions on its capital stock or any other interest or (ii)
make or repay any loans or advances to Terex or the parent of such Subsidiary.
SECTION 6.07. Transactions with Affiliates. Sell or transfer any
property or assets to, or purchase or acquire any property or assets from, or
otherwise engage in any other transactions with, any of its Affiliates, except
that any Borrower or any Subsidiary may engage in any of the foregoing
transactions in the ordinary course of business at prices and on terms and
conditions not less favorable to such Borrower or such Subsidiary than could be
obtained on an arm's-length basis from unrelated third parties, and except that
this Section shall not apply to any transaction between or among Borrowers and
Guarantors.
SECTION 6.08. Business of Borrowers and Subsidiaries. Engage at any
time in any business or business activity other than the Related Business.
SECTION 6.09. Other Indebtedness and Agreements. (a) Permit any waiver,
supplement, modification, amendment, termination or release of any indenture,
instrument or agreement pursuant to which any Indebtedness of any Borrower or
any Subsidiary in an aggregate principal amount in excess of $5,000,000 is
outstanding if the effect of such waiver, supplement, modification, amendment,
termination or release is to (i) increase the interest rate on such
Indebtedness; (ii) accelerate the dates upon which payments of principal or
interest are due on such Indebtedness; (iii) add or change any event of default
or add any material covenant with respect to such Indebtedness; (iv) change the
prepayment provisions of such Indebtedness in any manner adverse to the Lenders;
(v) change the subordination provisions thereof (or the subordination terms of
any Guarantee thereof); or (vi) change or amend any other term if such change or
amendment would materially increase the obligations of the obligor or confer
additional material rights on the holder of such Indebtedness in a manner
adverse to any Borrower, any Subsidiary, the Administrative Agent or the
Lenders.
<PAGE>
84
(b)(i) Make any distribution, whether in cash, property, securities or
a combination thereof, other than regular scheduled payments of principal and
interest as and when due (to the extent not prohibited by applicable
subordination provisions), in respect of, or pay, or offer or commit to pay, or
directly or indirectly redeem, repurchase, retire or otherwise acquire for
consideration, or set apart any sum for the aforesaid purposes, any Indebtedness
for borrowed money (other than the Loans) of any Borrower or any Subsidiary
except that (A) subject to Section 2.13(c), Terex shall be permitted to use the
Net Cash Proceeds of any Equity Issuance to prepay not more than one-third of
the Senior Subordinated Notes or any other Indebtedness, (B) Terex and its
Subsidiaries shall be permitted to make any such distribution or payment if all
of the following conditions are satisfied: (1) at the time of such distribution
or payment and after giving effect thereto, no Default or Event of Default has
occurred and is continuing or would arise as a result thereof; (2) the amount of
all such distributions and payments made pursuant to this clause (i), together
with all dividends, redemptions and purchases made pursuant to Section
6.06(a)(ii), during the term of this Agreement shall not exceed $25,000,000; and
(3) on a pro forma basis and after giving effect to such distribution or payment
and all other distributions or payments pursuant to this clause (i) and Section
6.06(a) made after the last day of the most recent fiscal quarter for which
financial statements have been delivered pursuant to Section 5.04(a) or (b), as
applicable, as if such payments or distributions were made in the
four-fiscal-quarter period ending on such last day of such fiscal quarter, the
Consolidated Leverage Ratio as of the end of such four-fiscal-quarter period
shall be less than 3.85 to 1.00, or (ii) pay in cash any amount in respect of
such Indebtedness that may at the obligor's option be paid in kind or in other
securities and (C) Terex may at any time repay Indebtedness of any Borrower or
any Subsidiary solely in shares of its capital stock.
SECTION 6.10. Capital Expenditures. Permit the aggregate amount of
Consolidated Capital Expenditures made by Terex and its Subsidiaries, taken as a
whole, in any fiscal year of Terex to exceed $17,500,000. The amount of
permitted Capital Expenditures set forth in the immediately preceding sentence
in respect of any fiscal year shall be increased by (a) the amount of unused
permitted Capital Expenditures for the immediately preceding fiscal year less
(b) an amount equal to unused Capital Expenditures carried forward to such
preceding fiscal year.
SECTION 6.11. Consolidated Leverage Ratio. Permit the Consolidated
Leverage Ratio on the last day of any fiscal quarter of Terex ending during any
period set forth below to be in excess of the ratio set forth below for such
period:
Period Ratio
Effective Date - March 31, 1999 5.75 to 1.0
April 1, 1999 - March 31, 2000 5.00 to 1.0
April 1, 2000 - March 31, 2001 4.50 to 1.0
April 1, 2001 - March 31, 2002 3.75 to 1.0
Thereafter 3.50 to 1.0
<PAGE>
85
SECTION 6.12. Consolidated Interest Coverage Ratio. Permit the
Consolidated Interest Coverage Ratio for any period of four consecutive fiscal
quarters of Terex ending during any period set forth below to be less than the
ratio set forth below for such period:
Period Ratio
Effective Date - March 31, 1999 2.00 to 1.0
April 1, 1999 - March 31, 2000 2.10 to 1.0
April 1, 2000 - March 31, 2001 2.25 to 1.0
April 1, 2001 - March 31, 2002 2.35 to 1.0
April 1, 2002 - March 31, 2004 2.50 to 1.0
Thereafter 2.75 to 1.0
SECTION 6.13. Consolidated Fixed Charge Coverage Ratio. Permit the
Consolidated Fixed Charge Coverage Ratio for any period of four consecutive
fiscal quarters of Terex ending during any period set forth below to be less
than the ratio set forth below for such period:
Period Ratio
Effective Date - March 31, 2001 1.15 to 1.0
April 1, 2001 - March 31, 2003 1.20 to 1.0
April 1, 2003 - March 31, 2004 1.25 to 1.0
Thereafter 1.50 to 1.0
SECTION 6.14. Fiscal Year. Permit the fiscal year of Terex to end on a
day other than December 31.
ARTICLE VII
Events of Default
In case of the happening of any of the following events ("Events of
Default"):
(a) any representation or warranty made or deemed made in or
in connection with any Loan Document or the borrowings or issuances of
Letters of Credit hereunder, or any representation, warranty, statement
or information contained in any report, certificate, financial
statement or other instrument furnished in connection with or pursuant
to any Loan Document, shall prove to have been false or misleading in
any material respect when so made, deemed made or furnished;
(b) default shall be made in the payment of any principal of
any Loan or the reimbursement with respect to any L/C Disbursement when
and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or by acceleration
thereof or otherwise;
<PAGE>
86
(c) default shall be made in the payment of any interest on
any Loan or any Fee or L/C Disbursement or any other amount (other than
an amount referred to in (b) above) due under any Loan Document, when
and as the same shall become due and payable, and such default shall
continue unremedied for a period of three Business Days after notice;
(d) default shall be made in the due observance or performance
by any Borrower or any Subsidiary of any covenant, condition or
agreement contained in Section 5.01(a), 5.05 or 5.07 or in Article VI;
(e) default shall be made in the due observance or performance
by any Borrower or any Subsidiary of any covenant, condition or
agreement contained in any Loan Document (other than those specified in
(b), (c) or (d) above) and such default shall continue unremedied for a
period of 15 days after notice thereof from the Administrative Agent or
any Lender to Terex;
(f) any Borrower or any Subsidiary shall (i) fail to pay any
principal or interest, regardless of amount, due in respect of any
Indebtedness in a principal amount in excess of $5,000,000, when and as
the same shall become due and payable, or (ii) fail to observe or
perform any other term, covenant, condition or agreement contained in
any agreement or instrument evidencing or governing any such
Indebtedness if the effect of any failure referred to in this clause
(ii) is to cause, or to permit the holder or holders of such
Indebtedness or a trustee on its or their behalf (with or without the
giving of notice, the lapse of time or both) to cause, such
Indebtedness to become due prior to its stated maturity;
(g) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent
jurisdiction seeking (i) relief in respect of any Borrower or any
Subsidiary, or of a substantial part of the property or assets of any
Borrower or a Subsidiary, under Title 11 of the United States Code, as
now constituted or hereafter amended, or any other Federal, state or
foreign bankruptcy, insolvency, receivership or similar law, (ii) the
appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for any Borrower or any Subsidiary or
for a substantial part of the property or assets of any Borrower or any
Subsidiary or (iii) the winding-up or liquidation of any Borrower or
any Subsidiary; and such proceeding or petition shall continue
undismissed for 60 days or an order or decree approving or ordering any
of the foregoing shall be entered;
(h) any Borrower or any Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking relief under Title
11 of the United States Code, as now constituted or hereafter amended,
or any other Federal, state or foreign bankruptcy, insolvency,
receivership or similar law, (ii) consent to the institution of, or
fail to contest in a timely and appropriate manner, any proceeding or
the filing of any petition described in (g) above, (iii) apply for or
consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for any Borrower or any
Subsidiary or for a substantial part of the property or assets of any
Borrower or any Subsidiary, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v)
make a general assignment for the benefit of creditors, (vi) become
unable, admit in writing its inability or fail generally to pay its
<PAGE>
87
debts as they become due or (vii) take any action for the purpose of
effecting any of the foregoing;
(i) one or more judgments for the payment of money the
aggregate amount which is not covered by insurance is in excess of
$5,000,000 shall be rendered against any Borrower, any Subsidiary or
any combination thereof and the same shall remain undischarged for a
period of 45 consecutive days during which execution shall not be
effectively stayed, or any action shall be legally taken by a judgment
creditor to levy upon assets or properties of any Borrower or any
Subsidiary to enforce any such judgment;
(j) an ERISA Event shall have occurred that, in the opinion of
the Required Lenders, when taken together with all other such ERISA
Events, could reasonably be expected to result in liability of any
Borrower and its ERISA Affiliates in an aggregate amount exceeding
$5,000,000;
(k) any security interest purported to be created by any
Security Document shall cease to be, or shall be asserted by any
Borrower or any other Loan Party not to be, a valid, perfected, first
priority (except as otherwise expressly provided in this Agreement or
such Security Document) security interest in the securities, assets or
properties covered thereby, except to the extent that any such loss of
perfection or priority results from the failure of the Collateral Agent
to maintain possession of certificates representing securities pledged
under the Pledge Agreement and except to the extent that such loss is
covered by a lender's title insurance policy and the related insurer
promptly after such loss shall have acknowledged in writing that such
loss is covered by such title insurance policy; or
(l) there shall have occurred a Change in Control;
then, and in every such event (other than an event with respect to any Borrower
described in paragraph (g) or (h) above), and at any time thereafter during the
continuance of such event, the Administrative Agent, with the consent of the
Required Lenders, may, and at the request of the Required Lenders shall, by
notice to Terex, take either or both of the following actions, at the same or
different times: (i) terminate forthwith the Commitments and (ii) declare the
Loans then outstanding to be forthwith due and payable in whole or in part,
whereupon the principal of the Loans so declared to be due and payable, together
with accrued interest thereon and any unpaid accrued Fees and all other
liabilities of the Borrowers accrued hereunder and under any other Loan
Document, shall become forthwith due and payable, without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived by the Borrowers, anything contained herein or in any other Loan Document
to the contrary notwithstanding; and in any event with respect to any Borrower
described in paragraph (g) or (h) above, the Commitments shall automatically
terminate and the principal of the Loans then outstanding, together with accrued
interest thereon and any unpaid accrued Fees and all other liabilities of the
Borrowers accrued hereunder and under any other Loan Document, shall
automatically become due and payable, without presentment, demand, protest or
any other notice of any kind, all of which are hereby expressly waived by the
Borrowers, anything contained herein or in any other Loan Document to the
contrary notwithstanding.
<PAGE>
88
ARTICLE VIII
The Administrative Agent and the Collateral Agent
In order to expedite the transactions contemplated by this Agreement,
CSFB is hereby appointed to act as Administrative Agent and Collateral Agent on
behalf of the Lenders and the Issuing Banks (for purposes of this Article VIII,
the Administrative Agent and the Collateral Agent are referred to collectively
as the "Agents"). Each of the Lenders, the Issuing Banks, and each assignee of
any such Lender or Issuing Bank, hereby irrevocably authorizes the Agents to
take such actions on behalf of such Lender, Issuing Bank or assignee and to
exercise such powers as are specifically delegated to the Agents by the terms
and provisions hereof and of the other Loan Documents, together with such
actions and powers as are reasonably incidental thereto. The Administrative
Agent is hereby expressly authorized by the Lenders and the Issuing Banks,
without hereby limiting any implied authority, (a) to receive on behalf of the
Lenders and the Issuing Banks all payments of principal of and interest on the
Loans, all payments in respect of L/C Disbursements and all other amounts due to
the Lenders hereunder, and promptly to distribute to each Lender or each Issuing
Bank its proper share of each payment so received; (b) to give notice on behalf
of each of the Lenders to the Borrowers of any Event of Default specified in
this Agreement of which the Administrative Agent has actual knowledge acquired
in connection with its agency hereunder; and (c) to distribute to each Lender
copies of all notices, financial statements and other materials delivered by any
Borrower or any other Loan Party pursuant to this Agreement or the other Loan
Documents as received by the Administrative Agent. Without limiting the
generality of the foregoing, the Agents are hereby expressly authorized to
execute any and all documents (including releases) with respect to the
Collateral and the rights of the Secured Parties with respect thereto, as
contemplated by and in accordance with the provisions of this Agreement and the
Security Documents.
Neither the Agents nor any of their respective directors, officers,
employees or agents shall be liable as such for any action taken or omitted by
any of them except for its or his own gross negligence or wilful misconduct, or
be responsible for any statement, warranty or representation herein or the
contents of any document delivered in connection herewith, or be required to
ascertain or to make any inquiry concerning the performance or observance by any
Borrower or any other Loan Party of any of the terms, conditions, covenants or
agreements contained in any Loan Document. The Agents shall not be responsible
to the Lenders for the due execution, genuineness, validity, enforceability or
effectiveness of this Agreement or any other Loan Documents, instruments or
agreements. The Agents shall in all cases be fully protected in acting, or
refraining from acting, in accordance with written instructions signed by the
Required Lenders and, except as otherwise specifically provided herein, such
instructions and any action or inaction pursuant thereto shall be binding on all
the Lenders. Each Agent shall, in the absence of knowledge to the contrary, be
entitled to rely on any instrument or document believed by it in good faith to
be genuine and correct and to have been signed or sent by the proper person or
persons. Neither the Agents nor any of their respective directors, officers,
employees or agents shall have any responsibility to any Borrower or any other
Loan Party on account of the failure of or delay in performance or breach by any
Lender or an Issuing Bank of any of its obligations hereunder or to any Lender
or an Issuing Bank on account of the failure of or delay in performance or
breach by any other Lender or an Issuing Bank or any Borrower or any other Loan
Party of any of their respective obligations hereunder or under any other Loan
Document or in connection herewith or therewith. Each of the Agents may execute
any and all duties hereunder by or through agents or employees and shall be
<PAGE>
89
entitled to rely upon the advice of legal counsel selected by it with respect to
all matters arising hereunder and shall not be liable for any action taken or
suffered in good faith by it in accordance with the advice of such counsel.
The Lenders hereby acknowledge that neither Agent shall be under any
duty to take any discretionary action permitted to be taken by it pursuant to
the provisions of this Agree ment unless it shall be requested in writing to do
so by the Required Lenders.
Subject to the appointment and acceptance of a successor Agent as
provided below, either Agent may resign at any time by notifying the Lenders and
Terex. Upon any such resignation, the Required Lenders shall have the right to
appoint a successor. If no successor shall have been so appointed by the
Required Lenders and shall have accepted such appointment within 30 days after
the retiring Agent gives notice of its resignation, then the retiring Agent may,
on behalf of the Lenders, appoint a successor Agent which shall be a bank with
an office in New York, New York, having a combined capital and surplus of at
least $500,000,000 or an Affiliate of any such bank. Upon the acceptance of any
appointment as Agent hereunder by a successor bank, such successor shall succeed
to and become vested with all the rights, powers, privileges and duties of the
retiring Agent and the retiring Agent shall be discharged from its duties and
obligations hereunder. After the Agent's resignation hereunder, the provisions
of this Article and Section 9.05 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
Agent.
With respect to the Loans made by it hereunder, each Agent in its
individual capacity and not as Agent shall have the same rights and powers as
any other Lender and may exercise the same as though it were not an Agent, and
the Agents and their Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with any Borrower or any Subsidiary or
other Affiliate thereof as if it were not an Agent.
Each Lender agrees (a) to reimburse the Agents, on demand, in the
amount of its pro rata share (based on its aggregate Commitments hereunder) of
any expenses incurred for the benefit of the Lenders by the Agents, including
counsel fees and compensation of agents and employees paid for services rendered
on behalf of the Lenders, that shall not have been reimbursed by any Borrower
and (b) to indemnify and hold harmless each Agent and any of its directors,
officers, employees or agents, on demand, in the amount of such pro rata share,
from and against any and all liabilities, taxes, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever that may be imposed on, incurred by or asserted
against it in its capacity as Agent or any of them in any way relating to or
arising out of this Agreement or any other Loan Document or any action taken or
omitted by it or any of them under this Agreement or any other Loan Document, to
the extent the same shall not have been reimbursed by any Borrower or any other
Loan Party; provided that no Lender shall be liable to an Agent or any such
other indemnified person for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements are determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross negligence or wilful
misconduct of such Agent or any of its directors, officers, employees or agents.
Each Revolving Credit Lender agrees to reimburse each of the Issuing Banks and
their directors, employees and agents, in each case, to the same extent and
subject to the same limitations as provided above for the Agents.
<PAGE>
90
Each Lender acknowledges that it has, independently and without
reliance upon the Agents or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Agents or any other Lender and
based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement or any other Loan Document, any related
agreement or any document furnished hereunder or thereunder.
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices. Notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by telecopy, as follows:
(a) if to any Borrower, to it in care of Terex at 500 Post
Road East, Westport, CT 06880, Attention of General Counsel (Telecopy
No. (203) 227-1647);
(b) if to the Administrative Agent, to Credit Suisse First
Boston, 11 Madison Avenue, New York, New York 10010, Attention of Joe
Barone (Telecopy No. (212) 325-8304, and with respect to Alternative
Currencies in Marks, Pounds, Francs or Lire, Credit Suisse First
Boston, One Cabot Square, London E14 4QJ, England, Attention of Steve
Martin (Telecopy No. 44-171-888-8398), and with respect to Alternative
Currencies in Australian Dollars, Credit Suisse First Boston, Level 14,
101 Collins Street, Melbourne VIC 3001, Australia, Attention of Malcolm
White (Telecopy No. 613-9653-3450); and
(c) if to a Lender, to it at its address (or telecopy number)
set forth on Schedule 2.01(a) or in the Assignment and Acceptance
pursuant to which such Lender shall have become a party hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telecopy or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 9.01 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 9.01.
SECTION 9.02. Survival of Agreement. All covenants, agreements,
representations and warranties made by any Borrower herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Lenders and the Issuing Banks and shall survive the
making by the Lenders of the Loans and the issuance of Letters of Credit by the
Issuing Banks, regardless of any investigation made by the Lenders or the
Issuing Banks or on their behalf, and shall continue in full force and effect as
long as the principal of or any accrued interest on any Loan or any Fee or any
other amount payable
<PAGE>
91
under this Agreement or any other Loan Document is outstanding and unpaid or any
Letter of Credit is outstanding and so long as the Commitments have not been
terminated. The provisions of Sections 2.14, 2.16, 2.20 and 9.05 shall remain
operative and in full force and effect regardless of the expiration of the term
of this Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the expiration of the Commitments, the expiration
of any Letter of Credit, the invalidity or unenforceability of any term or
provision of this Agreement or any other Loan Document, or any investigation
made by or on behalf of the Administrative Agent, the Collateral Agent, any
Lender or any Issuing Bank.
SECTION 9.03. Binding Effect. This Agreement shall become effective
when it shall have been executed by the Borrowers and the Administrative Agent
and when the Administrative Agent shall have received counterparts hereof which,
when taken together, bear the signatures of each of the other parties hereto,
and thereafter shall be binding upon and inure to the benefit of the parties
hereto and their respective permitted successors and assigns.
SECTION 9.04. Successors and Assigns. (a) Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the permitted successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Borrowers, the Administrative
Agent, the Issuing Banks or the Lenders that are contained in this Agreement
shall bind and inure to the benefit of their respective successors and assigns.
(b) Each Lender may assign to one or more assignees all or a portion of
its interests, rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it); provided,
however, that (i) except in the case of an assignment to a Lender or an
Affiliate of such Lender or an Approved Fund, (x) Terex and the Administrative
Agent (and, in the case of any assignment of a Revolving Credit Commitment, the
Issuing Banks and the Swingline Lender) must give their prior written consent to
such assignment (which consent shall not be unreasonably withheld) and (y) the
amount of the Commitment or Loans, as applicable, of the assigning Lender
subject to each such assignment (determined as of the date the Assignment and
Acceptance with respect to such assignment is delivered to the Administrative
Agent) shall not be less than $5,000,000 (or, if less, the entire remaining
amount of such Lender's Commitment or Loans, as applicable), (ii) the parties to
each such assignment shall execute and deliver to the Administrative Agent an
Assignment and Acceptance, together with a processing and recordation fee of
$3,500, (iii) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire and (iv) prior to the end
of the Term Loan Availability Period, any such assignment of Tranche A
Commitments or Revolving Credit Commitments shall be made so that, after giving
effect thereto, each of the assignee and the assignor, if such assignor retains
any such Commitments, shall have the same percentage of the Tranche A
Commitments as such person has of the Revolving Credit Commitments. For purposes
of this Section 9.04(b), "Approved Fund" shall mean, with respect to any Lender
that is a fund that invests in bank loans, any other fund that invests in bank
loans which is managed or advised by the same investment advisor as such Lender
or by an affiliate of such investment advisor. Upon acceptance and recording
pursuant to paragraph (e) of this Section 9.04, from and after the effective
date specified in each Assignment and Acceptance, which effective date shall be
at least five Business Days after the execution thereof, (A) the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
<PAGE>
92
by such Assignment and Acceptance, have the rights and obligations of a Lender
under this Agreement and (B) the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment and Acceptance, be released
from its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto but shall continue to be entitled to the benefits of Sections 2.14, 2.16,
2.20 and 9.05, as well as to any Fees accrued for its account and not yet paid).
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim and that
its Term Loan Commitments and Revolving Credit Commitment, and the outstanding
balances of its Term Loans and Revolving Loans, in each case without giving
effect to assignments thereof which have not become effective, are as set forth
in such Assignment and Acceptance, (ii) except as set forth in (i) above, such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
any other Loan Document or any other instrument or document furnished pursuant
hereto, or the financial condition of any Borrower or any Subsidiary or the
performance or observance by any Borrower or any Subsidiary of any of its
obligations under this Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto; (iii) such assignee represents
and warrants that it is legally authorized to enter into such Assignment and
Acceptance; (iv) such assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial statements referred
to in Section 3.05(a) or delivered pursuant to Section 5.04 and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (v) such
assignee will independently and without reliance upon the Administrative Agent,
the Collateral Agent, such assigning Lender or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (vi) such assignee appoints and authorizes the Administrative
Agent and the Collateral Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to the Administrative
Agent and the Collateral Agent, respectively, by the terms hereof, together with
such powers as are reasonably incidental thereto; and (vii) such assignee agrees
that it will perform in accordance with their terms all the obligations which by
the terms of this Agreement are required to be performed by it as a Lender.
(d) The Administrative Agent, acting for this purpose as an agent of
the Borrowers, shall maintain at one of its offices in The City of New York a
copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the "Register"). The entries in the Register shall be
conclusive and the Borrowers, the Administrative Agent, the Issuing Banks, the
Collateral Agent and the Lenders may treat each person whose name is recorded in
the Register pursuant to the terms hereof as a Lender hereunder for all purposes
of this Agreement, notwithstanding notice to the contrary. The Register shall be
available for
<PAGE>
93
inspection by the Borrowers, any Issuing Bank, the Collateral Agent and any
Lender, at any reasonable time and from time to time upon reasonable prior
notice.
(e) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, an Administrative Questionnaire
completed in respect of the assignee (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in paragraph
(b) above and, if required, the written consent of Terex, the Swingline Lender,
the Issuing Banks and the Administrative Agent to such assignment, the
Administrative Agent shall (i) accept such Assignment and Acceptance, (ii)
record the information contained therein in the Register and (iii) give prompt
notice thereof to the Lenders, the Issuing Banks and the Swingline Lender. No
assignment shall be effective unless it has been recorded in the Register as
provided in this paragraph (e).
(f) Each Lender may without the consent of any Borrower, the Swingline
Lender, the Issuing Banks or the Administrative Agent sell participations to one
or more banks or other entities in all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans owing to it); provided, however, that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (iii) the participating banks or other entities shall be
entitled to the benefit of the cost protection provisions contained in Sections
2.14, 2.16 and 2.20 to the same extent as if they were Lenders and (iv) the
Borrowers, the Administrative Agent, the Issuing Banks and the Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement, and such Lender shall
retain the sole right to enforce the obligations of the Borrowers relating to
the Loans or L/C Disbursements and to approve any amendment, modification or
waiver of any provision of this Agreement (other than amendments, modifications
or waivers decreasing any fees payable hereunder or the amount of principal of
or the rate at which interest is payable on the Loans, extending any scheduled
principal payment date or date fixed for the payment of interest on the Loans or
increasing or extending the Commitments).
(g) Any Lender or participant may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.04, disclose to the assignee or participant or proposed assignee or
participant any information relating to any Borrower furnished to such Lender by
or on behalf of any Borrower; provided that, prior to any such disclosure of
information designated by any Borrower as confidential, each such assignee or
participant or proposed assignee or participant shall execute an agreement
whereby such assignee or participant shall agree (subject to customary
exceptions) to preserve the confidentiality of such confidential information on
terms no less restrictive than those applicable to the Lenders pursuant to
Section 9.17.
(h) Any Lender may at any time assign all or any portion of its rights
under this Agreement to a Federal Reserve Bank to secure extensions of credit by
such Federal Reserve Bank to such Lender; provided that no such assignment shall
release a Lender from any of its obligations hereunder or substitute any such
Bank for such Lender as a party hereto. In order to facilitate such an
assignment to a Federal Reserve Bank, each Borrower shall, at the request of the
assigning Lender, duly execute and deliver to the assigning Lender a promissory
note or notes evidencing the Loans made to such Borrower by the assigning Lender
hereunder.
<PAGE>
94
(i) No Borrower shall assign or delegate any of its rights or duties
hereunder without the prior written consent of the Administrative Agent, each
Issuing Bank and each Lender, and any attempted assignment without such consent
shall be null and void.
(j) In the event that Standard & Poor's Ratings Group, Moody's
Investors Service, Inc., and Thompson's BankWatch (or Insurance Watch Ratings
Service, in the case of Lenders that are insurance companies (or Best's
Insurance Reports, if such insurance company is not rated by Insurance Watch
Ratings Service)) shall, after the date that any Lender becomes a Revolving
Credit Lender, downgrade the long-term certificate deposit ratings of such
Lender, and the resulting ratings shall be below BBB-, Baa3 and C (or BB, in the
case of a Lender that is an insurance company (or B, in the case of an insurance
company not rated by Insurance Watch Ratings Service)), then each Issuing Bank
shall have the right, but not the obligation, at its own expense, upon notice to
such Lender and the Administrative Agent, to replace (or to request Terex to use
its reasonable efforts to replace) such Lender with an assignee (in accordance
with and subject to the restrictions contained in paragraph (b) above), and such
Lender hereby agrees to transfer and assign without recourse (in accordance with
and subject to the restrictions contained in paragraph (b) above) all its
interests, rights and obligations in respect of its Revolving Credit Commitment
to such assignee; provided, however, that (i) no such assignment shall conflict
with any law, rule and regulation or order of any Governmental Authority and
(ii) the applicable Issuing Bank or such assignee, as the case may be, shall pay
to such Lender in immediately available funds on the date of such assignment the
principal of and interest accrued to the date of payment on the Loans made by
such Lender hereunder and all other amounts accrued for such Lender's account or
owed to it hereunder.
SECTION 9.05. Expenses; Indemnity. (a) Each Borrower agrees to pay all
reasonable out-of-pocket expenses incurred by the Administrative Agent, the
Collateral Agent, the Issuing Banks and the Swingline Lender in connection with
the syndication of the credit facilities provided for herein and the preparation
and administration of this Agreement and the other Loan Documents or in
connection with any amendments, modifications or waivers of the provisions
hereof or thereof (whether or not the transactions hereby or thereby
contemplated shall be consummated) or incurred by the Administrative Agent, the
Collateral Agent or any Lender in connection with the enforcement or protection
of its rights in connection with this Agreement and the other Loan Documents or
in connection with the Loans made or Letters of Credit issued hereunder, as
applicable, including the reasonable fees, charges and disbursements of Cravath,
Swaine & Moore, counsel for the Administrative Agent and the Collateral Agent,
and, in connection with any such enforcement or protection, the fees, charges
and disbursements of any other counsel for the Administrative Agent, the
Collateral Agent or any Lender.
(b) Each Borrower agrees to indemnify the Administrative Agent, the
Collateral Agent, each Lender and each Issuing Bank, each Affiliate of any of
the foregoing persons and each of their respective directors, officers,
employees and agents (each such person being called an "Indemnitee") against,
and to hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses, including reasonable counsel fees, charges and
disbursements, incurred by or asserted against any Indemnitee arising out of, in
any way connected with, or as a result of (i) the execution or delivery of this
Agreement or any other Loan Document or any agreement or instrument contemplated
thereby, the performance by the parties thereto of their respective obligations
thereunder or the consummation of the Transactions and the other transactions
contemplated thereby, (ii) the use of the proceeds of the Loans or issuance of
<PAGE>
95
Letters of Credit, (iii) any claim, litigation, investigation or proceeding
relating to any of the foregoing, whether or not any Indemnitee is a party
thereto, or (iv) any actual or alleged presence, Release or threat of Release of
Hazardous Materials on any Properties, or any Environmental Claim related in any
way to any Borrower or the Subsidiaries; provided that such indemnity shall not,
as to any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or wilful misconduct of such Indemnitee.
(c) The provisions of this Section 9.05 shall remain operative and in
full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the expiration of the Commitments, the expiration
of any Letter of Credit, the invalidity or unenforceability of any term or
provision of this Agreement or any other Loan Document, or any investigation
made by or on behalf of the Administrative Agent, the Collateral Agent, any
Lender or an Issuing Bank. All amounts due under this Section 9.05 shall be
payable on written demand therefor.
SECTION 9.06. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender is hereby authorized at any time and
from time to time, except to the extent prohibited by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by such Lender to or
for the credit or the account of any Borrower against any of and all the
obligations of such Borrower now or hereafter existing under this Agreement and
other Loan Documents held by such Lender, irrespective of whether or not such
Lender shall have made any demand under this Agreement or such other Loan
Document and although such obligations may be unmatured. The rights of each
Lender under this Section 9.06 are in addition to other rights and remedies
(including other rights of setoff) which such Lender may have.
SECTION 9.07. Applicable Law. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (OTHER THAN AS EXPRESSLY SET FORTH IN OTHER LOAN DOCUMENTS) SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
EACH LETTER OF CREDIT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE
WITH, THE LAWS OR RULES DESIGNATED IN SUCH LETTER OF CREDIT, OR IF NO SUCH LAWS
OR RULES ARE DESIGNATED, THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY
CREDITS (1993 REVISION), INTERNATIONAL CHAMBER OF COMMERCE, PUBLICATION NO. 500
(THE "UNIFORM CUSTOMS") AND, AS TO MATTERS NOT GOVERNED BY THE UNIFORM CUSTOMS,
THE LAWS OF THE STATE OF NEW YORK.
SECTION 9.08. Waivers; Amendment. (a) No failure or delay of the
Administrative Agent, the Collateral Agent, any Lender or an Issuing Bank in
exercising any power or right hereunder or under any other Loan Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the
Administrative Agent, the Collateral Agent, the Issuing Banks and the Lenders
hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver
<PAGE>
96
of any provision of this Agreement or any other Loan Document or consent to any
departure by any Borrower or any other Loan Party therefrom shall in any event
be effective unless the same shall be permitted by paragraph (b) below, and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given. No notice or demand on any Borrower in any case
shall entitle such Borrower to any other or further notice or demand in similar
or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrowers and the Required Lenders; provided, however, that
no such agreement shall (i) decrease the principal amount of, or extend the
maturity of or any scheduled principal payment date or date for the payment of
any interest on any Loan or any date for reimbursement of an L/C Disbursement,
or waive or excuse any such payment or any part thereof, or decrease the rate of
interest on any Loan or L/C Disbursement, without the prior written consent of
each Lender affected thereby, (ii) change or extend the Commitment or decrease
or extend the date for payment of the Facility Fees of any Lender without the
prior written consent of such Lender, (iii) amend or modify the provisions of
Section 2.17 or 9.04(i), the provisions of this Section, the definition of the
term "Required Lenders", increase the total Commitments or release any Guarantor
or all or any substantial part of the Collateral, without the prior written
consent of each Lender, (iv) change the allocation between Tranche A Term Loans
and Tranche B Term Loans of any prepayment pursuant to Section 2.12 or 2.13
without the prior written consent of (A) Lenders holding a majority of the
aggregate outstanding principal amount of the Tranche A Term Loans and (B)
Lenders holding a majority of the aggregate outstanding principal amount of the
Tranche B Term Loans or (v) amend Section 2.13(j) without the prior written
consent of the Lenders holding a majority of the aggregate outstanding principal
amount of the Tranche B Term Loans; provided further that no such agreement
shall amend, modify or otherwise affect the rights or duties of the
Administrative Agent, the Collateral Agent, any Issuing Bank, any A/C Fronting
Lender or the Swingline Lender hereunder or under any other Loan Document
without the prior written consent of the Administrative Agent, the Collateral
Agent, such Issuing Bank, such A/C Fronting Lender or the Swingline Lender.
SECTION 9.09. Interest Rate Limitation. Notwithstanding anything herein
to the contrary, if at any time the interest rate applicable to any Loan or
participation in any L/C Disbursement, together with all fees, charges and other
amounts which are treated as interest on such Loan or participation in such L/C
Disbursement under applicable law (collectively the "Charges"), shall exceed the
maximum lawful rate (the "Maximum Rate") which may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan or participation in
accordance with applicable law, the rate of interest payable in respect of such
Loan or participation hereunder, together with all Charges payable in respect
thereof, shall be limited to the Maximum Rate and, to the extent lawful, the
interest and Charges that would have been payable in respect of such Loan or
participation but were not payable as a result of the operation of this Section
9.09 shall be cumulated and the interest and Charges payable to such Lender in
respect of other Loans or participations or periods shall be increased (but not
above the Maximum Rate therefor) until such cumulated amount, together with
interest thereon at the Federal Funds Effective Rate to the date of repayment,
shall have been received by such Lender.
SECTION 9.10. Entire Agreement. This Agreement, the Fee Letter and the
other Loan Documents constitute the entire contract between the parties relative
to the subject matter hereof. Any other previous agreement among the parties
<PAGE>
97
with respect to the subject matter hereof is superseded by this Agreement and
the other Loan Documents. Nothing in this Agreement or in the other Loan
Documents, expressed or implied, is intended to confer upon any party other than
the parties hereto and thereto any rights, remedies, obligations or liabilities
under or by reason of this Agreement or the other Loan Documents.
SECTION 9.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11.
SECTION 9.12. Severability. In the event any one or more of the
provisions contained in this Agreement or in any other Loan Document should be
held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby (it being understood that
the invalidity of a particular provision in a particular jurisdiction shall not
in and of itself affect the validity of such provision in any other
jurisdiction). The parties shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforce able provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 9.13. Counterparts. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original but all of which when taken together shall
constitute a single contract, and shall become effective as provided in Section
9.03. Delivery of an executed signature page to this Agreement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Agreement.
SECTION 9.14. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 9.15. Jurisdiction; Consent to Service of Process. (a) Each
Borrower hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or preceeding shall be conclusive and may be
<PAGE>
98
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the
Administrative Agent, the Collateral Agent, any Issuing Bank or any Lender may
otherwise have to bring any action or proceeding relating to this Agreement or
the other Loan Documents against any Borrower or its properties in the courts of
any jurisdiction.
(b) Each Borrower hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Loan Documents in any
New York State or Federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01; provided, however,
that each Subsidiary Borrower hereby appoints Stuart A. Gordon, Esq., Robinson
Silverman Pearce Aronsohn & Berman LLP, 1290 Avenue of the Americas, New York,
NY 10104, as its agent for service of process. Nothing in this Agreement will
affect the right of any party to this Agreement to serve process in any other
manner permitted by law.
SECTION 9.16. Conversion of Currencies. (a) If, for the purpose of
obtaining judgment in any court, it is necessary to convert a sum owing
hereunder in one currency into another currency, each party hereto agrees, to
the fullest extent that it may effectively do so, that the rate of exchange used
shall be that at which in accordance with normal banking procedures in the
relevant jurisdiction the first currency could be purchased with such other
currency on the Business Day immediately preceding the day on which final
judgment is given.
(b) The obligations of each party in respect of any sum due to any
other party hereto or any holder of the obligations owing hereunder (the
"Applicable Creditor") shall, notwithstanding any judgment in a currency (the
"Judgment Currency") other than the currency in which such sum is stated to be
due hereunder (the "Agreement Currency"), be discharged only to the extent that,
on the Business Day following receipt by the Applicable Creditor of any sum
adjudged to be so due in the Judgment Currency, the Applicable Creditor may in
accordance with normal banking procedures in the relevant jurisdiction purchase
the Agreement Currency with the Judgment Currency; if the amount of the
Agreement Currency so purchased is less than the sum originally due to the
Applicable Creditor in the Agreement Currency, such party agrees, as a separate
obligation and notwithstanding any such judgment, to indemnify the Applicable
Creditor against such loss. The obligations of the Loan Parties contained in
this Section 9.16 shall survive the termination of this Agreement and the
payment of all other amounts owing hereunder.
SECTION 9.17. Confidentiality. The Administrative Agent, the Collateral
Agent, each Issuing Bank and each of the Lenders agrees to keep confidential
(and to use its best efforts to cause its respective agents and representatives
to keep confidential) the Information (as defined below) and all copies thereof,
extracts therefrom and analyses or other materials based thereon, except that
the Administrative Agent, the Collateral Agent, any Issuing Bank or any Lender
shall be permitted to disclose Information (a) to such of its respective
officers,
<PAGE>
99
directors, employees, agents, affiliates and representatives as need to know
such Information, (b) to the extent requested by any regulatory authority
(provided such authority shall be advised of the confidential nature of the
Information), (c) to the extent otherwise required by applicable laws and
regulations or by any subpoena or similar legal process, (d) in connection with
any suit, action or proceeding relating to the enforcement of its rights
hereunder or under the other Loan Documents, (e) to any direct or indirect
contractual counterparty in swap agreements or such contractual counterparty's
professional advisor (so long as such contractual counterparty (or its
affiliates) is not a competitor of Terex or any of its Subsidiaries and agrees
to be bound by the provisions of this Section 9.17) or (f) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section 9.17 or (ii) becomes available to the Administrative Agent, any
Issuing Bank, any Lender or the Collateral Agent on a nonconfidential basis from
a source other than any Borrower. For the purposes of this Section,
"Information" shall mean all financial statements, certificates, reports,
agreements and information (including all analyses, compilations and studies
prepared by the Administrative Agent, the Collateral Agent, any Issuing Bank or
any Lender based on any of the foregoing) that are received from any Borrower
and related to any Borrower, any shareholder of any Borrower or any employee,
customer or supplier of any Borrower, other than any of the foregoing that were
available to the Administrative Agent, the Collateral Agent, any Issuing Bank or
any Lender on a nonconfidential basis prior to its disclosure thereto by any
Borrower, and which are in the case of Information provided after the date
hereof, clearly identified at the time of delivery as confidential. The
provisions of this Section 9.17 shall remain operative and in full force and
effect regardless of the expiration and term of this Agreement.
SECTION 9.18. European Monetary Union. If, as a result of the
implementation of European monetary union, (a) any currency ceases to be lawful
currency of the nation issuing the same and is replaced by a European common
currency, then any amount payable hereunder by any party hereto in such currency
shall instead be payable in the European common currency and the amount so
payable shall be determined by translating the amount payable in such currency
to such European common currency at the exchange rate recognized by the European
Central Bank for the purpose of implementing European monetary union, or (b) any
currency and a European common currency are at the same time recognized by the
central bank or comparable authority of the nation issuing such currency as
lawful currency of such nation, then (i) any Loan made at such time shall be
made in such European common currency and (ii) any other amount payable by any
party hereto in such currency shall be payable in such currency or in such
European common currency (in an amount determined as set forth in clause (a)),
at the election of the obligor. Prior to the occurrence of the event or events
described in clause (a) or (b) of the preceding sentence, each amount payable
hereunder in any currency will continue to be payable only in that currency.
Each Borrower agrees, at the request of the Required Lenders, at the time of or
at any time following the implementation of European monetary union, to enter
into an agreement amending this Agreement in such manner as the Required Lenders
shall reasonably request in order to avoid any unfair burden or disadvantage
resulting from the implementation of such monetary union and to place the
parties hereto in the position they would have been in had such monetary union
not been implemented, the intent being that neither party will be adversely
affected economically as a result of such implementation and
<PAGE>
100
that reasonable provisions may be adopted to govern the borrowing, maintenance
and repayment of Loans denominated in any Alternative Currency or a European
common currency after the occurrence of the event or events described in clause
(a) or (b) of the preceding sentence.
SECTION 9.19. German Borrower. Terex may designate the German Borrower
to be a Subsidiary Borrower under this Agreement on or after the consummation of
the Acquisition by delivering a written notice to the Administrative Agent
together with (i) an accession agreement satisfactory to the Administrative
Agent and duly executed by Terex and the German Borrower, (ii) an opinion of
counsel reasonably satisfactory to the Administrative Agent and (iii) a pledge
by Terex of 65% of the capital stock of the German Borrower for the benefit of
the Secured Parties. Upon the execution of such accession agreement by the
Administrative Agent, the German Borrower shall become a Borrower under this
Agreement with all of the rights and obligations of a Borrower.
<PAGE>
101
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
TEREX CORPORATION,
by
Eric I. Cohen
Name: Eric I. Cohen
Title: Senior Vice President
TEREX EQUIPMENT LIMITED,
by
Eric I. Cohen
Name: Eric I. Cohen
Title: Director
P.P.M. S.A.,
by
Fil Filipov
Name: Fil Filipov
Title: President & Director
UNIT RIG (AUSTRALIA) PTY. LTD.,
by
Gary Nicholas
Name: Gary Nicholas
Title: Secretary
P.P.M. S.p.A,
by
Fil Filipov
Name: Fil Filipov
Title: President
<PAGE>
102
CREDIT SUISSE FIRST BOSTON,
individually and as Administrative Agent,
Collateral Agent and Swingline Lender,
by
Kristin Lepri
Name: Kristin Lepri
Title: Associate
by
Heather Suggit
Name: Heather Suggitt
Title: Vice President
ABN AMRO BANK N.V.,
by
Andrew Dry
Name: Andrew Dry
Title: Group Vice President
by
Michael A. Kowalczuk
Name: Michael A. Kowalczuk
Title: Corporate Banking Officer
BANK OF TOKYO-MITSUBISHI TRUST
COMPANY,
by
Paul P. Malecki
Name: Paul P. Malecki
Title: Vice President
BANKBOSTON N.A., as Revolver and Term
A Lender,
by
Brent E. Shay
Name: Brent E. Shay
Title: Managing Director
<PAGE>
103
BANKBOSTON, N.A.,
by
Renee A. Ross
Name: Renee A. Ross
Title: Managing Director
CIBC INC.,
by
William J. Koslo, Jr.
Name: William J. Koslo, Jr.
Title: Executive Director
CREDIT LYONNAIS, NEW YORK BRANCH,
by
Vladimir Labun
Name: Vladimir Labun
Title: First Vice President-Manager
DRESDNER BANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES,
by
Beverly G. Cason
Name: Beverly G. Cason
Title: Vice President
by
Colleen A. Madden
Name: Colleen A. Madden
Title: Vice President
FIRST UNION NATIONAL BANK,
by
Hank Biedrzycki
Name: Hank Biedrzycki
Title: Vice President-Director
<PAGE>
104
GENERAL ELECTRIC CAPITAL CORPORATION,
by
Janet K. Williams
Name: Janet K. Williams
Title: Duly Authorized Signatory
MARINE MIDLAND BANK,
by
Randolph H. Ross
Name: Randolph H. Ross
Title: Authorized Signatory
NATIONAL CITY BANK,
by
Joseph D. Robison
Name: Joseph D. Robison
Title: Vice President
KZH HOLDING CORPORATION III,
by
Andrew J. Taylor
Name: Andrew J. Taylor
Title: Authorized Agent
SKANDINAVISKA ENSKILDA BANKEN
AB (publ), NEW YORK BRANCH,
by
Sverker Johansson
Name: Sverker Johansson
Title: Vice President
by
Philip Montemurro
Name: Philip Montemurro
Title: Vice President
<PAGE>
105
KZH-CRESCENT-2 CORPORATION,
by
Andrew J. Taylor
Name: Andrew J. Taylor
Title: Authorized Agent
TORONTO DOMINION (TEXAS), INC.,
by
David G. Parker
Name: David G. Parker
Title: Vice President
<PAGE>
1
GUARANTEE AGREEMENT dated as of March 6, 1998,
between TEREX CORPORATION, a Delaware corporation ("Terex"),
and CREDIT SUISSE FIRST BOSTON, a bank organized under the
laws of Switzerland, acting through its New York branch
("CSFB"), as collateral agent (the "Collateral Agent") for the
Secured Parties (as defined in the Credit Agreement referred
to below).
Reference is made to (a) the Credit Agreement dated as of March 6, 1998
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among Terex, Terex Equipment Limited, a company organized under the
laws of Scotland, P.P.M. S.A., a company organized under the laws of the
Republic of France, Unit Rig (Australia) Pty. Ltd., a company organized under
the laws of New South Wales, and P.P.M. S.p.A., a company organized under the
laws of the Republic of Italy, the Lenders (as defined in Article I thereto),
the Issuing Banks (as defined in Article I thereto) and CSFB, as administrative
agent and as collateral agent for the Lenders and (b) the Guarantee Agreement
dated as of March 6, 1998 (as amended, supplemented or otherwise modified from
time to time, the "Subsidiary Guarantee Agreement") among the subsidiaries of
Terex listed on Schedule I thereto (the "Subsidiary Guarantors") and the
Collateral Agent. Capitalized terms used herein and not defined herein shall
have the meanings assigned to such terms in the Credit Agreement.
The Lenders have agreed to make Loans to the Borrowers, and the Issuing
Banks have agreed to issue Letters of Credit for the account of the Borrowers,
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement. Each of the Subsidiary Borrowers is a wholly owned Subsidiary
of Terex and Terex acknowledges that it will derive substantial benefit from the
making of the Loans by the Lenders to the Subsidiary Borrowers, and the issuance
of the Letters of Credit for the account of the Subsidiary Borrowers by the
Issuing Banks. The obligations of the Lenders to make Loans to the Subsidiary
Borrowers and of the Issuing Banks to issue Letters of Credit for the account of
the Subsidiary Borrowers are conditioned on, among other things, the execution
and delivery by Terex of a Guarantee Agreement in the form hereof. As
consideration therefor and in order to induce the Lenders to make Loans to the
Subsidiary Borrowers and the Issuing Banks to issue Letters of Credit for the
account of the Subsidiary Borrowers, Terex is willing to execute this Agreement.
Accordingly, the parties hereto agree as follows:
SECTION 1. Guarantee. Terex unconditionally guarantees, as a primary
obligor and not merely as a surety, (a) the due and punctual payment of (i) the
principal of and premium, if any, and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Loans, when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise, (ii) each payment required to be
made by any Borrower under the Credit Agreement in respect of any Letter of
Credit, when and as due, including payments in respect of reimbursement of
disbursements, interest thereon and obligations to provide cash collateral and
(iii) all other monetary obligations, including fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent, fixed or otherwise
(including monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), of the Loan Parties to the Secured
Parties under the Credit Agreement and the other Loan Documents, (b) the due and
punctual performance of all covenants, agreements, obligations and liabilities
of the Loan Parties under or pursuant to the Credit Agreement and the other Loan
Documents and (c) all obligations of any Borrower, monetary or otherwise, under
each Hedging Agreement entered into with a counterparty that was a Lender (or an
Affiliate thereof) at the time such Hedging Agreement was entered into (all the
monetary and other obligations referred to in the preceding clauses (a) through
(c) being collectively called the "Obligations"). Terex further agrees that the
Obligations may be extended or renewed, in whole or in part, without notice to
or further assent from it, and that it will remain bound upon its guarantee
notwithstanding any extension or renewal of any Obligation.
<PAGE>
2
SECTION 2. Obligations Not Waived. To the fullest extent permitted by
applicable law, Terex waives presentment to, demand of payment from and protest
to the Subsidiary Borrowers of any of the Obligations, and also waives notice of
acceptance of its guarantee and notice of protest for nonpayment. To the fullest
extent permitted by applicable law, the obligations of Terex hereunder shall not
be affected by (a) the failure of the Collateral Agent or any other Secured
Party to assert any claim or demand or to enforce or exercise any right or
remedy against any Subsidiary Borrower or any Subsidiary Guarantor under the
provisions of the Credit Agreement, the Subsidiary Guarantee Agreement, any
other Loan Document or otherwise, (b) any rescission, waiver, amendment or
modification of, or any release from any of the terms or provisions of this
Agreement, any other Loan Document, any Guarantee or any other agreement,
including with respect to any Subsidiary Guarantor under the Subsidiary
Guarantee Agreement or (c) the failure to perfect any security interest in, or
the release of, any of the security held by or on behalf of the Collateral Agent
or any other Secured Party.
SECTION 3. Security. Terex authorizes the Collateral Agent and each of
the other Secured Parties, to (a) take and hold security for the payment of this
Guarantee and the Obligations and exchange, enforce, waive and release any such
security, (b) apply such security and direct the order or manner of sale
thereof, in accordance with the terms of the Loan Documents, as they in their
sole discretion may determine and (c) release or substitute any one or more
endorsees, other guarantors of other obligors.
SECTION 4. Guarantee of Payment. Terex further agrees that its
guarantee constitutes a guarantee of payment when due and not of collection, and
waives any right to require that any resort be had by the Collateral Agent or
any other Secured Party to any of the security held for payment of the
Obligations or to any balance of any deposit account or credit on the books of
the Collateral Agent or any other Secured Party in favor of any Subsidiary
Borrower or any other person.
SECTION 5. No Discharge or Diminishment of Guarantee. The obligations
of Terex hereunder shall not be subject to any reduction, limitation, impairment
or termination for any reason (other than the indefeasible payment in full in
cash of the Obligations), including any claim of waiver, release, surrender,
alteration or compromise of any of the Obligations, and shall not be subject to
any defense or setoff, counterclaim, recoupment or termination whatsoever by
reason of the invalidity, illegality or unenforceability of the Obligations or
otherwise. Without limiting the generality of the foregoing, the obligations of
Terex hereunder shall not be discharged or impaired or otherwise affected by the
failure of the Collateral Agent or any other Secured Party to assert any claim
or demand or to enforce any remedy under the Credit Agreement, any other Loan
Document or any other agreement, by any waiver or modification of any provision
of any thereof, by any default, failure or delay, wilful or otherwise, in the
performance of the Obligations, or by any other act or omission that may or
might in any manner or to any extent vary the risk of Terex or that would
otherwise operate as a discharge of Terex as a matter of law or equity (other
than the indefeasible payment in full in cash of all the Obligations).
SECTION 6. Defenses of Subsidiary Borrowers Waived. To the fullest
extent permitted by applicable law, Terex waives any defense based on or arising
out of any defense of the Subsidiary Borrowers or the unenforceability of the
Obligations or any part thereof from any cause, or the cessation from any cause
of the liability of any Subsidiary Borrower, other than the final payment in
full in cash of the Obligations. The Collateral Agent and the other Secured
Parties may, at their election, foreclose on any security held by one or more of
them by one or more judicial or nonjudicial sales, accept an assignment of any
such security in lieu of foreclosure, compromise or adjust any part of the
Obligations, make any other accommodation with any Subsidiary Borrower, any
Subsidiary Guarantor or any other guarantor or exercise any other right or
remedy available to them against any Subsidiary Borrower, any Subsidiary
Guarantor or any other guarantor, without affecting or impairing in any way the
liability of Terex hereunder except to the extent the Obligations have been
fully and finally paid in cash or otherwise satisfied pursuant to the terms of
the Loan Documents. Pursuant to applicable law, Terex waives any defense arising
out of any such election even though such election operates, pursuant to
applicable law, to impair or to extinguish any right of reimbursement or
<PAGE>
3
other right or remedy of Terex against any Subsidiary Borrower, any Subsidiary
Guarantor or any other guarantor, as the case may be, or any security.
SECTION 7. Agreement to Pay; Subordination. In furtherance of the
foregoing and not in limitation of any other right that the Collateral Agent or
any other Secured Party has at law or in equity against Terex by virtue hereof,
upon the failure of any Subsidiary Borrower or any other Loan Party to pay any
Obligation when and as the same shall become due, whether at maturity, by
acceleration, after notice of prepayment or otherwise, Terex hereby promises to
and will forthwith pay, or cause to be paid, to the Collateral Agent or such
other Secured Party as designated thereby in cash the amount of such unpaid
Obligations. Upon payment by Terex of any sums to the Collateral Agent or any
Secured Party as provided above, all rights of Terex against any Subsidiary
Borrower arising as a result thereof by way of right of subrogation,
contribution, reimbursement, indemnity or otherwise shall in all respects be
subordinate and junior in right of payment to the prior payment in full in cash
of all the Obligations. In addition, any indebtedness of any Subsidiary Borrower
now or hereafter held by Terex is hereby subordinated in right of payment to the
prior payment in full of the Obligations. If any amount shall erroneously be
paid to Terex on account of (i) such subrogation, contribution, reimbursement,
indemnity or similar right or (ii) any such indebtedness of any Subsidiary
Borrower, and if an Event of Default shall have occurred and be continuing, such
amount shall be held in trust for the benefit of the Secured Parties and shall
forthwith be paid to the Collateral Agent to be credited against the payment of
the Obligations, whether matured or unmatured, in accordance with the terms of
the Loan Documents.
SECTION 8. Information. Terex assumes all responsibility for being and
keeping itself informed of the Subsidiary Borrowers' financial condition and
assets, and of all other circumstances bearing upon the risk of nonpayment of
the Obligations and the nature, scope and extent of the risks that Terex assumes
and incurs hereunder, and agrees that none of the Collateral Agent or the other
Secured Parties will have any duty to advise Terex of information known to it or
any of them regarding such circumstances or risks.
SECTION 9. Representations and Warranties. INTENTIONALLY OMITTED
SECTION 10. Termination. The Guarantee made hereunder (a) shall
terminate when all the Obligations have been paid in full and the Lenders have
no further commitment to lend to any Subsidiary Borrowers under the Credit
Agreement, the L/C Exposure with respect to all Letters of Credit issued for the
account of any Subsidiary Borrower has been reduced to zero and the Issuing
Banks have no further obligation to issue Letters of Credit to any Subsidiary
Borrower under the Credit Agreement and (b) shall be reinstated if, at any time
after the Guarantee has terminated, payment, or any part thereof, of any
Obligation is rescinded or must otherwise be restored by any Secured Party or
any Subsidiary Guarantor upon the bankruptcy or reorganization of any Subsidiary
Borrower, any Subsidiary Guarantor, Terex or otherwise.
SECTION 11. Binding Effect; Several Agreement; Assignments. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of Terex that are contained in this
Agreement shall bind and inure to the benefit of each party hereto and their
respective successors and assigns. This Agreement shall become effective as to
Terex when a counterpart hereof executed on behalf of Terex shall have been
delivered to the Collateral Agent, and a counterpart hereof shall have been
executed on behalf of the Collateral Agent, and thereafter shall be binding upon
Terex and the Collateral Agent and their respective successors and assigns, and
shall inure to the benefit of Terex, the Collateral Agent and the other Secured
Parties, and their respective successors and assigns, except Terex shall not
have the right to assign its rights or obligations hereunder or any interest
herein (and any such attempted assignment shall be void).
SECTION 12. Waivers; Amendment. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
<PAGE>
4
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and of the other Secured Parties under the other Loan Documents are cumulative
and are not exclusive of any rights or remedies that they would otherwise have.
No waiver of any provision of this Agreement or consent to any departure by
Terex therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand on Terex in any case shall entitle Terex to any other or
further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to a written agreement entered into between
Terex and the Collateral Agent, with the prior written consent of the Required
Lenders (except as otherwise provided in the Credit Agreement).
SECTION 13. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 14. Notices. All communications and notices hereunder shall be
in writing and given as provided in Section 9.01 of the Credit Agreement.
SECTION 15. Survival of Agreement; Severability. (a) All covenants,
agreements, representations and warranties made by Terex herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Collateral Agent and the other Secured Parties and
shall survive the making by the Lenders of the Loans to the Subsidiary Borrowers
and the issuance of the Letters of Credit for the account of the Subsidiary
Borrowers by the Issuing Banks regardless of any investigation made by the
Secured Parties or on their behalf, and shall continue in full force and effect
as long as the principal of or any accrued interest on any Loan to the
Subsidiary Borrowers or any other fee or amount payable under this Agreement or
any other Loan Document by the Subsidiary Borrowers is outstanding and unpaid or
the L/C Exposure with respect to Letters of Credit issued for the account of all
Subsidiary Borrowers does not equal zero and as long as the Commitments and the
L/C Commitments have not been terminated.
(b) In the event any one or more of the provisions contained in this
Agreement or in any other Loan Document should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby (it being understood that the invalidity of a
particular provision in a particular jurisdiction shall not in and of itself
affect the validity of such provision in any other jurisdiction). The parties
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 16. Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute a single contract, and shall become effective as
provided in Section 11. Delivery of an executed signature page to this Agreement
by facsimile transmission shall be as effective as delivery of a manually
executed counterpart of this Agreement.
SECTION 17. Rules of Interpretation. The rules of interpretation
specified in Section 1.02 of the Credit Agreement shall be applicable to this
Agreement.
SECTION 18. Jurisdiction; Consent to Service of Process. (a) Terex
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of any New York State court or Federal court of
the United States of America sitting in New York City, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
<PAGE>
5
Agreement or the other Loan Documents, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in such New York State or, to the extent permitted by law, in
such Federal court. Each of the parties hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that the Collateral Agent or
any other Secured Party may otherwise have to bring any action or proceeding
relating to this Agreement or the other Loan Documents against Terex or its
properties in the courts of any jurisdiction.
(b) Terex hereby irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection that it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement or the other Loan Documents in any New York
State or Federal court. Each of the parties hereto hereby irrevocably waives, to
the fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 14. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 19. Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS. EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 19.
SECTION 20. Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Secured Party is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other Indebtedness at any time owing by such Secured Party to
or for the credit or the account of Terex against any or all the obligations of
Terex now or hereafter existing under this Agreement and the other Loan
Documents held by such Secured Party, irrespective of whether or not such
Secured Party shall have made any demand under this Agreement or any other Loan
Document and although such obligations may be unmatured. The rights of each
Secured Party under this Section 20 are in addition to other rights and remedies
(including other rights of setoff) which such Secured Party may have.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
TEREX CORPORATION,
by
Name:
Title: Authorized Officer
<PAGE>
6
CREDIT SUISSE FIRST BOSTON, as
Collateral Agent,
by
Name:
Title:
by
Name:
Title:
<PAGE>
1
GUARANTEE AGREEMENT dated as of March 6,
1998, among each of the subsidiaries listed on
Schedule I hereto (each such subsidiary individually,
a "Subsidiary Guarantor" and collectively, the
"Subsidiary Guarantors") of TEREX CORPORATION, a
Delaware corporation ("Terex"), and CREDIT SUISSE
FIRST BOSTON, a bank organized under the laws of
Switzerland, acting through its New York branch
("CSFB"), as collateral agent (the "Collateral
Agent") for the Secured Parties (as defined in the
Credit Agreement referred to below).
Reference is made to (a) the Credit Agreement dated as of March 6, 1998
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among Terex, Terex Equipment Limited, a company organized under the
laws of Scotland, P.P.M. S.A., a company organized under the laws of the
Republic of France, Unit Rig (Australia) Pty. Ltd., a company organized under
the laws of New South Wales, and P.P.M. Sp.A., a company organized under the
laws of the Republic of Italy, the Lenders (as defined in Article I thereto),
the Issuing Banks (as defined in Article I thereto) and CSFB, as administrative
agent and as collateral agent for the Lenders ) and (b) the Guarantee Agreement
dated as of March 6, 1998 (as amended, supplemented or otherwise modified from
time to time, the "Terex Guarantee Agreement") between Terex and the Collateral
Agent. Capitalized terms used herein and not defined herein shall have the
meanings assigned to such terms in the Credit Agreement.
The Lenders have agreed to make Loans to the Borrowers, and the Issuing
Banks have agreed to issue Letters of Credit for the account of the Borrowers,
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement. Each of the Subsidiary Guarantors is a wholly owned Subsidiary
of Terex and acknowledges that it will derive substantial benefit from the
making of the Loans by the Lenders and the issuance of the Letters of Credit by
the Issuing Banks. The obligations of the Lenders to make Loans and of the
Issuing Banks to issue Letters of Credit are conditioned on, among other things,
the execution and delivery by the Subsidiary Guarantors of a Guarantee Agreement
in the form hereof. As consideration therefor and in order to induce the Lenders
to make Loans and the Issuing Banks to issue Letters of Credit, the Subsidiary
Guarantors are willing to execute this Agreement.
Accordingly, the parties hereto agree as follows:
SECTION 1. Guarantee. Each Subsidiary Guarantor unconditionally
guarantees, jointly with the other Subsidiary Guarantors and severally, as a
primary obligor and not merely as a surety, (a) the due and punctual payment of
(i) the principal of and premium, if any, and interest (including interest
accruing during the pendency of any bankruptcy, insolvency, receivership or
other similar proceeding, regardless of whether allowed or allowable in such
proceeding) on the Loans, when and as due, whether at maturity, by acceleration,
upon one or more dates set for prepayment or otherwise, (ii) each payment
required to be made by any Borrower under the Credit Agreement in respect of any
Letter of Credit, when and as due, including payments in respect of
reimbursement of disbursements, interest thereon and obligations to provide cash
collateral and (iii) all other monetary obligations, including fees, costs,
expenses and indemnities, whether primary, secondary, direct, contingent, fixed
or otherwise (including monetary obligations incurred during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding), of the Loan Parties to the
Secured Parties under the Credit Agreement and the other Loan Documents, (b) the
due and punctual performance of all covenants, agreements, obligations and
liabilities of the Loan Parties under or pursuant to the Credit Agreement and
the other Loan Documents and (c) all obligations of any Borrower, monetary or
otherwise, under each Hedging Agreement entered into with a counterparty that
was a Lender (or an Affiliate thereof) at the time such Hedging Agreement was
entered into (all the monetary and other obligations referred to in the
preceding clauses (a) through (c) being collectively called the "Obligations").
Each Subsidiary Guarantor further agrees that the Obligations may be extended or
renewed, in whole or in part, without notice to or further assent from it, and
that it will remain bound upon its guarantee notwithstanding any extension or
renewal of any Obligation.
<PAGE>
2
Anything contained in this Agreement to the contrary notwithstanding,
the obligations of each Subsidiary Guarantor hereunder shall be limited to a
maximum aggregate amount equal to the greatest amount that would not render such
Subsidiary Guarantor's obligations hereunder subject to avoidance as a
fraudulent transfer or conveyance under Section 548 of Title 11 of the United
States Code or any provisions of applicable state law (collectively, the
"Fraudulent Transfer Laws"), in each case after giving effect to all other
liabilities of such Subsidiary Guarantor, contingent or otherwise, that are
relevant under the Fraudulent Transfer Laws (specifically excluding, however,
any liabilities of such Subsidiary Guarantor (a) in respect of intercompany
indebtedness to Terex or Affiliates of Terex to the extent that such
indebtedness would be discharged in an amount equal to the amount paid by such
Subsidiary Guarantor hereunder and (b) under any Guarantee of senior unsecured
indebtedness or Indebtedness subordinated in right of payment to the Obligations
which Guarantee contains a limitation as to maximum amount similar to that set
forth in this paragraph, pursuant to which the liability of such Subsidiary
Guarantor hereunder is included in the liabilities taken into account in
determining such maximum amount) and after giving effect as assets to the value
(as determined under the applicable provisions of the Fraudulent Transfer Laws)
of any rights to subrogation, contribution, reimbursement, indemnity or similar
rights of such Subsidiary Guarantor pursuant to (i) applicable law or (ii) any
agreement providing for an equitable allocation among such Subsidiary Guarantor
and other Affiliates of Terex of obligations arising under Guarantees by such
parties (including the Indemnity, Subrogation and Contribution Agreement).
SECTION 2. Obligations Not Waived. To the fullest extent permitted by
applicable law, each Subsidiary Guarantor waives presentment to, demand of
payment from and protest to the Borrowers of any of the Obligations, and also
waives notice of acceptance of its guarantee and notice of protest for
nonpayment. To the fullest extent permitted by applicable law, the obligations
of each Subsidiary Guarantor hereunder shall not be affected by (a) the failure
of the Collateral Agent or any other Secured Party to assert any claim or demand
or to enforce or exercise any right or remedy against Terex, any Subsidiary
Borrower or any other Subsidiary Guarantor under the provisions of the Credit
Agreement, any other Loan Document or otherwise, (b) any rescission, waiver,
amendment or modification of, or any release from any of the terms or provisions
of this Agreement, any other Loan Document, any Guarantee or any other
agreement, including with respect to any other Subsidiary Guarantor under this
Agreement or, with respect to Terex, under the Terex Guarantee Agreement or (c)
the failure to perfect any security interest in, or the release of, any of the
security held by or on behalf of the Collateral Agent or any other Secured
Party.
SECTION 3. Security. Each of the Subsidiary Guarantors authorizes the
Collateral Agent and each of the other Secured Parties, to (a) take and hold
security for the payment of this Guarantee and the Obligations and exchange,
enforce, waive and release any such security, (b) apply such security and direct
the order or manner of sale thereof, in accordance with the terms of the Loan
Documents, as they in their sole discretion may determine and (c) release or
substitute any one or more endorsees, other guarantors or other obligors.
SECTION 4. Guarantee of Payment. Each Subsidiary Guarantor further
agrees that its guarantee constitutes a guarantee of payment when due and not of
collection, and waives any right to require that any resort be had by the
Collateral Agent or any other Secured Party to any of the security held for
payment of the Obligations or to any balance of any deposit account or credit on
the books of the Collateral Agent or any other Secured Party in favor of any
Borrower or any other person.
SECTION 5. No Discharge or Diminishment of Guarantee. The obligations
of each Subsidiary Guarantor hereunder shall not be subject to any reduction,
limitation, impairment or termination for any reason (other than the
indefeasible payment in full in cash of the Obligations), including any claim of
waiver, release, surrender, alteration or compromise of any of the Obligations,
and shall not be subject to any defense or setoff, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of each Subsidiary Guarantor
hereunder shall not be discharged or impaired or otherwise affected by the
failure of the Collateral Agent or any other Secured Party to assert any claim
<PAGE>
3
or demand or to enforce any remedy under the Credit Agreement, any other Loan
Document or any other agreement, by any waiver or modification of any provision
of any thereof, by any default, failure or delay, wilful or otherwise, in the
performance of the Obligations, or by any other act or omission that may or
might in any manner or to any extent vary the risk of any Subsidiary Guarantor
or that would otherwise operate as a discharge of each Subsidiary Guarantor as a
matter of law or equity (other than the indefeasible payment in full in cash of
all the Obligations).
SECTION 6. Defenses of Borrowers Waived. To the fullest extent
permitted by applicable law, each of the Subsidiary Guarantors waives any
defense based on or arising out of any defense of any Borrower or the
unenforceability of the Obligations or any part thereof from any cause, or the
cessation from any cause of the liability of any Borrower other than the final
payment in full in cash of the Obligations. The Collateral Agent and the other
Secured Parties may, at their election, foreclose on any security held by one or
more of them by one or more judicial or nonjudicial sales, accept an assignment
of any such security in lieu of foreclosure, compromise or adjust any part of
the Obligations, make any other accommodation with any Borrower or any other
guarantor (including Terex under the Terex Guarantee Agreement), or exercise any
other right or remedy available to them against any Borrower or any other
guarantor (including Terex under the Terex Guarantee Agreement), without
affecting or impairing in any way the liability of any Subsidiary Guarantor
hereunder except to the extent the Obligations have been fully and finally paid
in cash or otherwise satisfied pursuant to the terms of the Loan Documents.
Pursuant to applicable law, each of the Subsidiary Guarantors waives any defense
arising out of any such election even though such election operates, pursuant to
applicable law, to impair or to extinguish any right of reimbursement or
subrogation or other right or remedy of such Subsidiary Guarantor against Terex
or any other Subsidiary Guarantor or guarantor, as the case may be, or any
security.
SECTION 7. Agreement to Pay; Subordination. In furtherance of the
foregoing and not in limitation of any other right that the Collateral Agent or
any other Secured Party has at law or in equity against any Subsidiary Guarantor
by virtue hereof, upon the failure of any Borrower or any other Loan Party to
pay any Obligation when and as the same shall become due, whether at maturity,
by acceleration, after notice of prepayment or otherwise, each Subsidiary
Guarantor hereby promises to and will forthwith pay, or cause to be paid, to the
Collateral Agent or such other Secured Party as designated thereby in cash the
amount of such unpaid Obligations. Upon payment by any Subsidiary Guarantor of
any sums to the Collateral Agent or any Secured Party as provided above, all
rights of such Subsidiary Guarantor against the applicable Borrower arising as a
result thereof by way of right of subrogation, contribution, reimbursement,
indemnity or otherwise shall in all respects be subordinate and junior in right
of payment to the prior payment in full in cash of all the Obligations. In
addition, any indebtedness of any Borrower now or hereafter held by any
Subsidiary Guarantor is hereby subordinated in right of payment to the prior
payment in full of the Obligations. If any amount shall erroneously be paid to
any Subsidiary Guarantor on account of (i) such subrogation, contribution,
reimbursement, indemnity or similar right or (ii) any such indebtedness of any
Borrower, and if an Event of Default shall have occurred and be continuing, such
amount shall be held in trust for the benefit of the Secured Parties and shall
forthwith be paid to the Collateral Agent to be credited against the payment of
the Obligations, whether matured or unmatured, in accordance with the terms of
the Loan Documents.
SECTION 8. Information. Each of the Subsidiary Guarantors assumes all
responsibility for being and keeping itself informed of the Borrowers' financial
condition and assets, and of all other circumstances bearing upon the risk of
nonpayment of the Obligations and the nature, scope and extent of the risks that
such Subsidiary Guarantor assumes and incurs hereunder, and agrees that none of
the Collateral Agent or the other Secured Parties will have any duty to advise
any of the Subsidiary Guarantors of information known to it or any of them
regarding such circumstances or risks.
<PAGE>
4
SECTION 9. Representations and Warranties. Each of the Subsidiary
Guarantors represents and warrants as to itself that all representations and
warranties relating to it contained in the Credit Agreement are true and
correct.
SECTION 10. Termination. The Guarantees made hereunder (a) shall
terminate when all the Obligations have been paid in full and the Lenders have
no further commitment to lend under the Credit Agreement, the L/C Exposure has
been reduced to zero and the Issuing Banks have no further obligation to issue
Letters of Credit under the Credit Agreement and (b) shall be reinstated if, at
any time after the Guarantee has terminated, payment, or any part thereof, of
any Obligation is rescinded or must otherwise be restored by any Secured Party
or any Subsidiary Guarantor upon the bankruptcy or reorganization of Terex, any
Subsidiary Borrower, any Subsidiary Guarantor or otherwise.
SECTION 11. Binding Effect; Several Agreement; Assignments. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Subsidiary Guarantors that are
contained in this Agreement shall bind and inure to the benefit of each party
hereto and their respective successors and assigns. This Agreement shall become
effective as to any Subsidiary Guarantor when a counterpart hereof executed on
behalf of such Subsidiary Guarantor shall have been delivered to the Collateral
Agent, and a counterpart hereof shall have been executed on behalf of the
Collateral Agent, and thereafter shall be binding upon such Subsidiary Guarantor
and the Collateral Agent and their respective successors and assigns, and shall
inure to the benefit of such Subsidiary Guarantor, the Collateral Agent and the
other Secured Parties, and their respective successors and assigns, except that
no Subsidiary Guarantor shall have the right to assign its rights or obligations
hereunder or any interest herein (and any such attempted assignment shall be
void). If all of the capital stock of a Subsidiary Guarantor is sold,
transferred or otherwise disposed of pursuant to a transaction permitted by
Section 6.05 of the Credit Agreement, such Subsidiary Guarantor shall be
released from its obligations under this Agreement without further action. This
Agreement shall be construed as a separate agreement with respect to each
Subsidiary Guarantor and may be amended, modified, supplemented, waived or
released with respect to any Subsidiary Guarantor without the approval of any
other Subsidiary Guarantor and without affecting the obligations of any other
Subsidiary Guarantor hereunder.
SECTION 12. Waivers; Amendment. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and of the other Secured Parties under the other Loan Documents are cumulative
and are not exclusive of any rights or remedies that they would otherwise have.
No waiver of any provision of this Agreement or consent to any departure by any
Subsidiary Guarantor therefrom shall in any event be effective unless the same
shall be permitted by paragraph (b) below, and then such waiver or consent shall
be effective only in the specific instance and for the purpose for which given.
No notice or demand on any Subsidiary Guarantor in any case shall entitle such
Subsidiary Guarantor or any other Subsidiary Guarantor to any other or further
notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to a written agreement entered into between
the Subsidiary Guarantors with respect to which such waiver, amendment or
modification relates and the Collateral Agent, with the prior written consent of
the Required Lenders (except as otherwise provided in the Credit Agreement).
SECTION 13. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
<PAGE>
5
SECTION 14. Notices. All communications and notices hereunder shall be
in writing and given as provided in Section 9.01 of the Credit Agreement. All
communications and notices hereunder to each Subsidiary Guarantor shall be given
to it in care of Terex.
SECTION 15. Survival of Agreement; Severability. (a) All covenants,
agreements, representations and warranties made by the Subsidiary Guarantors
herein and in the certificates or other instruments prepared or delivered in
connection with or pursuant to this Agreement or any other Loan Document shall
be considered to have been relied upon by the Collateral Agent and the other
Secured Parties and shall survive the making by the Lenders of the Loans and the
issuance of the Letters of Credit by the Issuing Banks regardless of any
investigation made by the Secured Parties or on their behalf, and shall continue
in full force and effect as long as the principal of or any accrued interest on
any Loan or any other fee or amount payable under this Agreement or any other
Loan Document is outstanding and unpaid or the L/C Exposure does not equal zero
and as long as the Commitments and the L/C Commitments have not been terminated.
(b) In the event any one or more of the provisions contained in this
Agreement or in any other Loan Document should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby (it being understood that the invalidity of a
particular provision in a particular jurisdiction shall not in and of itself
affect the validity of such provision in any other jurisdiction). The parties
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 16. Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute a single contract, and shall become effective as
provided in Section 11. Delivery of an executed signature page to this Agreement
by facsimile transmission shall be as effective as delivery of a manually
executed counterpart of this Agreement.
SECTION 17. Rules of Interpretation. The rules of interpretation
specified in Section 1.02 of the Credit Agreement shall be applicable to this
Agreement.
SECTION 18. Jurisdiction; Consent to Service of Process. (a) Each
Subsidiary Guarantor hereby irrevocably and unconditionally submits, for itself
and its property, to the nonexclusive jurisdiction of any New York State court
or Federal court of the United States of America sitting in New York City, and
any appellate court from any thereof, in any action or proceeding arising out of
or relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the
Collateral Agent or any other Secured Party may otherwise have to bring any
action or proceeding relating to this Agreement or the other Loan Documents
against any Subsidiary Guarantor or its properties in the courts of any
jurisdiction.
(b) Each Subsidiary Guarantor hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or the other
Loan Documents in any New York State or Federal court. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.
<PAGE>
6
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 14. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 19. Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS. EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 19.
SECTION 20. Additional Subsidiary Guarantors. Pursuant to Section 5.11
of the Credit Agreement, each Domestic Subsidiary that was not in existence or
was not a Domestic Subsidiary on the date of the Credit Agreement is required to
enter into this Agreement as a Subsidiary Guarantor upon becoming a Domestic
Subsidiary. Upon execution and delivery after the date hereof by the Collateral
Agent and such a Subsidiary of an instrument in the form of Annex 1, such
Subsidiary shall become a Subsidiary Guarantor hereunder with the same force and
effect as if originally named as a Subsidiary Guarantor herein. The execution
and delivery of any instrument adding an additional Subsidiary Guarantor as a
party to this Agreement shall not require the consent of any other Subsidiary
Guarantor hereunder. The rights and obligations of each Subsidiary Guarantor
hereunder shall remain in full force and effect notwithstanding the addition of
any new Subsidiary Guarantor as a party to this Agreement.
SECTION 21. Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Secured Party is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other Indebtedness at any time owing by such Secured Party to
or for the credit or the account of any Subsidiary Guarantor against any or all
the obligations of such Subsidiary Guarantor now or hereafter existing under
this Agreement and the other Loan Documents held by such Secured Party,
irrespective of whether or not such Secured Party shall have made any demand
under this Agreement or any other Loan Document and although such obligations
may be unmatured. The rights of each Secured Party under this Section 21 are in
addition to other rights and remedies (including other rights of setoff) which
such Secured Party may have.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
EACH OF THE SUBSIDIARIES
LISTED ON SCHEDULE I HERETO,
by
-----------------------
Name:
Title: Authorized Officer
<PAGE>
7
CREDIT SUISSE FIRST BOSTON, as
Collateral Agent,
by
-----------------------
Name:
Title:
by
-----------------------
Name:
Title:
<PAGE>
8
Schedule I to the
Guarantee Agreement
Subsidiary Guarantor
<PAGE>
1
Annex 1 to the
Subsidiary Guarantee Agreement
SUPPLEMENT NO. dated as of , to the
Subsidiary Guarantee Agreement dated as of March 6,
1998 (the "Subsidiary Guarantee Agreement"), among
each of the subsidiaries listed on Schedule I thereto
(each such subsidiary individually, a "Subsidiary
Guarantor" and collectively, the "Subsidiary
Guarantors") of TEREX CORPORATION, a Delaware
corporation ("Terex"), and CREDIT SUISSE FIRST
BOSTON, a bank organized under the laws of
Switzerland, operating through its New York branch
("CSFB"), as collateral agent (the "Collateral
Agent") for the Secured Parties (as defined in the
Credit Agreement referred to below).
A. Reference is made to the Credit Agreement dated as of March 6, 1998
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among Terex, Terex Equipment Limited, a company organized under the
laws of Scotland, P.P.M. S.A., a company organized under the laws of the
Republic of France, Unit Rig (Australia) Pty. Ltd., a company organized under
the laws of New South Wales, and P.P.M. Sp.A., a company organized under the
laws of the Republic of Italy, the Lenders (as defined in Article I thereto),
the Issuing Banks (as defined in Article I thereto) and CSFB, as administrative
agent and as collateral agent for the Lenders.
B. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Subsidiary Guarantee Agreement.
C. The Subsidiary Guarantors have entered into the Subsidiary Guarantee
Agreement in order to induce the Lenders to make Loans and the Issuing Banks to
issue Letters of Credit. Pursuant to Section 5.11 of the Credit Agreement, each
Domestic Subsidiary that was not in existence or not a Domestic Subsidiary on
the date of the Credit Agreement is required to enter into the Subsidiary
Guarantee Agreement as a Subsidiary Guarantor upon becoming a Domestic
Subsidiary. Section 20 of the Subsidiary Guarantee Agreement provides that
additional Subsidiaries may become Subsidiary Guarantors under the Subsidiary
Guarantee Agreement by execution and delivery of an instrument in the form of
this Supplement. The undersigned Subsidiary (the "New Subsidiary Guarantor") is
executing this Supplement in accordance with the requirements of the Credit
Agreement to become a Subsidiary Guarantor under the Subsidiary Guarantee
Agreement in order to induce the Lenders to make additional Loans and the
Issuing Bank to issue additional Letters of Credit and as consideration for
Loans previously made and Letters of Credit previously issued.
Accordingly, the Collateral Agent and the New Subsidiary Guarantor
agree as follows:
SECTION 1. In accordance with Section 20 of the Subsidiary Guarantee
Agreement, the New Subsidiary Guarantor by its signature below becomes a
Subsidiary Guarantor under the Subsidiary Guarantee Agreement with the same
force and effect as if originally named therein as a Subsidiary Guarantor and
the New Subsidiary Guarantor hereby (a) agrees to all the terms and provisions
of the Subsidiary Guarantee Agreement applicable to it as a Subsidiary Guarantor
thereunder and (b) represents and warrants that the representations and
warranties made by it as a Subsidiary Guarantor thereunder are true and correct
on and as of the date hereof. Each reference to a "Subsidiary Guarantor" in the
Subsidiary Guarantee Agreement shall be deemed to include the New Subsidiary
Guarantor. The Subsidiary Guarantee Agreement is hereby incorporated herein by
reference.
SECTION 2. The New Subsidiary Guarantor represents and warrants to the
Collateral Agent and the other Secured Parties that this Supplement has been
duly authorized, executed and delivered by it and constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its terms.
<PAGE>
2
SECTION 3. This Supplement may be executed in counterparts, each of
which shall constitute an original, but all of which when taken together shall
constitute a single contract. This Supplement shall become effective when the
Collateral Agent shall have received counterparts of this Supplement that, when
taken together, bear the signatures of the New Subsidiary Guarantor and the
Collateral Agent. Delivery of an executed signature page to this Supplement by
facsimile transmission shall be as effective as delivery of a manually executed
counterpart of this Supplement.
SECTION 4. Except as expressly supplemented hereby, the Subsidiary
Guarantee Agreement shall remain in full force and effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and in the Subsidiary Guarantee Agreement shall not in any way be
affected or impaired thereby (it being understood that the invalidity of a
particular provision hereof in a particular jurisdiction shall not in and of
itself affect the validity of such provision in any other jurisdiction). The
parties hereto shall endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
SECTION 7. All communications and notices hereunder shall be in writing
and given as provided in Section 14 of the Subsidiary Guarantee Agreement.
SECTION 8. The Collateral Agent shall be reimbursed, in accordance with
Section 9.05(a) of the Credit Agreement, for its out-of-pocket expenses in
connection with this Supplement, including the fees, disbursements and other
charges of counsel for the Collateral Agent.
IN WITNESS WHEREOF, the New Subsidiary Guarantor and the Collateral
Agent have duly executed this Supplement to the Subsidiary Guarantee Agreement
as of the day and year first above written.
[Name of New Subsidiary Guarantor],
by
----------------------------------
Name:
Title:
Address:
<PAGE>
3
CREDIT SUISSE FIRST BOSTON,
as Collateral Agent,
by
----------------------------------
Name:
Title:
by
----------------------------------
Name:
Title:
<PAGE>
1
SECURITY AGREEMENT dated as of March 6,
1998, among TEREX CORPORATION, a Delaware corporation
("Terex"), each subsidiary of Terex listed on
Schedule I hereto (each such subsidiary individually
a "Subsidiary Guarantor" and collectively, the
"Subsidiary Guarantors"; the Subsidiary Guarantors
and Terex are referred to collectively herein as the
"Grantors") and CREDIT SUISSE FIRST BOSTON, a bank
organized under the laws of Switzerland, acting
through its New York branch, ("CSFB"), as collateral
agent (in such capacity, the "Collateral Agent") for
the Secured Parties (as defined herein).
Reference is made to (a) the Credit Agreement dated as of March 6, 1998
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among Terex, Terex Equipment Limited, a company organized under the
laws of Scotland, P.P.M. S.A., a company organized under the laws of the
Republic of France, Unit Rig (Australia) Pty. Ltd., a company organized under
the laws of New South Wales, and P.P.M. Sp.A., a company organized under the
laws of the Republic of Italy, the Lenders (as defined in Article I thereto),
the Issuing Banks (as defined in Article I thereto) and CSFB, as administrative
agent and as collateral agent for the Lenders, (b) the Guarantee Agreement dated
as of March 6, 1998 (as amended, supplemented or otherwise modified from time to
time, the "Subsidiary Guarantee Agreement") among the Subsidiary Guarantors and
the Collateral Agent and (c) the Guarantee Agreement dated as of March 6, 1998
(as amended, supplemented or otherwise modified from time to time, the "Terex
Guarantee Agreement") between Terex and the Collateral Agent. Capitalized terms
used herein and not defined herein shall have meanings assigned to such terms in
the Credit Agreement.
The Lenders have agreed to make Loans to the Borrowers and the Issuing
Banks have agreed to issue Letters of Credit for the account of the Borrowers,
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement. The Subsidiary Guarantors have agreed to guarantee, among
other things, all the obligations of the Borrowers under the Credit Agreement in
accordance with the terms of the Subsidiary Guarantee Agreement. Terex has
agreed to guarantee, among other things, all the obligations of the Subsidiary
Borrowers under the Credit Agreement in accordance with the terms of the Terex
Guarantee Agreement. The obligations of the Lenders to make Loans and of the
Issuing Banks to issue Letters of Credit are conditioned upon, among other
things, the execution and delivery by the Grantors of an agreement in the form
hereof to secure (a) the due and punctual payment by the Borrowers of (i) the
principal of and premium, if any, and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Loans, when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise, (ii) each payment required to be
made by any Borrower under the Credit Agreement in respect of any Letter of
Credit, when and as due, including payments in respect of reimbursement of
disbursements, interest thereon and obligations to provide cash collateral and
(iii) all other monetary obligations, including fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent, fixed or otherwise
(including monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), of the Borrowers to the Secured
Parties under the Credit Agreement and the other Loan Documents, (b) the due and
punctual performance of all covenants, agreements, obligations and liabilities
of the Borrowers under or pursuant to the Credit Agreement and the other Loan
Documents, (c) the due and punctual payment and performance of all the
covenants, agreements, obligations and liabilities of each other Loan Party
under or pursuant to this Agreement and the other Loan Documents and (d) the due
and punctual payment and performance of all obligations of the Borrowers under
each Hedging Agreement entered into with any counterparty that was a Lender (or
an Affiliate thereof) at the time such Hedging Agreement was entered into (all
<PAGE>
2
the monetary and other obligations referred to in the preceding clauses (a)
through (d) being referred to collectively as the "Obligations").
Accordingly, the Grantors and the Collateral Agent, on behalf of itself
and each Secured Party (and each of their respective successors or assigns),
hereby agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Definition of Terms Used Herein. Unless the context
otherwise requires, all capitalized terms used but not defined herein shall have
the meanings set forth in the Credit Agreement.
SECTION 1.02. Definition of Certain Terms Used Herein. As used herein,
the following terms shall have the following meanings:
"Account Debtor" shall mean any person who is or who may become
obligated to any Grantor under, with respect to or on account of an Account.
"Accounts" shall mean any and all right, title and interest of any
Grantor to payment for goods and services sold or leased, including any such
right evidenced by chattel paper, whether due or to become due, whether or not
it has been earned by performance, and whether now or hereafter acquired or
arising in the future, including accounts receivable from Affiliates of the
Grantors.
"Accounts Receivable" shall mean all Accounts and all right, title and
interest in any returned goods, together with all rights, titles, securities and
guarantees with respect thereto, including any rights to stoppage in transit,
replevin, reclamation and resales, and all related security interests, liens and
pledges, whether voluntary or involuntary, in each case whether now existing or
owned or hereafter arising or acquired.
"Collateral" shall mean all (a) Accounts Receivable, (b) Documents, (c)
Equipment, (d) General Intangibles, (e) Inventory, (f) cash and cash accounts,
(g) Investment Property and (h) Proceeds; provided that the Collateral shall not
include more than 65% of the issued and outstanding shares of stock of any
Foreign Subsidiary.
"Commodity Account" shall mean an account maintained by a Commodity
Intermediary in which a Commodity Contract is carried out for a Commodity
Customer.
"Commodity Contract" shall mean a commodity futures contract, an option
on a commodity futures contract, a commodity option or any other contract that,
in each case, is (a) traded on or subject to the rules of a board of trade that
has been designated as a contract market for such a contract pursuant to the
federal commodities laws or (b) traded on a foreign commodity board of trade,
exchange or market, and is carried on the books of a Commodity Intermediary for
a Commodity Customer.
"Commodity Customer" shall mean a person for whom a Commodity
Intermediary carries a Commodity Contract on its books.
"Commodity Intermediary" shall mean (a) a person who is registered as a
futures commission merchant under the federal commodities laws or (b) a person
who in the ordinary course of its business provides clearance or settlement
services for a board of trade that has been designated as a contract market
pursuant to federal commodities laws.
<PAGE>
3
"Copyright License" shall mean any written agreement, now or hereafter
in effect, granting any right to any third party under any Copyright now or
hereafter owned by any Grantor or which such Grantor otherwise has the right to
license, or granting any right to such Grantor under any Copyright now or
hereafter owned by any third party, and all rights of such Grantor under any
such agreement.
"Copyrights" shall mean all of the following now owned or hereafter
acquired by any Grantor: (a) all copyright rights in any work subject to the
copyright laws of the United States or any other country, whether as author,
assignee, transferee or otherwise, and (b) all registrations and applications
for registration of any such copyright in the United States or any other
country, including registrations, recordings, supplemental registrations and
pending applications for registration in the United States Copyright Office,
including those listed on Schedule II.
"Credit Agreement" shall have the meaning assigned to such term in the
preliminary statement of this Agreement.
"Documents" shall mean all instruments, files, records, ledger sheets
and documents covering or relating to any of the Collateral.
"Entitlement Holder" shall mean a person identified in the records of a
Securities Intermediary as the person having a Security Entitlement against the
Securities Intermediary. If a person acquires a Security Entitlement by virtue
of Section 8-501(b)(2) or (3) of the Uniform Commercial Code as in effect in the
relevant jurisdiction, such person is the Entitlement Holder.
"Equipment" shall mean all equipment, furniture and furnishings, and
all tangible personal property similar to any of the foregoing, including tools,
parts and supplies of every kind and description, and all improvements,
accessions or appurtenances thereto, that are now or hereafter owned by any
Grantor. The term Equipment shall include Fixtures.
"Financial Asset" shall mean (a) a Security, (b) an obligation of a
person or a share, participation or other interest in a person or in property or
an enterprise of a person, which is, or is of a type, dealt with in or traded on
financial markets, or which is recognized in any area in which it is issued or
dealt in as a medium for investment or (c) any property that is held by a
Securities Intermediary for another person in a Securities Account if the
Securities Intermediary has expressly agreed with the other person that the
property is to be treated as a Financial Asset under Article 8 of the Uniform
Commercial Code as in effect in the relevant jurisdiction. As the context
requires, the term Financial Asset shall mean either the interest itself or the
means by which a person's claim to it is evidenced, including a certificated or
uncertificated Security, a certificate representing a Security or a Security
Entitlement.
"Fixtures" shall mean all items of Equipment, whether now owned or
hereafter acquired, of any Grantor that become so related to particular real
estate that an interest in them arises under any real estate law applicable
thereto.
"General Intangibles" shall mean all choses in action and causes of
action and all other assignable intangible personal property of any Grantor of
every kind and nature (other than Accounts Receivable) now owned or hereafter
acquired by any Grantor, including Indebtedness of Terex or any Subsidiary
whether evidenced by a promissory note or not, but excluding the intercompany
demand notes listed on Schedule VI, corporate or other business records,
indemnification claims, contract rights (including rights under leases, whether
entered into as lessor or lessee, Hedging Agreements and other agreements),
Intellectual Property, goodwill, registrations, franchises, tax refund claims
and any letter of credit, guarantee, claim, security interest or other security
held by or granted to any Grantor to secure payment by an Account Debtor of any
of the Accounts Receivable.
<PAGE>
4
"Intellectual Property" shall mean all intellectual and similar
property of any Grantor of every kind and nature now owned or hereafter acquired
by any Grantor, including inventions, designs, Patents, Copyrights, Licenses,
Trademarks, trade secrets, confidential or proprietary technical and business
information, know-how, show-how or other data or information, software and
databases and all embodiments or fixations thereof and related documentation,
registrations and franchises, and all additions, improvements and accessions to,
and books and records describing or used in connection with, any of the
foregoing.
"Inventory" shall mean all goods of any Grantor, whether now owned or
hereafter acquired, held for sale or lease, or furnished or to be furnished by
any Grantor under contracts of service, or consumed in any Grantor's business,
including raw materials, intermediates, work in process, packaging materials,
finished goods, semi-finished inventory, scrap inventory, manufacturing supplies
and spare parts, and all such goods that have been returned to or repossessed by
or on behalf of any Grantor.
"Investment Property" shall mean all Securities (whether certificated
or uncertificated), Security Entitlements, Securities Accounts, Commodity
Contracts and Commodity Accounts of any Grantor, whether now owned or hereafter
acquired by any Grantor.
"License" shall mean any Patent License, Trademark License, Copyright
License or other license or sublicense to which any Grantor is a party,
including those listed on Schedule III (other than those license agreements in
existence on the date hereof and listed on Schedule III and those license
agreements entered into after the date hereof, which by their terms prohibit
assignment or a grant of a security interest by such Grantor as licensee
thereunder).
"Lockbox System" shall have the meaning assigned to such term in
Section 5.01.
"Obligations" shall have the meaning assigned to such term in the
preliminary statement of this Agreement.
"Patent License" shall mean any written agreement, now or hereafter in
effect, granting to any third party any right to make, use or sell any invention
on which a Patent, now or hereafter owned by any Grantor or which any Grantor
otherwise has the right to license, is in existence, or granting to any Grantor
any right to make, use or sell any invention on which a Patent, now or hereafter
owned by any third party, is in existence, and all rights of any Grantor under
any such agreement.
"Patents" shall mean all of the following now owned or hereafter
acquired by any Grantor: (a) all letters patent of the United States or any
other country, all registrations and recordings thereof, and all applications
for letters patent of the United States or any other country, including
registrations, recordings and pending applications in the United States Patent
and Trademark Office or any similar offices in any other country, including
those listed on Schedule IV, and (b) all reissues, continuations, divisions,
continuations-in-part, renewals or extensions thereof, and the inventions
disclosed or claimed therein, including the right to make, use and/or sell the
inventions disclosed or claimed therein.
"Perfection Certificate" shall mean a certificate in a form previously
approved by the Collateral Agent, completed and supplemented with the schedules
and attachments contemplated thereby, and duly executed by a Financial Officer
and the chief legal officer of Terex.
"Proceeds" shall mean any consideration received from the sale,
exchange, license, lease or other disposition of any asset or property that
constitutes Collateral, any value received as a consequence of the possession of
any Collateral and any payment received from any insurer or other person or
entity as a result of the destruction, loss, theft, damage or other involuntary
<PAGE>
5
conversion of whatever nature of any asset or property which constitutes
Collateral, and shall include (a) all cash and negotiable instruments received
by or held on behalf of the Collateral Agent pursuant to the Lockbox System, (b)
any claim of any Grantor against any third party for (and the right to sue and
recover for and the rights to damages or profits due or accrued arising out of
or in connection with) (i) past, present or future infringement of any Patent
now or hereafter owned by any Grantor, or licensed under a Patent License, (ii)
past, present or future infringement or dilution of any Trademark now or
hereafter owned by any Grantor or licensed under a Trademark License or injury
to the goodwill associated with or symbolized by any Trademark now or hereafter
owned by any Grantor, (iii) past, present or future breach of any License and
(iv) past, present or future infringement of any Copyright now or hereafter
owned by any Grantor or licensed under a Copyright License and (c) any and all
other amounts from time to time paid or payable under or in connection with any
of the Collateral.
"Secured Parties" shall mean (a) the Lenders, (b) the Administrative
Agent, (c) the Collateral Agent, (d) the Issuing Banks, (e) each counterparty to
an Interest Rate Protection Agreement entered into with any Borrower if such
counterparty was a Lender at the time the Hedging Agreement was entered into,
(f) the beneficiaries of each indemnification obligation undertaken by any
Grantor under any Loan Document and (g) the successors and assigns of each of
the foregoing.
"Securities" shall mean any obligations of an issuer or any shares,
participations or other interests in an issuer or in property or an enterprise
of an issuer which (a) are represented by a certificate representing a security
in bearer or registered form, or the transfer of which may be registered upon
books maintained for that purpose by or on behalf of the issuer, (b) are one of
a class or series or by its terms is divisible into a class or series of shares,
participations, interests or obligations and (c)(i) are, or are of a type, dealt
with or traded on securities exchanges or securities markets or (ii) are a
medium for investment and by their terms expressly provide that they are a
security governed by Article 8 of the Uniform Commercial Code as in effect in
the relevant jurisdiction.
"Securities Account" shall mean an account to which a Financial Asset
is or may be credited in accordance with an agreement under which the person
maintaining the account undertakes to treat the person for whom the account is
maintained as entitled to exercise rights that comprise the Financial Asset.
"Security Entitlements" shall mean the rights and property interests of
an Entitlement Holder with respect to a Financial Asset.
"Security Interest" shall have the meaning assigned to such term in
Section 2.01.
"Securities Intermediary" shall mean (a) a clearing corporation or (b)
a person, including a bank or broker, that in the ordinary course of its
business maintains securities accounts for others and is acting in that
capacity.
"Sub-Agent" shall mean a financial institution which shall have
delivered to the Collateral Agent an executed Lockbox and Depository Agreement.
"Trademark License" shall mean any written agreement, now or hereafter
in effect, granting to any third party any right to use any Trademark now or
hereafter owned by any Grantor or which any Grantor otherwise has the right to
license, or granting to any Grantor any right to use any Trademark now or
hereafter owned by any third party, and all rights of any Grantor under any such
agreement.
"Trademarks" shall mean all of the following now owned or hereafter
acquired by any Grantor: (a) all trademarks, service marks, trade names,
corporate names, company names, business names, fictitious business names,
<PAGE>
6
trade styles, trade dress, logos, other source or business identifiers, designs
and general intangibles of like nature, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all registration and
recording applications filed in connection therewith, including registrations
and registration applications in the United States Patent and Trademark Office,
any State of the United States or any similar offices in any other country or
any political subdivision thereof, and all extensions or renewals thereof,
including those listed on Schedule V, (b) all goodwill associated therewith or
symbolized thereby and (c) all other assets, rights and interests that uniquely
reflect or embody such goodwill.
SECTION 1.03. Rules of Interpretation. The rules of interpretation
specified in Section 1.02 of the Credit Agreement shall be applicable to this
Agreement.
ARTICLE II
Security Interest
SECTION 2.01. Security Interest. As security for the payment or
performance, as the case may be, in full of the Obligations, each Grantor hereby
bargains, sells, conveys, assigns, sets over, mortgages, pledges, hypothecates
and transfers to the Collateral Agent, its successors and assigns, for the
ratable benefit of the Secured Parties, and hereby grants to the Collateral
Agent, its successors and assigns, for the ratable benefit of the Secured
Parties, a security interest in, all of such Grantor's right, title and interest
in, to and under the Collateral (the "Security Interest"). Without limiting the
foregoing, the Collateral Agent is hereby authorized to file one or more
financing statements (including fixture filings), continuation statements,
filings with the United States Patent and Trademark Office or United States
Copyright Office (or any successor office or any similar office in any other
country) or other documents for the purpose of perfecting, confirming,
continuing, enforcing or protecting the Security Interest granted by each
Grantor, without the signature of any Grantor, and naming any Grantor or the
Grantors as debtors and the Collateral Agent as secured party.
SECTION 2.02. No Assumption of Liability. The Security Interest is
granted as security only and shall not subject the Collateral Agent or any other
Secured Party to, or in any way alter or modify, any obligation or liability of
any Grantor with respect to or arising out of the Collateral.
ARTICLE III
Representations and Warranties
The Grantors jointly and severally represent and warrant to the
Collateral Agent and the Secured Parties that:
SECTION 3.01. Title and Authority. Each Grantor has good and valid
rights in and title to the Collateral with respect to which it has purported to
grant a Security Interest hereunder and has full corporate power and authority
to grant to the Collateral Agent the Security Interest in such Collateral
pursuant hereto and to execute, deliver and perform its obligations in
accordance with the terms of this Agreement, without the consent or approval of
any other person other (i) than any consent or approval which has been obtained
and (ii) any consent or approval the failure of which to obtain could not impair
or adversely affect the Security Interests intended to be granted hereunder.
SECTION 3.02. Filings. (a) The Perfection Certificate has been duly
prepared, completed and executed and the information set forth therein is
correct and complete. Fully executed Uniform Commercial Code financing
<PAGE>
7
statements (including fixture filings, as applicable) or other appropriate
filings, recordings or registrations containing a description of the Collateral
have been delivered to the Collateral Agent for filing in each appropriate
governmental, municipal or other office, which are all the filings, recordings
and registrations (other than filings required to be made in the United States
Patent and Trademark Office and the United States Copyright Office in order to
perfect the Security Interest in Collateral consisting of United States Patents,
Trademarks and Copyrights) that are necessary to publish notice of and protect
the validity of and to establish a legal, valid and perfected security interest
in favor of the Collateral Agent (for the ratable benefit of the Secured
Parties) in respect of all Collateral (other than Collateral in transit with an
aggregate fair market value not to exceed $20,000,000 at any one time) in which
the Security Interest may be perfected by filing, recording or registration in
the United States (or any political subdivision thereof) and its territories and
possessions, and no further or subsequent filing, refiling, recording,
rerecording, registration or reregistration is necessary in any such
jurisdiction, except as provided under applicable law with respect to the filing
of continuation statements.
(b) Each Grantor represents and warrants that fully executed security
agreements in the form hereof and containing a description of all Collateral
consisting of Intellectual Property with respect to United States Patents and
United States registered Trademarks (and Trademarks for which United States
registration applications are pending) and United States registered Copyrights,
have been delivered to the Collateral Agent for recording by the United States
Patent and Trademark Office and the United States Copyright Office pursuant to
35 U.S.C. ss. 261, 15 U.S.C. ss. 1060 or 17 U.S.C. ss. 205 and the regulations
thereunder, as applicable, and otherwise as may be required pursuant to the laws
of any other necessary jurisdiction, to protect the validity of and to establish
a legal, valid and perfected security interest in favor of the Collateral Agent
(for the ratable benefit of the Secured Parties) in respect of all Collateral
consisting of Patents, Trademarks and Copyrights in which a security interest
may be perfected by filing, recording or registration in the United States (or
any political subdivision thereof) and its territories and possessions, or in
any other necessary jurisdiction, and no further or subsequent filing, refiling,
recording, rerecording, registration or reregistration is necessary (other than
such actions as are necessary to perfect the Security Interest with respect to
any Collateral consisting of Patents, Trademarks and Copyrights (or registration
or application for registration thereof) acquired or developed after the date
hereof).
SECTION 3.03. Validity of Security Interest. The Security Interest
constitutes (a) a legal and valid security interest in all the Collateral
securing the payment and performance of the Obligations, (b) subject to the
filings described in Section 3.02 above, a perfected security interest in all
Collateral in which a security interest may be perfected by filing, recording or
registering a financing statement or analogous document in the United States (or
any political subdivision thereof) and its territories and possessions pursuant
to the Uniform Commercial Code or other applicable law in such jurisdictions and
(c) a security interest that shall be perfected in all Collateral in which a
security interest may be perfected upon the receipt and recording of this
Agreement with the United States Patent and Trademark Office and the United
States Copyright Office, as applicable, within the three month period
(commencing as of the date hereof) pursuant to 35 U.S.C. ss. 261 or 15 U.S.C.
ss. 1060 or the one month period (commencing as of the date hereof) pursuant to
17 U.S.C. ss. 205 and otherwise as may be required pursuant to the laws of any
other necessary jurisdiction. The Security Interest is and shall be prior to any
other Lien on any of the Collateral, other than Liens expressly permitted to be
prior to the Security Interest pursuant to Section 6.02 of the Credit Agreement.
SECTION 3.04. Absence of Other Liens. The Collateral is owned by the
Grantors free and clear of any Lien, except for Liens expressly permitted
pursuant to Section 6.02 of the Credit Agreement. The Grantor has not filed or
consented to the filing of (a) any financing statement or analogous document
under the Uniform Commercial Code or any other applicable laws covering any
Collateral except for financing statements or analogous documents filed for
precautionary reasons relating to operating leases, consignments and other
similar items, in each case (i) in the ordinary course of business, and (ii) as
<PAGE>
8
permitted under the Credit Agreement, (b) any assignment in which any Grantor
assigns any Collateral or any security agreement or similar instrument covering
any Collateral with the United States Patent and Trademark Office or the United
States Copyright Office or (c) any assignment in which any Grantor assigns any
Collateral or any security agreement or similar instrument covering any
Collateral with any foreign governmental, municipal or other office, which
financing statement or analogous document, assignment, security agreement or
similar instrument is still in effect, except, in each case, for Liens expressly
permitted pursuant to Section 6.02 of the Credit Agreement.
ARTICLE IV
Covenants
SECTION 4.01. Change of Name; Location of Collateral; Records; Place of
Business. (a) Each Grantor agrees promptly to notify the Collateral Agent in
writing of any change (i) in its corporate name or in any trade name used to
identify it in the conduct of its business or in the ownership of its
properties, (ii) in the location of its chief executive office, its principal
place of business, any office in which it maintains books or records relating to
Collateral owned by it or any office or facility at which Collateral owned by it
is located (including the establishment of any such new office or facility),
(iii) in its identity or corporate structure or (iv) in its Federal Taxpayer
Identification Number. Each Grantor agrees not to effect or permit any change
referred to in the preceding sentence unless all filings have been made under
the Uniform Commercial Code or otherwise that are required in order for the
Collateral Agent to continue at all times following such change to have a valid,
legal and perfected first priority security interest in all the Collateral. Each
Grantor agrees promptly to notify the Collateral Agent if any material portion
of the Collateral owned or held by such Grantor is damaged or destroyed.
(b) Each Grantor agrees to maintain, at its own cost and expense, such
complete and accurate records with respect to the Collateral owned by it as is
consistent with its current practices and in accordance with such prudent and
standard practices used in industries that are the same as or similar to those
in which such Grantor is engaged, but in any event to include complete
accounting records indicating all payments and proceeds received with respect to
any part of the Collateral, and, at such time or times as the Collateral Agent
may reasonably request, promptly to prepare and deliver to the Collateral Agent
a duly certified schedule or schedules in form and detail satisfactory to the
Collateral Agent showing the identity, amount and location of any and all
Collateral.
SECTION 4.02. Periodic Certification. Each year, at the time of
delivery of annual financial statements with respect to the preceding fiscal
year pursuant to Section 5.04 of the Credit Agreement, Terex shall deliver to
the Collateral Agent a certificate executed by a Financial Officer and the chief
legal officer of Terex (a) setting forth the information required pursuant to
Section 2 of the Perfection Certificate or confirming that there has been no
change in such information since the date of such certificate or the date of the
most recent certificate delivered pursuant to Section 4.02 and (b) certifying
that all Uniform Commercial Code financing statements (including fixture
filings, as applicable) or other appropriate filings, recordings or
registrations, including all refilings, rerecordings and reregistrations,
containing a description of the Collateral have been filed of record in each
governmental, municipal or other appropriate office in each jurisdiction
identified pursuant to clause (a) above to the extent necessary to protect and
perfect the Security Interest for a period of not less than 18 months after the
date of such certificate (except as noted therein with respect to any
continuation statements to be filed within such period). Each certificate
delivered pursuant to this Section 4.02 shall identify in the format of Schedule
II, III, IV or V, as applicable, all Intellectual Property of any Grantor in
<PAGE>
9
existence on the date thereof and not then listed on such Schedules or
previously so identified to the Collateral Agent.
SECTION 4.03. Protection of Security. Each Grantor shall, at its own
cost and expense, take any and all commercially reasonable actions necessary to
defend title to the Collateral against all persons and to defend the Security
Interest of the Collateral Agent in the Collateral and the priority thereof
against any Lien not expressly permitted pursuant to Section 6.02 of the Credit
Agreement.
SECTION 4.04. Further Assurances. Each Grantor agrees, at its own
expense, to execute, acknowledge, deliver and cause to be duly filed all such
further instruments and documents and take all such actions as the Collateral
Agent may from time to time reasonably request to better assure, preserve,
protect and perfect the Security Interest and the rights and remedies created
hereby, including the payment of any fees and taxes required in connection with
the execution and delivery of this Agreement, the granting of the Security
Interest and the filing of any financing statements (including fixture filings)
or other documents in connection herewith or therewith. If any amount payable
under or in connection with any of the Collateral shall be or become evidenced
by any promissory note or other instrument, such note or instrument shall be
immediately pledged and delivered to the Collateral Agent, duly endorsed in a
manner satisfactory to the Collateral Agent.
Without limiting the generality of the foregoing, each Grantor hereby
authorizes the Collateral Agent, with prompt notice thereof to the Grantors, to
supplement this Agreement by supplementing Schedule II, III, IV or V hereto or
adding additional schedules hereto to specifically identify any asset or item
that may constitute Copyrights, Licenses, Patents or Trademarks; provided,
however, that any Grantor shall have the right, exercisable within 10 days after
it has been notified by the Collateral Agent of the specific identification of
such Collateral, to advise the Collateral Agent in writing of any inaccuracy of
the representations and warranties made by such Grantor hereunder with respect
to such Collateral. Each Grantor agrees that it will use its best efforts to
take such action as shall be necessary in order that all representations and
warranties hereunder shall be true and correct in all material respects with
respect to such Collateral within 30 days after the date it has been notified by
the Collateral Agent of the specific identification of such Collateral.
SECTION 4.05. Inspection and Verification. The Collateral Agent and
such persons as the Collateral Agent may reasonably designate shall have the
right at the Grantors' own cost and expense, to inspect, during normal business
hours and on reasonable notice, the Collateral, all records related thereto (and
to make extracts and copies from such records) and the premises upon which any
of the Collateral is located (no more than two such inspections being permitted
annually under this Section 4.05 unless an Event of Default shall have occurred
and be continuing) to discuss the Grantors' affairs with the officers of the
Grantors and their independent accountants and to verify under reasonable
procedures the validity, amount, quality, quantity, value, condition and status
of, or any other matter relating to, the Collateral, including, in the case of
Accounts or Collateral in the possession of any third person, by contacting
Account Debtors or the third person possessing such Collateral for the purpose
of making such a verification. The Collateral Agent shall have the absolute
right to share any information it gains from such inspection or verification
with any Secured Party (it being understood that any such information shall be
deemed to be "Information" subject to the provisions of Section 9.17 of the
Credit Agreement).
SECTION 4.06. Taxes; Encumbrances. At its option at any time after ten
days notice to the applicable Grantor (or, to the extent the Collateral Agent
deems it necessary to act prior the end of such ten day notice period in order
to preserve the Collateral, the applicable Grantor's rights to and use of the
Collateral or the Security Interest granted herein, any shorter notice period)
the Collateral Agent may discharge past due taxes, assessments, charges, fees,
Liens, security interests or other encumbrances at any time levied or placed on
the Collateral and not permitted pursuant to Section 6.02 of the Credit
<PAGE>
10
Agreement, and may pay for the maintenance and preservation of the Collateral to
the extent any Grantor fails to do so as required by the Credit Agreement or
this Agreement, and each Grantor jointly and severally agrees to reimburse the
Collateral Agent on demand for any payment made or any expense incurred by the
Collateral Agent pursuant to the foregoing authorization; provided, however,
that nothing in this Section 4.06 shall be interpreted as excusing any Grantor
from the performance of, or imposing any obligation on the Collateral Agent or
any Secured Party to cure or perform, any covenants or other promises of any
Grantor with respect to taxes, assessments, charges, fees, liens, security
interests or other encumbrances and maintenance as set forth herein or in the
other Loan Documents.
SECTION 4.07. Assignment of Security Interest. If at any time any
Grantor shall take a security interest in any property of an Account Debtor or
any other person to secure payment and performance of an Account, such Grantor
shall promptly assign (to the extent permitted to do so) such security interest
to the Collateral Agent; provided that such Grantor shall make all commercially
reasonable efforts to obtain consent to assign such property as security to the
Collateral Agent pursuant to this Agreement. Such assignment need not be filed
of public record unless necessary to continue the perfected status of the
security interest against creditors of and transferees from the Account Debtor
or other person granting the security interest.
SECTION 4.08. Continuing Obligations of the Grantors. Each Grantor
shall remain liable to observe and perform all the conditions and obligations to
be observed and performed by it under each contract, agreement or instrument
relating to the Collateral, all in accordance with the terms and conditions
thereof, and each Grantor jointly and severally agrees to indemnify and hold
harmless the Collateral Agent and the Secured Parties from and against any and
all liability for such performance.
SECTION 4.09. Use and Disposition of Collateral. None of the Grantors
shall make or permit to be made an assignment, pledge or hypothecation of the
Collateral or shall grant any other Lien in respect of the Collateral, except as
expressly permitted by Section 6.02 of the Credit Agreement. None of the
Grantors shall make or permit to be made any transfer of the Collateral and each
Grantor shall remain at all times in possession of the Collateral owned by it,
except that (a) Inventory and Accounts Receivable may be sold in the ordinary
course of business and (b) unless and until the Collateral Agent shall notify
the Grantors that an Event of Default shall have occurred and be continuing and
that during the continuance thereof the Grantors shall not sell, convey, lease,
assign, transfer or otherwise dispose of any Collateral (which notice may be
given by telephone if promptly confirmed in writing), the Grantors may use and
dispose of the Collateral in any lawful manner not inconsistent with the
provisions of this Agreement, the Credit Agreement or any other Loan Document.
Without limiting the generality of the foregoing, each Grantor agrees that it
shall not permit any Inventory to be in the possession or control of any
warehouseman, bailee, agent or processor at any time unless such warehouseman,
bailee, agent or processor shall have been notified of the Security Interest and
such Grantor shall have taken all commercially reasonable steps necessary to
obtain the agreement from such warehouseman, bailee, agent or processor in
writing to hold the Inventory subject to the Security Interest and the
instructions of the Collateral Agent and to waive and release any Lien held by
it with respect to such Inventory, whether arising by operation of law or
otherwise.
SECTION 4.10. Limitation on Modification of Accounts. None of the
Grantors will, without the Collateral Agent's prior written consent, which
consent shall not be unreasonably withheld, grant any extension of the time of
payment of any of the Accounts Receivable, compromise, compound or settle the
same for less than the full amount thereof, release, wholly or partly, any
person liable for the payment thereof or allow any credit or discount whatsoever
thereon, other than extensions, credits, discounts, compromises or settlements
granted or made in the ordinary course of business and consistent with its
current and past practices and in accordance with such commercially prudent and
<PAGE>
11
standard practices used in industries that are the same as or similar to those
in which such Grantor is engaged.
SECTION 4.11. Insurance. The Grantors, at their own expense, shall
maintain or cause to be maintained insurance covering physical loss or damage to
the Inventory and Equipment in accordance with Section 5.02 of the Credit
Agreement. Each Grantor irrevocably makes, constitutes and appoints the
Collateral Agent (and all officers, employees or agents designated by the
Collateral Agent) as such Grantor's true and lawful agent (and attorney-in-fact)
for the purpose, during the continuance of an Event of Default, of making,
settling and adjusting claims in respect of Collateral under policies of
insurance, endorsing the name of such Grantor on any check, draft, instrument or
other item of payment for the proceeds of such policies of insurance and for
making all determinations and decisions with respect thereto. In the event that
any Grantor at any time or times shall fail to obtain or main tain any of the
policies of insurance required hereby or to pay any premium in whole or part
relating thereto, the Collateral Agent may, without waiving or releasing any
obligation or liability of the Grantors hereunder or any Event of Default, in
its sole discretion, obtain and maintain such policies of insurance and pay such
premium and take any other actions with respect thereto as the Collateral Agent
deems advisable. All sums disbursed by the Collateral Agent in connection with
this Section 4.11, including reasonable attorneys' fees, court costs, expenses
and other charges relating thereto, shall be payable, upon demand, by the
Grantors to the Collateral Agent and shall be additional Obligations secured
hereby.
SECTION 4.12. Legend. Each Grantor shall legend, in form and manner
reasonably satisfactory to the Collateral Agent, its Accounts Receivable and its
books, records and documents evidencing or pertaining thereto with an
appropriate reference to the fact that such Accounts Receivable have been
assigned to the Collateral Agent for the benefit of the Secured Parties and that
the Collateral Agent has a security interest therein. Collateral Agent shall
provide Grantors with its legending requirements in writing.
SECTION 4.13. Covenants Regarding Patent, Trademark and Copyright
Collateral. (a) Each Grantor agrees that it will not, nor will it permit any of
its licensees to, do any act, or omit to do any act, whereby any Patent which is
material to the conduct of such Grantor's business may become invalidated or
dedicated to the public, and agrees that it shall continue to mark any products
covered by a Patent with the relevant patent number as necessary and sufficient
to establish and preserve its maximum rights under applicable patent laws.
(b) Each Grantor (either itself or through its licensees or its
sublicensees) will, for each Trademark material to the conduct of such Grantor's
business, (i) maintain such Trademark in full force free from any claim of
abandonment or invalidity for non-use, (ii) maintain the quality of products and
services offered under such Trademark, (iii) display such Trademark with notice
of Federal or foreign registration to the extent necessary and sufficient to
establish and preserve its maximum rights under applicable law and (iv) not
knowingly use or knowingly permit the use of such Trademark in violation of any
third party rights.
(c) Each Grantor (either itself or through licensees) will, for each
work covered by a material Copyright, continue to publish, reproduce, display,
adopt and distribute the work with appropriate copyright notice as necessary and
sufficient to establish and preserve its maximum rights under applicable
copyright laws.
(d) Each Grantor shall notify the Collateral Agent immediately if it
knows or has reason to know that any Patent, Trademark or Copyright material to
the conduct of its business may become abandoned, lost or dedicated to the
public, or of any adverse determination or development (including the
institution of, or any such determination or development in, any proceeding in
the United States Patent and Trademark Office, United States Copyright Office or
any court or similar office of any country) regarding such Grantor's ownership
of any Patent, Trademark or Copyright, its right to register the same, or to
<PAGE>
12
keep and maintain the same.
(e) In no event shall any Grantor, either itself or through any agent,
employee, licensee or designee, file an application for any Patent, Trademark or
Copyright (or for the registration of any Trademark or Copyright) with the
United States Patent and Trademark Office, United States Copyright Office or any
office or agency in any political subdivision of the United States or in any
other country or any political subdivision thereof, unless it promptly informs
the Collateral Agent, and, upon request of the Collateral Agent, executes and
delivers any and all agreements, instruments, documents and papers as the
Collateral Agent may reasonably request to evidence the Collateral Agent's
security interest in such Patent, Trademark or Copyright, and each Grantor
hereby appoints the Collateral Agent as its attorney-in-fact to execute and file
such writings for the foregoing purposes, all acts of such attorney being hereby
ratified and confirmed; such power, being coupled with an interest, is
irrevocable.
(f) Each Grantor will take all commercially reasonable necessary steps
that are consistent with the practice in any proceeding before the United States
Patent and Trademark Office, United States Copyright Office or any office or
agency in any political subdivision of the United States or in any other country
or any political subdivision thereof, to maintain and pursue each material
application relating to the Patents, Trademarks and/or Copyrights (and to obtain
the relevant grant or registration) and to maintain each issued Patent and each
registration of the Trademarks and Copyrights that is material to the conduct of
any Grantor's business, including timely filings of applications for renewal,
affidavits of use, affidavits of incontestability and payment of maintenance
fees, and, if consistent with good business judgment, to initiate opposition,
interference and cancelation proceedings against third parties.
(g) In the event that any Grantor has reason to believe that any
Collateral consisting of a Patent, Trademark or Copyright material to the
conduct of any Grantor's business has been or is about to be infringed,
misappropriated or diluted by a third party, such Grantor promptly shall notify
the Collateral Agent and shall, if consistent with good business judgment,
promptly sue for infringement, misappropriation or dilution and to recover any
and all damages for such infringement, misappropriation or dilution, and take
such other actions as are appropriate under the circumstances to protect such
Collateral.
(h) Upon and during the continuance of an Event of Default, each
Grantor shall use all commercially reasonable efforts to obtain all requisite
consents or approvals by the licensor of each Copyright License, Patent License
or Trademark License to effect the assignment of all of such Grantor's right,
title and interest thereunder to the Collateral Agent or its designee.
ARTICLE V
Collections
SECTION 5.01. Lockbox System. Terex shall maintain its existing
lock-box arrangements for the benefit of the Secured Parties with UMB Bank of
St. Louis, N.A. ("UMB") pursuant to the Lockbox Operating and Procedural
Agreement, dated as of April 7, 1997, among Terex, certain of its Subsidiaries,
UMB and BankBoston, N.A. (formerly The First National Bank of Boston), or at the
request of CSFB, shall enter into a substantially similar arrangement with CSFB
(any such arrangement the "Lockbox System").
SECTION 5.02. Power of Attorney. Each Grantor irrevocably makes,
constitutes and appoints the Collateral Agent (and all officers, employees or
agents designated by the Collateral Agent) as such Grantor's true and lawful
agent and attorney-in-fact, and in such capacity the Collateral Agent shall have
the right, with power of substitution for each Grantor and in each Grantor's
<PAGE>
13
name or otherwise, for the use and benefit of the Collateral Agent and the
Secured Parties, upon the occurrence and during the continuance of an Event of
Default (a) to receive, endorse, assign and/or deliver any and all notes,
acceptances, checks, drafts, money orders or other evidences of payment relating
to the Collateral or any part thereof; (b) to demand, collect, receive payment
of, give receipt for and give discharges and releases of all or any of the
Collateral; (c) to sign the name of any Grantor on any invoice or bill of lading
relating to any of the Collateral; (d) to send verifications of Accounts
Receivable to any Account Debtor; (e) to commence and prosecute any and all
suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect or otherwise realize on all or any of the Collateral or
to enforce any rights in respect of any Collateral; (f) to settle, compromise,
compound, adjust or defend any actions, suits or proceedings relating to all or
any of the Collateral; (g) to notify, or to require any Grantor to notify,
Account Debtors to make payment directly to the Collateral Agent; and (h) to
use, sell, assign, transfer, pledge, make any agreement with respect to or
otherwise deal with all or any of the Collateral, and to do all other acts and
things necessary to carry out the purposes of this Agreement, as fully and
completely as though the Collateral Agent were the absolute owner of the
Collateral for all purposes; provided, however, that nothing herein contained
shall be construed as requiring or obligating the Collateral Agent or any
Secured Party to make any commitment or to make any inquiry as to the nature or
sufficiency of any payment received by the Collateral Agent or any Secured
Party, or to present or file any claim or notice, or to take any action with
respect to the Collateral or any part thereof or the moneys due or to become due
in respect thereof or any property covered thereby, and no action taken or
omitted to be taken by the Collateral Agent or any Secured Party with respect to
the Collateral or any part thereof shall give rise to any defense, counterclaim
or offset in favor of any Grantor or to any claim or action against the
Collateral Agent or any Secured Party. It is understood and agreed that the
appointment of the Collateral Agent as the agent and attorney-in-fact of the
Grantors for the purposes set forth above is coupled with an interest and is
irrevocable. The provisions of this Section shall in no event relieve any
Grantor of any of its obligations hereunder or under any other Loan Document
with respect to the Collateral or any part thereof or impose any obligation on
the Collateral Agent or any Secured Party to proceed in any particular manner
with respect to the Collateral or any part thereof, or in any way limit the
exercise by the Collateral Agent or any Secured Party of any other or further
right which it may have on the date of this Agreement or hereafter, whether
hereunder, under any other Loan Document, by law or otherwise.
ARTICLE VI
Remedies
SECTION 6.01. Remedies upon Default. Upon the occurrence and during the
continuance of an Event of Default, each Grantor agrees to deliver each item of
Collateral to the Collateral Agent on demand, and it is agreed that the
Collateral Agent shall have the right to take any of or all the following
actions at the same or different times: (a) with respect to any Collateral
consisting of Intellectual Property, on demand, to cause the Security Interest
to become an assignment, transfer and conveyance of any of or all such
Collateral by the applicable Grantors to the Collateral Agent, or to license or
sublicense, whether general, special or otherwise, and whether on an exclusive
or non-exclusive basis, any such Collateral throughout the world on such terms
and conditions and in such manner as the Collateral Agent shall determine (other
than in violation of any then-existing licensing arrangements to the extent that
waivers cannot be obtained), and (b) with or without legal process and with or
without prior notice or demand for performance, to take possession of the
Collateral and without liability for trespass to enter any premises where the
Collateral may be located for the purpose of taking possession of or removing
the Collateral and, generally, to exercise any and all rights afforded to a
secured party under the Uniform Commercial Code or other applicable law. Without
limiting the generality of the foregoing, each Grantor agrees that the
Collateral Agent shall have the right, subject to the mandatory requirements of
applicable law, to sell or otherwise dispose of all or any part of the
<PAGE>
14
Collateral, at public or private sale or at any broker's board or on any
securities exchange, for cash, upon credit or for future delivery as the
Collateral Agent shall deem appropriate. The Collateral Agent shall be
authorized at any such sale (if it deems it advisable to do so) to restrict the
prospective bidders or purchasers to persons who will represent and agree that
they are purchasing the Collateral for their own account for investment and not
with a view to the distribution or sale thereof, and upon consummation of any
such sale the Collateral Agent shall have the right to assign, transfer and
deliver to the purchaser or purchasers thereof the Collateral so sold. Each such
purchaser at any such sale shall hold the property sold absolutely, free from
any claim or right on the part of any Grantor, and each Grantor hereby waives
(to the extent permitted by law) all rights of redemption, stay and appraisal
which such Grantor now has or may at any time in the future have under any rule
of law or statute now existing or hereafter enacted.
The Collateral Agent shall give the Grantors 10 days' written notice
(which each Grantor agrees is reasonable notice within the meaning of Section
9-504(3) of the Uniform Commercial Code as in effect in the State of New York or
its equivalent in other jurisdictions) of the Collateral Agent's intention to
make any sale of Collateral. Such notice, in the case of a public sale, shall
state the time and place for such sale and, in the case of a sale at a broker's
board or on a securities exchange, shall state the board or exchange at which
such sale is to be made and the day on which the Collateral, or portion thereof,
will first be offered for sale at such board or exchange. Any such public sale
shall be held at such time or times within ordinary business hours and at such
place or places as the Collateral Agent may fix and state in the notice (if any)
of such sale. At any such sale, the Collateral, or portion thereof, to be sold
may be sold in one lot as an entirety or in separate parcels, as the Collateral
Agent may (in its sole and absolute discretion) determine. The Collateral Agent
shall not be obligated to make any sale of any Collateral if it shall determine
not to do so, regardless of the fact that notice of sale of such Collateral
shall have been given. The Collateral Agent may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for sale, and such sale may,
without further notice, be made at the time and place to which the same was so
adjourned. In case any sale of all or any part of the Collateral is made on
credit or for future delivery, the Collateral so sold may be retained by the
Collateral Agent until the sale price is paid by the purchaser or purchasers
thereof, but the Collateral Agent shall not incur any liability in case any such
purchaser or purchasers shall fail to take up and pay for the Collateral so sold
and, in case of any such failure, such Collateral may be sold again upon like
notice. At any public (or, to the extent permitted by law, private) sale made
pursuant to this Section, any Secured Party may bid for or purchase, free (to
the extent permitted by law) from any right of redemption, stay, valuation or
appraisal on the part of any Grantor (all said rights being also hereby waived
and released to the extent permitted by law), the Collateral or any part thereof
offered for sale and may make payment on account thereof by using any claim then
due and payable to such Secured Party from any Grantor as a credit against the
purchase price, and such Secured Party may, upon compliance with the terms of
sale, hold, retain and dispose of such property without further accountability
to any Grantor therefor. For purposes hereof, a written agreement to purchase
the Collateral or any portion thereof shall be treated as a sale thereof; the
Collateral Agent shall be free to carry out such sale pursuant to such agreement
and no Grantor shall be entitled to the return of the Collateral or any portion
thereof subject thereto, notwithstanding the fact that after the Collateral
Agent shall have entered into such an agreement all Events of Default shall have
been remedied and the Obligations paid in full. As an alternative to exercising
the power of sale herein conferred upon it, the Collateral Agent may proceed by
a suit or suits at law or in equity to foreclose this Agreement and to sell the
Collateral or any portion thereof pursuant to a judgment or decree of a court or
courts having competent jurisdiction or pursuant to a proceeding by a
court-appointed receiver.
<PAGE>
15
SECTION 6.02. Application of Proceeds. The Collateral Agent shall apply
the proceeds of any collection or sale of the Collateral, as well as any
Collateral consisting of cash, as follows:
FIRST, to the payment of all reasonable costs and expenses
incurred by the Administrative Agent or the Collateral Agent (in its
capacity as such hereunder or under any other Loan Document) in
connection with such collection or sale or otherwise in connection with
this Agreement or any of the Obligations, including all court costs and
the fees and expenses of its agents and legal counsel, the repayment of
all advances made by the Collateral Agent hereunder or under any other
Loan Document on behalf of any Grantor and any other costs or expenses
incurred in connection with the exercise of any right or remedy
hereunder or under any other Loan Document;
SECOND, to the payment in full of the Obligations (the amounts
so applied to be distributed among the Secured Parties pro rata in
accordance with the amounts of the Obligations owed to them on the date
of any such distribution); and
THIRD, to the Grantors, their successors or assigns, or as a
court of competent jurisdiction may otherwise direct.
The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of the Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the Collateral Agent or of the officer making the sale shall be a
sufficient discharge to the purchaser or purchasers of the Collateral so sold
and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Collateral Agent
or such officer or be answerable in any way for the misapplication thereof.
SECTION 6.03. Grant of License to Use Intellectual Property. For the
purpose of enabling the Collateral Agent to exercise rights and remedies under
this Article at such time as the Collateral Agent shall be lawfully entitled to
exercise such rights and remedies, to the extent permitted to do so (and each
Grantor shall make all commercially reasonable efforts to obtain the consent to
license all Intellectual Property referred to below to the Collateral Agent
pursuant to this Section 6.03) each Grantor hereby grants to the Collateral
Agent an irrevocable, non-exclusive license (exercisable without payment of
royalty or other compensation to the Grantors) to use, license or sub-license
any of the Collateral consisting of Intellectual Property now owned or hereafter
acquired by such Grantor, and wherever the same may be located, and including in
such license reasonable access to all media in which any of the licensed items
may be recorded or stored and to all computer software and programs used for the
compilation or printout thereof. The use of such license by the Collateral Agent
shall be exercised, at the option of the Collateral Agent, upon the occurrence
and during the continuation of an Event of Default; provided that any license,
sub-license or other transaction entered into by the Collateral Agent in
accordance herewith shall be binding upon the Grantors notwithstanding any
subsequent cure of an Event of Default.
<PAGE>
16
ARTICLE VII
Miscellaneous
SECTION 7.01. Notices. All communications and notices hereunder shall
(except as otherwise expressly permitted herein) be in writing and given as
provided in Section 9.01 of the Credit Agreement. All communications and notices
hereunder to any Subsidiary Guarantor shall be given to it in care of Terex.
SECTION 7.02. Security Interest Absolute. All rights of the Collateral
Agent hereunder, the Security Interest and all obligations of the Grantors
hereunder shall be absolute and unconditional irrespective of (a) any lack of
validity or enforceability of the Credit Agreement, any other Loan Document, any
agreement with respect to any of the Obligations or any other agreement or
instrument relating to any of the foregoing, (b) any change in the time, manner
or place of payment of, or in any other term of, all or any of the Obligations,
or any other amendment or waiver of or any consent to any departure from the
Credit Agreement, any other Loan Document or any other agreement or instrument,
(c) any exchange, release or nonperfection of any Lien on other collateral, or
any release or amendment or waiver of or consent under or departure from any
guarantee, securing or guaranteeing all or any of the Obligations, or (d) any
other circumstance that might otherwise constitute a defense available to, or a
discharge of, any Grantor in respect of the Obligations or this Agreement.
SECTION 7.03. Survival of Agreement. All covenants, agreements,
representations and warranties made by any Grantor herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement shall be considered to have been relied upon by the
Secured Parties and shall survive the making by the Lenders of the Loans, and
the execution and delivery to the Lenders of any notes evidencing such Loans,
regardless of any investigation made by the Lenders or on their behalf, and
shall continue in full force and effect until this Agreement shall terminate.
SECTION 7.04. Binding Effect; Several Agreement. This Agreement shall
become effective as to any Grantor when a counterpart hereof executed on behalf
of such Grantor shall have been delivered to the Collateral Agent and a
counterpart hereof shall have been executed on behalf of the Collateral Agent,
and thereafter shall be binding upon such Grantor and the Collateral Agent and
their respective successors and assigns, and shall inure to the benefit of such
Grantor, the Collateral Agent and the other Secured Parties and their respective
successors and assigns, except that no Grantor shall have the right to assign or
transfer its rights or obligations hereunder or any interest herein or in the
Collateral (and any such assignment or transfer shall be void) except as
expressly contemplated by this Agreement or the Credit Agreement. This Agreement
shall be construed as a separate agreement with respect to each Grantor and may
be amended, modified, supplemented, waived or released with respect to any
Grantor without the approval of any other Grantor and without affecting the
obligations of any other Grantor hereunder.
SECTION 7.05. Successors and Assigns. Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of any Grantor or the Collateral Agent that are contained in
this Agreement shall bind and inure to the benefit of their respective
successors and assigns.
SECTION 7.06. Collateral Agent's Fees and Expenses; Indemnification.
(a) Each Grantor jointly and severally agrees to pay upon demand to the
Collateral Agent the amount of any and all reasonable expenses, including the
reasonable fees, disbursements and other charges of its counsel and of any
experts or agents, which the Collateral Agent may incur in connection with (i)
the administration of this Agreement, (ii) the custody or preservation of, or
the sale of, collection from or other realization upon any of the Collateral,
(iii) the exercise, enforcement or protection of any of the rights of the
<PAGE>
17
Collateral Agent hereunder or (iv) the failure of any Grantor to perform or
observe any of the provisions hereof.
(b) Without limitation of its indemnification obligations under the
other Loan Documents, each Grantor jointly and severally agrees to indemnify the
Collateral Agent and the Indemnitees (as defined in Section 9.05 of the Credit
Agreement) against, and hold each Indemnitee harmless from, any and all losses,
claims, damages, liabilities and related expenses, including reasonable counsel
fees, other charges and disbursements, incurred by or asserted against any
Indemnitee arising out of, in any way connected with, or as a result of (i) the
execution or delivery of this Agreement or any other Loan Document or any
agreement or instrument contemplated hereby or thereby, the performance by the
parties hereto of their respective obligations thereunder or the consummation of
the Transactions and the other transactions contemplated thereby or (ii) any
claim, litigation, investigation or proceeding relating to any of the foregoing,
whether or not any Indemnitee is a party thereto, provided that such indemnity
shall not, as to any Indemnitee, be available to the extent that such losses,
claims, damages, liabilities or related expenses are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from
the gross negligence or wilful misconduct of such Indemnitee.
(c) Any amounts payable as provided hereunder shall be additional
Obligations secured hereby and by the other Security Documents. The provisions
of this Section 7.06 shall remain operative and in full force and effect
regardless of the termination of this Agreement or any other Loan Document, the
consummation of the transactions contemplated hereby, the repayment of any of
the Obligations, the invalidity or unenforceability of any term or provision of
this Agreement or any other Loan Document, or any investigation made by or on
behalf of the Collateral Agent or any other Secured Party. All amounts due under
this Section 7.06 shall be payable on written demand therefor and shall bear
interest at the rate specified in Section 2.07 of the Credit Agreement.
SECTION 7.07. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 7.08. Waivers; Amendment. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and of the Secured Parties under the other Loan Documents are cumulative and are
not exclusive of any rights or remedies that they would otherwise have. No
waiver of any provisions of this Agreement or any other Loan Document or consent
to any departure by any Grantor therefrom shall in any event be effective unless
the same shall be permitted by paragraph (b) below, and then such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given. No notice to or demand on any Grantor in any case shall entitle
such Grantor or any other Grantor to any other or further notice or demand in
similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Collateral Agent and the Grantor or Grantors with respect to
which such waiver, amendment or modification is to apply, subject to any consent
required in accordance with Section 9.08 of the Credit Agreement.
SECTION 7.09. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
<PAGE>
18
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.09.
SECTION 7.10. Severability. In the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 7.11 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original but all of which
when taken together shall constitute but one contract (subject to Section 7.04),
and shall become effective as provided in Section 7.04. Delivery of an executed
signature page to this Agreement by facsimile transmission shall be effective as
delivery of a manually executed counterpart hereof.
SECTION 7.12. Headings. Article and Section headings used herein are
for the purpose of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.
SECTION 7.13. Jurisdiction; Consent to Service of Process. (a) Each
Grantor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the
Collateral Agent or any other Secured Party may otherwise have to bring any
action or proceeding relating to this Agreement or the other Loan Documents
against any Grantor or its properties in the courts of any jurisdiction.
(b) Each Grantor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Loan Documents in any
New York State or Federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 7.01. Nothing in this
Agreement will affected the right of any party to this Agreement to serve
process in any other manner permitted by law.
<PAGE>
19
SECTION 7.14. Termination. This Agreement and the Security Interest
shall terminate when all the Obligations have been paid in full, the Lenders
have no further commitment to lend under the Credit Agreement, the L/C Exposure
has been reduced to zero and the Issuing Banks have no further commitment to
issue Letters of Credit under the Credit Agreement, at which time the Collateral
Agent shall promptly execute and deliver to the Grantors, at the Grantors'
expense, all Uniform Commercial Code termination statements and other release
documents which the Grantors shall reasonably request to evidence such
termination. Any execution and delivery of termination statements or documents
pursuant to this Section 7.14 shall be without recourse to or warranty by the
Collateral Agent. A Subsidiary Guarantor shall automatically be released from
its obligations hereunder and the Security Interest in the Collateral of such
Subsidiary Guarantor shall be automatically released in the event that all the
capital stock of such Subsidiary Guarantor shall be sold, transferred or
otherwise disposed of to a person that is not an Affiliate of Terex in
accordance with the terms of the Credit Agreement; provided that if consent to
such sale, transfer or other disposition is required by the Credit Agreement,
such consent is obtained pursuant to Section 9.08(b) of the Credit Agreement and
the terms of such consent did not provide otherwise.
SECTION 7.15. Additional Grantors. Pursuant to Section 5.11 of the
Credit Agreement, each Domestic Subsidiary that was not in existence or was not
a Domestic Subsidiary on the date of the Credit Agreement is required to enter
into this Agreement as a Subsidiary Guarantor upon becoming a Domestic
Subsidiary. Upon execution and delivery after the date hereof by the Collateral
Agent and such a Subsidiary of an instrument in the form of Annex 2, such
Subsidiary shall become a Subsidiary Guarantor hereunder with the same force and
effect as if originally named as a Subsidiary Guarantor herein. The execution
and delivery of any instrument adding an additional Subsidiary Guarantor as a
party to this Agreement shall not require the consent of any other Grantor
hereunder. The rights and obligations of each Grantor hereunder shall remain in
full force and effect notwithstanding the addition of any new Subsidiary
Guarantor as a party to this Agreement.
SECTION 7.16. Credit Agreement. Notwithstanding anything else contained
in this Agreement, each Grantor may do any act or omit to do any act or cause or
permit any condition or circumstance to exist, in each case to the extent
expressly permitted by the Credit Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
TEREX CORPORATION,
by
--------------------------
Name:
Title:
EACH OF THE SUBSIDIARY GUARANTORS
LISTED ON SCHEDULE I HERETO,
by
--------------------------
Name:
Title: Authorized Officer
<PAGE>
20
CREDIT SUISSE FIRST BOSTON, as Collateral
Agent,
by
---------------------------
Name:
Title: Authorized Officer
by
---------------------------
Name:
Title: Authorized Officer
<PAGE>
21
SCHEDULE I
SUBSIDIARY GUARANTORS
<PAGE>
22
SCHEDULE II
COPYRIGHTS
<PAGE>
23
SCHEDULE III
LICENSES
<PAGE>
24
SCHEDULE IV
PATENTS
<PAGE>
25
SCHEDULE V
TRADEMARKS
<PAGE>
26
Annex 1 to the
Security Agreement
LOCKBOX AND DEPOSITORY AGREEMENT
TO FOLLOW
<PAGE>
1
Annex 2 to the
Security Agreement
SUPPLEMENT NO. __ dated as of ___ , to the Security
Agreement dated as of March 6, 1998, (as amended, supplemented
or otherwise modified from time to time, the (the "Security
Agreement") among TEREX CORPORATION, a Delaware corporation
("Terex"), each subsidiary of Terex listed on Schedule I
thereto (each such subsidiary individually a "Subsidiary
Guarantor" and collectively, the "Subsidiary Guarantors"; the
Subsidiary Guarantors and Terex are referred to collectively
herein as the "Grantors") and CREDIT SUISSE FIRST BOSTON, a
bank organized under the laws of Switzerland, acting through
its New York branch ("CSFB"), as collateral agent (in such
capacity, the "Collateral Agent") for the Secured Parties (as
defined herein).
A. Reference is made to (a) the Credit Agreement dated as of March 6,
1998 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among Terex, Terex Equipment Limited, a company organized
under the laws of Scotland, P.P.M. S.A., a company organized under the laws of
the Republic of France, Unit Rig (Australia) Pty, Ltd., a company organized
under the laws of New South Wales, and P.P.M. Sp.A., a company organized under
the laws of the Republic of Italy, the Lenders (as defined in Article I
thereto), the Issuing Banks (as defined in Article I thereto) and CSFB, as
administrative agent and as collateral agent for the Lenders, (b) the Guarantee
Agreement dated as of March 6, 1998 (as amended, supplemented or otherwise
modified from time to time, the "Subsidiary Guarantee Agreement") among the
Subsidiary Guarantors and the Collateral Agent and (c) the Guarantee Agreement
dated as of March 6, 1998 (as amended, supplemented or otherwise modified from
time to time, the "Terex Guarantee Agreement") between Terex and the Collateral
Agent .
B. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Security Agreement.
C. The Grantors have entered into the Security Agreement in order to
induce the Lenders to make Loans and the Issuing Banks to issue Letters of
Credit. Section 7.15 of Security Agreement provides that additional Subsidiaries
may become Grantors under the Security Agreement by execution and delivery of an
instrument in the form of this Supplement. The undersigned Subsidiary (the "New
Grantor") is executing this Supplement in accordance with the requirements of
the Credit Agreement to become a Grantor under the Security Agreement in order
to induce the Lenders to make additional Loans and the Issuing Bank to issue
additional Letters of Credit and as consideration for Loans previously made and
Letters of Credit previously issued.
Accordingly, the Collateral Agent and the New Grantor agree as follows:
SECTION 1. In accordance with Section 7.15 of the Security Agreement,
the New Grantor by its signature below becomes a Grantor under the Security
Agreement with the same force and effect as if originally named therein as a
Grantor and the New Grantor hereby (a) agrees to all the terms and provisions of
the Security Agreement applicable to it as a Grantor thereunder and (b)
represents and warrants that the representations and warranties made by it as a
Grantor thereunder are true and correct on and as of the date hereof. In
furtherance of the foregoing, the New Grantor, as security for the payment and
performance in full of the Obligations, does hereby create and grant to the
Collateral Agent, its successors and assigns, for the benefit of the Secured
Parties, their successors and assigns, a security interest in and lien on all of
the New Grantor's right, title and interest in and to the Collateral of the New
Grantor. Each reference to a "Grantor" in the Security Agreement shall be deemed
to include the New Grantor. The Security Agreement is hereby incorporated herein
by reference.
SECTION 2. The New Grantor represents and warrants to the Collateral
Agent and the other Secured Parties that this Supplement has been duly
authorized, executed and delivered by it and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium or other laws
<PAGE>
2
affecting creditors' rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law.
SECTION 3. This Supplement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Supplement shall become effective when the Collateral
Agent shall have received counterparts of this Supplement that, when taken
together, bear the signatures of the New Grantor and the Collateral Agent.
Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Supplement.
SECTION 4. The New Grantor hereby represents and warrants that (a) set
forth on Schedule I attached hereto is a true and correct schedule of the
location of any and all Collateral of the New Grantor and (b) set forth under
its signature hereto, is the true and correct location of the chief executive
office of the New Grantor.
SECTION 5. Except as expressly supplemented hereby, the Security
Agreement shall remain in full force and effect.
SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 7. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and in the Security Agreement shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The parties hereto shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 8. All communications and notices hereunder shall be in writing
and given as provided in Section 7.01 of the Security Agreement. All
communications and notices hereunder to the New Grantor shall be given to it at
the address set forth under its signature below.
SECTION 9. The Collateral Agent shall be reimbursed, in accordance with
Section 9.05(a) of the Credit Agreement, for its reasonable out-of-pocket
expenses in connection with this Supplement, including the reasonable fees,
other charges and disbursements of counsel for the Collateral Agent.
IN WITNESS WHEREOF, the New Grantor and the Collateral Agent have duly
executed this Supplement to the Security Agreement as of the day and year first
above written.
[Name of New Grantor],
by
--------------------------------
Name:
Title:
Address:
<PAGE>
3
CREDIT SUISSE FIRST BOSTON, as
Collateral Agent,
by
--------------------------------
Name:
Title:
by
--------------------------------
Name:
Title:
<PAGE>
4
SCHEDULE I
to Supplement No.___ to the
Security Agreement
LOCATION OF COLLATERAL
Description Location
<PAGE>
1
PLEDGE AGREEMENT dated as of March 6, 1998,
among TEREX CORPORATION, a Delaware corporation
("Terex"), each subsidiary of Terex listed on
Schedule I hereto (each such subsidiary individually
a "Subsidiary Pledgor" and collectively, the
"Subsidiary Pledgors"; Terex and the Subsidiary
Pledgors are referred to collectively herein as the
"Pledgors") and CREDIT SUISSE FIRST BOSTON, a bank
organized under the laws of Switzerland, acting
through its New York branch ("CSFB"), as collateral
agent (in such capacity, the "Collateral Agent") for
the Secured Parties (as defined in the Credit
Agreement referred to below).
Reference is made to (a) the Credit Agreement dated as of March 6, 1998
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among Terex, Terex Equipment Limited, a company organized under the
laws of Scotland, P.P.M. S.A., a company organized under the laws of the
Republic of France, Unit Rig (Australia) Pty. Ltd., a company organized under
the laws of New South Wales, and P.P.M. Sp.A., a company organized under the
laws of the Republic of Italy, the Lenders (as defined in Article I thereto),
the Issuing Banks (as defined in Article I thereto) and CSFB, as administrative
agent and as collateral agent for the Lenders, (b) the Guarantee Agreement dated
as of March 6, 1998 (as amended, supplemented or otherwise modified from time to
time, the "Subsidiary Guarantee Agreement") among the Subsidiary Pledgors and
the Collateral Agent and (c) the Guarantee Agreement dated as of March 6, 1998
(as amended, supplemented or otherwise modified from time to time, the "Terex
Guarantee Agreement") between Terex and the Collateral Agent. Capitalized terms
used herein and not defined herein shall have meanings assigned to such terms in
the Credit Agreement.
The Lenders have agreed to make Loans to the Borrowers and the Issuing
Banks have agreed to issue Letters of Credit for the account of the Borrowers,
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement. The Subsidiary Pledgors have agreed to guarantee, among other
things, all the obligations of the Borrower under the Credit Agreement pursuant
to the Subsidiary Guarantee Agreement. Terex has agreed to guarantee, among
other things, all the obligations of the Subsidiary Borrowers under the Credit
Agreement pursuant to the Terex Guarantee Agreement. The obligations of the
Lenders to make Loans and of the Issuing Bank to issue Letters of Credit are
conditioned upon, among other things, the execution and delivery by the Pledgors
of a Pledge Agreement in the form hereof to secure (a) the due and punctual
payment by the Borrowers of (i) the principal of and premium, if any, and
interest (including interest accruing during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding) on the Loans, when and as due, whether
at maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, (ii) each payment required to be made by any Borrower under the
Credit Agreement in respect of any Letter of Credit, when and as due, including
payments in respect of reimbursement of disbursements, interest thereon and
obligations to provide cash collateral and (iii) all other monetary obligations,
including fees, costs, expenses and indemnities, whether primary, secondary,
direct, contingent, fixed or otherwise (including monetary obligations incurred
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding), of
the Borrowers to the Secured Parties under the Credit Agreement and the other
Loan Documents, (b) the due and punctual performance of all covenants,
agreements, obligations and liabilities of the Borrowers under or pursuant to
the Credit Agreement and the other Loan Documents, (c) the due and punctual
payment and performance of all the covenants, agreements, obligations and
liabilities of each Subsidiary Pledgor under or pursuant to the Subsidiary
Guarantee Agreement or the other Loan Documents and (d) the due and punctual
payment and performance of all obligations of the Borrowers under each Hedging
Agreement entered into with any counterparty that was a Lender (or an Affiliate
thereof) at the time such Hedging Agreement was entered into (all the monetary
and other obligations referred to in the preceding clauses (a) through (d) being
referred to collectively as the "Obligations"); provided, however, that the
total principal amount
<PAGE>
2
of indebtedness or obligations secured by the Pledged Stock consisting of shares
of capital stock of a corporation incorporated in New South Wales shall not
exceed $4,000,000.
Accordingly, the Pledgors and the Collateral Agent, on behalf of itself
and each Secured Party (and each of their respective successors or assigns),
hereby agree as follows:
SECTION 1.1 Pledge. As security for the payment and performance, as the
case may be, in full of the Obligations, each Pledgor hereby transfers, grants,
bargains, sells, conveys, hypothe cates, pledges, sets over and delivers unto
the Collateral Agent, its successors and assigns, and hereby grants to the
Collateral Agent, its successors and assigns, for the ratable benefit of the
Secured Parties, a security interest in all of the Pledgor's right, title and
interest in, to and under (a) the shares of capital stock owned by it and listed
on Schedule II hereto and any shares of capital stock of or any Subsidiary
obtained in the future by the Pledgor and the certificates representing all such
shares (the "Pledged Stock"); provided that the Pledged Stock shall not include
(i), more than 65% of the issued and outstanding shares of stock of any Foreign
Subsidiary, (ii) to the extent that applicable law requires that a Subsidiary of
the Pledgor issue directors' qualifying shares, such qualifying shares or (iii)
the Irish Shares or the Related Rights (as both terms are defined hereinafter);
(b)(i) the debt securities listed opposite the name of the Pledgor on Schedule
II hereto, (ii) any debt securities in the future issued to the Pledgor and
(iii) the promissory notes and any other instruments evidencing such debt
securities (the "Pledged Debt Securities"); (c) all other property that may be
delivered to and held by the Collateral Agent pursuant to the terms hereof; (d)
subject to Section 5, all payments of principal or interest, dividends, cash,
instruments and other property from time to time received, receivable or
otherwise distributed, in respect of, in exchange for or upon the conversion of
the securities referred to in clauses (a) and (b) above; (e) subject to Section
5, all rights and privileges of the Pledgor with respect to the securities and
other property referred to in clauses (a), (b), (c) and (d) above; and (f) all
proceeds of any of the foregoing (the items referred to in clauses (a) through
(f) above and the Irish Shares and the Related Rights referred to in Section 1.2
below, being collectively referred to as the "Collateral"). Upon delivery to the
Collateral Agent, (a) any stock certificates, notes or other securities now or
hereafter included in the Collateral (the "Pledged Securities") shall be
accompanied by stock powers duly executed in blank or other instruments of
transfer satisfactory to the Collateral Agent and by such other instruments and
documents as the Collateral Agent may reasonably request and (b) all other
property comprising part of the Collateral shall be accompanied by proper
instruments of assignment duly executed by the applicable Pledgor and such other
instruments or documents as the Collateral Agent may reasonably request. Each
delivery of Pledged Securities shall be accompanied by a schedule describing the
securities theretofore and then being pledged hereunder, which schedule shall be
attached hereto as Schedule II and made a part hereof. Each schedule so
delivered shall supersede any prior schedules so delivered.
SECTION 1.2 Mortgage over Irish Shares. Terex as legal and beneficial
owner of the shares in Terex Aerials Limited ("TAL") referred to in Schedule II
hereto (the "Irish Shares") hereby mortgages and charges all its interests both
legal and beneficial in the Irish Shares, including any dividends or interest
paid or payable in relation to the Irish Shares and any rights, moneys or
property accruing or offered at any time in relation to the Irish Shares by way
of redemption, substitution, exchange, bonus or preference, under option rights
or otherwise (the "Related Rights") to the collateral Agent, its successors and
assigns, by way of a first mortgage or charge as a continuing security for the
payment and performance, as the case may be, in full of the Obligations.
TO HAVE AND TO HOLD the Collateral, together with all right, title,
interest, powers, privileges and preferences pertaining or incidental thereto,
unto the Collateral Agent, its successors and assigns, for the ratable benefit
of the Secured Parties, forever; subject, however, to the terms, covenants and
conditions hereinafter set forth.
SECTION 2. Delivery of the Collateral. (a) Each Pledgor agrees promptly
to deliver or cause to be delivered to the Collateral Agent any and all Pledged
Securities, and any and all
<PAGE>
3
certificates or other instruments or documents representing the Collateral
(including in the case of the mortgage over the Irish Shares referred to above a
stock transfer form executed in blank by Terex in a form satisfactory to the
Collateral Agent).
(b) Each Pledgor will cause any Indebtedness (except for any
intercompany Indebtedness not evidenced by notes and subordinated by its terms
to the payment of the Obligations) for borrowed money owed to the Pledgor by any
person to be evidenced by a duly executed promissory note that is pledged and
delivered to the Collateral Agent pursuant to the terms thereof.
(c) Notwithstanding anything to the contrary contained in this Section
2 or Section 1 hereof, if any Pledged Securities (whether now owned or hereafter
acquired) are uncertificated securities, the respective Pledgor shall promptly
notify the Collateral Agent thereof, and shall promptly take all actions
required to perfect the security interest of the Collateral Agent under
applicable law (including, in any event, under Section 9-115 of the New York
UCC, if applicable). Each Pledgor further agrees to take such actions as the
Collateral Agent deems reasonably necessary or desirable to effect the foregoing
and to permit the Collateral Agent to exercise any of its rights and remedies
hereunder, and agrees to provide an opinion of counsel reasonably satisfactory
to the Collateral Agent (which may be counsel employed by Terex) with respect to
the creation and perfection of any such pledge of uncertificated Pledged
Securities promptly upon request of the Collateral Agent.
SECTION 3. Representations, Warranties and Covenants. Each Pledgor
hereby represents, warrants and covenants, as to itself and the Collateral
pledged by it hereunder, to and with the Collateral Agent that:
(a) the Pledged Stock and the Irish Shares represent that
percentage as set forth on Schedule II of the issued and outstanding
shares of each class of the capital stock of the issuer with respect
thereto;
(b) except for the security interest granted hereunder, the
Pledgor (i) is and will at all times continue to be the direct owner,
beneficially and of record, of the Pledged Securities indicated on
Schedule II, (ii) holds the same free and clear of all Liens, (iii)
will make no assignment, pledge, hypothecation or transfer of, or
create or permit to exist any security interest in or other Lien on,
the Collateral, other than pursuant hereto or to the Credit Agreement,
and (iv) subject to Section 5 and Section 2(c), will cause any and all
Collateral, whether for value paid by the Pledgor or otherwise, to be
forthwith deposited with the Collateral Agent and pledged or assigned
hereunder;
(c) the Pledgor (i) has the corporate power and authority to
pledge the Collateral in the manner hereby done or contemplated and
(ii) will defend its title or interest thereto or therein against any
and all Liens (other than the Lien created by this Agreement), however
arising, of all persons whomsoever;
(d) no consent of any other person (including stockholders or
creditors of any Pledgor) and no consent or approval of any
Governmental Authority or any securities exchange was or is necessary
to the validity of the pledge effected hereby;
(e) by virtue of the execution and delivery by the Pledgors of
this Agreement, when the Pledged Securities, certificates or other
documents representing or evidencing the Collateral (together with an
executed stock transfer form in the case of the Irish Shares) are
delivered to the Collateral Agent in accordance with this Agreement
(or, in the case of uncertificated stock, the actions required by
Section 2(c) are taken), the Collateral Agent will obtain a valid and
perfected first lien upon and security interest in such Pledged
Securities as security for the payment and performance of the
Obligations;
<PAGE>
4
(f) the pledge effected hereby is effective to vest in the
Collateral Agent, on behalf of the Secured Parties, the rights of the
Collateral Agent in the Collateral as set forth herein;
(g) all of the Pledged Stock and the Irish Shares have been
duly authorized and validly issued and are fully paid and
nonassessable;
(h) all information set forth herein relating to the Pledged
Stock and the Irish Shares is accurate and complete in all material
respects as of the date hereof; and
(i) the pledge of the Pledged Stock pursuant to this Agreement
does not violate Regulation G, T, U or X of the Federal Reserve Board
or any successor thereto as of the date hereof;
and Terex covenants, as the sole shareholder of TAL, that it will not vote to
amend the provisions concerning the transfer of shares (and, in particular,
article 8(b)) contained in the articles of association of TAL (as amended by a
written resolution of the single member of TAL dated 5th March, 1998) without
the prior written consent of the Collateral Agent.
SECTION 4. Registration in Nominee Name; Denominations. Upon the
occurrence and during the continuance of an Event of Default, the Collateral
Agent, on behalf of the Secured Parties, shall have the right (in its sole and
absolute discretion) to hold the Pledged Securities in its own name as pledgee,
the name of its nominee (as pledgee or as sub-agent) or the name of the
Pledgors, endorsed or assigned in blank or in favor of the Collateral Agent.
Each Pledgor will promptly give to the Collateral Agent copies of any notices or
other communications received by it with respect to Pledged Securities
registered in the name of such Pledgor. Upon the occurrence and during the
continuance of an Event of Default, the Collateral Agent shall have the right to
exchange the certificates representing Pledged Securities for certificates of
smaller or larger denominations for any purpose consistent with this Agreement.
SECTION 5. Voting Rights; Dividends and Interest, etc. (a) Unless and
until an Event of Default shall have occurred and be continuing:
(i) Each Pledgor shall be entitled to exercise any and all
voting and/or other consensual rights and powers inuring to an owner of
Pledged Securities or any part thereof for any purpose consistent with
the terms of this Agreement, the Credit Agreement and the other Loan
Documents; provided, however, that such Pledgor will not be entitled to
exercise any such right if the result thereof could reasonably be
expected to materially and adversely affect the rights inuring to a
holder of the Pledged Securities or the rights and remedies of any of
the Secured Parties under this Agreement or the Credit Agreement or any
other Loan Document or the ability of the Secured Parties to exercise
the same.
(ii) The Collateral Agent shall execute and deliver to each
Pledgor, or cause to be executed and delivered to each Pledgor, all
such proxies, powers of attorney and other instruments as such Pledgor
may reasonably request for the purpose of enabling such Pledgor to
exercise the voting and/or consensual rights and powers it is entitled
to exercise pursuant to subparagraph (i) above and to receive the cash
dividends it is entitled to receive pursuant to subparagraph (iii)
below.
(iii) Each Pledgor shall be entitled to receive and retain any
and all cash dividends, interest and principal paid on the Pledged
Securities to the extent and only to the extent that such cash
dividends, interest and principal are permitted by, and otherwise paid
in accordance with, the terms and conditions of the Credit Agreement,
the other Loan Documents and applicable laws. All noncash dividends,
interest and principal, and all dividends, interest and principal paid
or payable in cash or otherwise in connection with a partial or total
liquidation or dissolution, return of capital, capital surplus or
paid-in surplus, and all other distributions (other than distributions
<PAGE>
5
referred to in the preceding sentence) made on or in respect of the
Pledged Securities, whether paid or payable in cash or otherwise,
whether resulting from a subdivision, combination or reclassification
of the outstanding capital stock of the issuer of any Pledged
Securities or received in exchange for Pledged Securities or any part
thereof, or in redemption thereof, or as a result of any merger,
consolidation, acquisition or other exchange of assets to which such
issuer may be a party or otherwise, shall be and become part of the
Collateral, and, if received by any Pledgor, shall not be commingled by
such Pledgor with any of its other funds or property but shall be held
separate and apart therefrom, shall be held in trust for the benefit of
the Collateral Agent and shall be forthwith delivered to the Collateral
Agent in the same form as so received (with any necessary endorsement).
(b) Upon the occurrence and during the continuance of an Event of
Default, all rights of any Pledgor to dividends, interest or principal that such
Pledgor is authorized to receive pursuant to paragraph (a)(iii) above shall
cease, and all such rights shall thereupon become vested in the Collateral
Agent, which shall have the sole and exclusive right and authority to receive
and retain such dividends, interest or principal. All dividends, interest or
principal received by the Pledgor contrary to the provisions of this Section 5
shall be held in trust for the benefit of the Collateral Agent, shall be
segregated from other property or funds of such Pledgor and shall be forthwith
delivered to the Collateral Agent upon demand in the same form as so received
(with any necessary endorsement). Any and all money and other property paid over
to or received by the Collateral Agent pursuant to the provisions of this
paragraph (b) shall be retained by the Collateral Agent in an account to be
established by the Collateral Agent upon receipt of such money or other property
and shall be applied in accordance with the provisions of Section 7. After all
Events of Default have been cured or waived, the Collateral Agent shall, within
five Business Days after all such Events of Default have been cured or waived,
repay to each Pledgor all cash dividends, interest or principal (without
interest), that such Pledgor would otherwise be permitted to retain pursuant to
the terms of paragraph (a)(iii) above and which remain in such account.
(c) Upon the occurrence and during the continuance of an Event of
Default, all rights of any Pledgor to exercise the voting and consensual rights
and powers it is entitled to exercise pursuant to paragraph (a)(i) of this
Section 5, and the obligations of the Collateral Agent under paragraph (a)(ii)
of this Section 5, shall cease, and all such rights shall thereupon become
vested in the Collateral Agent, which shall have the sole and exclusive right
and authority to exercise such voting and consensual rights and powers, provided
that, unless otherwise directed by the Required Lenders, the Collateral Agent
shall have the right from time to time following and during the continuance of
an Event of Default to permit the Pledgors to exercise such rights. After all
Events of Default have been cured or waived, such Pledgor will have the right to
exercise the voting and consensual rights and powers that it would otherwise be
entitled to exercise pursuant to the terms of paragraph (a)(i) above.
SECTION 6. Remedies upon Default. Upon the occurrence and during the
continuance of an Event of Default, subject to applicable regulatory and legal
requirements, the Collateral Agent may sell the Collateral, or any part thereof,
at public or private sale or at any broker's board or on any securities
exchange, for cash, upon credit or for future delivery as the Collateral Agent
shall deem appropriate. The Collateral Agent shall be authorized at any such
sale (if it deems it advisable to do so) to restrict the prospective bidders or
purchasers to persons who will represent and agree that they are purchasing the
Collateral for their own account for investment and not with a view to the
distribution or sale thereof, and upon consummation of any such sale the
Collateral Agent shall have the right to assign, transfer and deliver to the
purchaser or purchasers thereof the Collateral so sold. Each such purchaser at
any such sale shall hold the property sold absolutely free from any claim or
right on the part of any Pledgor, and, to the extent permitted by applicable
law, the Pledgors hereby waive all rights of redemption, stay, valuation and
appraisal any Pledgor now has or may at any time in the future have under any
rule of law or statute now existing or hereafter enacted.
<PAGE>
6
The Collateral Agent shall give a Pledgor 10 days' prior written notice
(which each Pledgor agrees is reasonable notice within the meaning of Section
9-504(3) of the Uniform Commercial Code as in effect in the State of New York or
its equivalent in other jurisdictions) of the Collateral Agent's intention to
make any sale of such Pledgor's Collateral. Such notice, in the case of a public
sale, shall state the time and place for such sale and, in the case of a sale at
a broker's board or on a securities exchange, shall state the board or exchange
at which such sale is to be made and the day on which the Collateral, or portion
thereof, will first be offered for sale at such board or exchange. Any such
public sale shall be held at such time or times within ordinary business hours
and at such place or places as the Collateral Agent may fix and state in the
notice of such sale. At any such sale, the Collateral, or portion thereof, to be
sold may be sold in one lot as an entirety or in separate parcels, as the
Collateral Agent may (in its sole and absolute discretion) determine. The
Collateral Agent shall not be obligated to make any sale of any Collateral if it
shall determine not to do so, regardless of the fact that notice of sale of such
Collateral shall have been given. The Collateral Agent may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned. In case any sale of all or any part of the
Collateral is made on credit or for future delivery, the Collateral so sold may
be retained by the Collateral Agent until the sale price is paid in full by the
purchaser or purchasers thereof, but the Collateral Agent shall not incur any
liability in case any such purchaser or purchasers shall fail to take up and pay
for the Collateral so sold and, in case of any such failure, such Collateral may
be sold again upon like notice. At any public (or, to the extent permitted by
applicable law, private) sale made pursuant to this Section 6, any Secured Party
may bid for or purchase, free from any right of redemption, stay or appraisal on
the part of any Pledgor (all said rights being also hereby waived and released),
the Collateral or any part thereof offered for sale and may make payment on
account thereof by using any claim then due and payable to it from such Pledgor
as a credit against the purchase price, and it may, upon compliance with the
terms of sale, hold, retain and dispose of such property without further
accountability to such Pledgor therefor. For purposes hereof, (a) a written
agreement to purchase the Collateral or any portion thereof shall be treated as
a sale thereof, (b) the Collateral Agent shall be free to carry out such sale
pursuant to such agreement and (c) such Pledgor shall not be entitled to the
return of the Collateral or any portion thereof subject thereto, notwithstanding
the fact that after the Collateral Agent shall have entered into such an
agreement all Events of Default shall have been remedied and the Obligations
paid in full. As an alternative to exercising the power of sale herein conferred
upon it, the Collateral Agent may proceed by a suit or suits at law or in equity
to foreclose upon the Collateral and to sell the Collateral or any portion
thereof pursuant to a judgment or decree of a court or courts having competent
jurisdiction or pursuant to a proceeding by a court-appointed receiver. Any sale
pursuant to the provisions of this Section 6 shall be deemed to conform to the
commercially reasonable standards as provided in Section 9-504(3) of the Uniform
Commercial Code as in effect in the State of New York or its equivalent in other
jurisdictions.
SECTION 7. Application of Proceeds of Sale. The proceeds of any sale of
Collateral pursuant to Section 6, as well as any Collateral consisting of cash,
shall be applied by the Collateral Agent as follows:
FIRST, to the payment of all reasonable costs and expenses
incurred by the Collateral Agent in connection with such sale or
otherwise in connection with this Agreement, any other Loan Document or
any of the Obligations, including all court costs and the reasonable
fees and expenses of its agents and legal counsel, the repayment of all
advances made by the Collateral Agent hereunder or under any other Loan
Document on behalf of any Pledgor and any other costs or expenses
incurred in connection with the exercise of any right or remedy
hereunder or under any other Loan Document;
SECOND, to the payment in full of the Obligations (the amounts
so applied to be distributed among the Secured Parties pro rata in
accordance with the amounts of the Obligations owed to them on the date
of any such distribution); and
<PAGE>
7
THIRD, to the Pledgors, their successors or assigns, or as a
court of competent jurisdiction may otherwise direct.
The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of the Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the purchase money by the Collateral Agent or of the officer
making the sale shall be a sufficient discharge to the purchaser or purchasers
of the Collateral so sold and such purchaser or purchasers shall not be
obligated to see to the application of any part of the purchase money paid over
to the Collateral Agent or such officer or be answerable in any way for the
misapplication thereof.
SECTION 8. Reimbursement of Collateral Agent. (a) Each Pledgor jointly
and severally agrees to pay upon demand to the Collateral Agent the amount of
any and all reasonable expenses, including the reasonable fees, other charges
and disbursements of its counsel and of any experts or agents, that the
Collateral Agent may incur in connection with (i) the administration of this
Agreement, (ii) the custody or preservation of, or the sale of, collection from,
or other realization upon, any of the Collateral, (iii) the exercise,
enforcement or protection of any of the rights of the Collateral Agent hereunder
or (iv) the failure of any Pledgor to perform or observe any of the provisions
hereof.
(b) Without limitation of its indemnification obligations under the
other Loan Documents, each Pledgor jointly and severally agrees to indemnify the
Collateral Agent and the Indemnitees (as defined in Section 9.05 of the Credit
Agreement) against, and hold each Indemnitee harmless from, any and all losses,
claims, damages, liabilities and related expenses, including reasonable counsel
fees, other charges and disbursements, incurred by or asserted against any
Indemnitee arising out of, in any way connected with, or as a result of (i) the
execution or delivery of this Agreement or any other Loan Document or any
agreement or instrument contemplated hereby or thereby, the performance by the
parties hereto of their respective obligations thereunder or the consummation of
the Transactions and the other transactions contemplated thereby or (ii) any
claim, litigation, investigation or proceeding relating to any of the foregoing,
whether or not any Indemnitee is a party thereto, provided that such indemnity
shall not, as to any Indemnitee, be available to the extent that such losses,
claims, damages, liabilities or related expenses are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from
the gross negligence or wilful misconduct of such Indemnitee.
(c) Any amounts payable as provided hereunder shall be additional
Obligations secured hereby and by the other Security Documents. The provisions
of this Section 8 shall remain operative and in full force and effect regardless
of the termination of this Agreement, the consummation of the transactions
contemplated hereby, the repayment of any of the Obligations, the invalidity or
unenforceability of any term or provision of this Agreement or any other Loan
Document or any investigation made by or on behalf of the Collateral Agent or
any other Secured Party. All amounts due under this Section 8 shall be payable
on written demand therefor and shall bear interest at the rate specified in
Section 2.07 of the Credit Agreement.
SECTION 9. Collateral Agent Appointed Attorney-in-Fact. Each Pledgor
hereby appoints the Collateral Agent the attorney-in-fact of such Pledgor for
the purpose of carrying out the provisions of this Agreement and taking any
action and executing any instrument that the Collateral Agent may deem necessary
or advisable to accomplish the purposes hereof and without limitation to the
foregoing to execute and complete in favor of the Collateral Agent or its
nominees or of any purchaser any transfers or other documents which the
Collateral Agent may require for perfecting its title to or for vesting the
Collateral in the Collateral Agent or its nominees or in any purchaser, which
appointment is irrevocable and coupled with an interest. The Collateral Agent
shall have the right, upon the occurrence and during the continuance of an Event
of Default, with full power of substitution either in the Collateral Agent's
name or in the name of such Pledgor, to ask for, demand, sue for, collect,
receive and give acquittance for any and all moneys due or to become due under
<PAGE>
8
and by virtue of any Collateral, to endorse checks, drafts, orders and other
instruments for the payment of money payable to the Pledgor representing any
interest or dividend or other distribution payable in respect of the Collateral
or any part thereof or on account thereof and to give full discharge for the
same, to settle, compromise, prosecute or defend any action, claim or proceeding
with respect thereto, and to sell, assign, endorse, pledge, transfer and to make
any agreement respecting, or otherwise deal with, the same; provided, however,
that nothing herein contained shall be construed as requiring or obligating the
Collateral Agent to make any commitment or to make any inquiry as to the nature
or sufficiency of any payment received by the Collateral Agent, or to present or
file any claim or notice, or to take any action with respect to the Collateral
or any part thereof or the moneys due or to become due in respect thereof or any
property covered thereby. The Collateral Agent and the other Secured Parties
shall be accountable only for amounts actually received as a result of the
exercise of the powers granted to them herein, and neither they nor their
officers, directors, employees or agents shall be responsible to any Pledgor for
any act or failure to act hereunder, except for their own gross negligence or
wilful misconduct.
SECTION 10. Waivers; Amendment. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and of the Secured Parties under the other Loan Documents are cumulative and are
not exclusive of any rights or remedies that they would otherwise have. No
waiver of any provisions of this Agreement or consent to any departure by any
Pledgor therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand on any Pledgor in any case shall entitle such Pledgor or any
other Pledgor to any other or further notice or demand in similar or other
circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to a written agreement entered into between
the Collateral Agent and the Pledgor or Pledgors with respect to which such
waiver, amendment or modification is to apply, subject to any consent required
in accordance with Section 9.08 of the Credit Agreement.
SECTION 11. Securities Act, etc. In view of the position of the
Pledgors in relation to the Pledged Securities, or because of other current or
future circumstances, a question may arise under the Securities Act of 1933, as
now or hereafter in effect, or any similar statute hereafter enacted analogous
in purpose or effect (such Act and any such similar statute as from time to time
in effect being called the "Federal Securities Laws") with respect to any
disposition of the Pledged Securities permitted hereunder. Each Pledgor
understands that compliance with the Federal Securities Laws might very strictly
limit the course of conduct of the Collateral Agent if the Collateral Agent were
to attempt to dispose of all or any part of the Pledged Securities, and might
also limit the extent to which or the manner in which any subsequent transferee
of any Pledged Securities could dispose of the same. Similarly, there may be
other legal restrictions or limitations affecting the Collateral Agent in any
attempt to dispose of all or part of the Pledged Securities under applicable
Blue Sky or other state securities laws or similar laws analogous in purpose or
effect. Each Pledgor recognizes that in light of such restrictions and
limitations the Collateral Agent may, with respect to any sale of the Pledged
Securities, limit the purchasers to those who will agree, among other things, to
acquire such Pledged Securities for their own account, for investment, and not
with a view to the distribution or resale thereof. Each Pledgor acknowledges and
agrees that in light of such restrictions and limitations, the Collateral Agent,
in its sole and absolute discretion, (a) may proceed to make such a sale whether
or not a registration statement for the purpose of registering such Pledged
Securities or part thereof shall have been filed under the Federal Securities
Laws and (b) may approach and negotiate with a single potential purchaser to
effect such sale. Each Pledgor acknowledges and agrees that any such sale might
result in prices and other terms less favorable to the seller than if such sale
were a public sale without such restrictions. In the event of any such sales,
<PAGE>
9
the Collateral Agent shall incur no responsibility or liability for selling all
or any part of the Pledged Securities at a price that the Collateral Agent, in
its sole and absolute discretion, may in good faith deem reasonable under the
circumstances, notwithstanding the possibility that a substantially higher price
might have been realized if the sale were deferred until after registration as
aforesaid or if more than a single purchaser were approached. The provisions of
this Section 11 will apply notwithstanding the existence of a public or private
market upon which the quotations or sales prices may exceed substantially the
price at which the Collateral Agent sells.
SECTION 12. Registration, etc. Each Pledgor agrees that, upon the
occurrence and during the continuance of an Event of Default hereunder, if for
any reason the Collateral Agent desires to sell any of the Pledged Securities
(except for Pledged Securities issued by a Foreign Subsidiary) at a public sale,
it will, at any time and from time to time, upon the written request of the
Collateral Agent, use its best efforts to take or to cause the issuer of such
Pledged Securities to take such action and prepare, distribute and/or file such
documents, as are required or advisable in the reasonable opinion of counsel for
the Collateral Agent to permit the public sale of such Pledged Securities. Each
Pledgor further agrees to indemnify, defend and hold harmless the Collateral
Agent, each other Secured Party, any underwriter and their respective officers,
directors , affiliates and controlling persons from and against all loss,
liability, expenses, costs of counsel (including, without limitation, reasonable
fees and expenses to the Collateral Agent of legal counsel), and claims
(including the costs of investigation) that they may incur insofar as such loss,
liability, expense or claim arises out of or is based upon any alleged untrue
statement of a material fact contained in any prospectus (or any amendment or
supplement thereto) or in any notification or offering circular, or arises out
of or is based upon any alleged omission to state a material fact required to be
stated therein or necessary to make the statements in any thereof not
misleading, except insofar as the same may have been caused by any untrue
statement or omission based upon information furnished in writing to such
Pledgor or the issuer of such Pledged Securities by the Collateral Agent or any
other Secured Party expressly for use therein. Each Pledgor further agrees, upon
such written request referred to above, to use its best efforts to qualify, file
or register, or cause the issuer of such Pledged Securities to qualify, file or
register, any of the Pledged Securities under the Blue Sky or other securities
laws of such states as may be requested by the Collateral Agent and keep
effective, or cause to be kept effective, all such qualifications, filings or
registrations. Each Pledgor will bear all costs and expenses of carrying out its
obligations under this Section 12. Each Pledgor acknowledges that there is no
adequate remedy at law for failure by it to comply with the provisions of this
Section 12 and that such failure would not be adequately compensable in damages,
and therefore agrees that its agreements contained in this Section 12 may be
specifically enforced.
SECTION 13. Security Interest Absolute. All rights of the Collateral
Agent hereunder, the grant of a security interest in the Collateral and all
obligations of each Pledgor hereunder, shall be absolute and unconditional
irrespective of (a) any lack of validity or enforceability of the Credit
Agreement, any other Loan Document, any agreement with respect to any of the
Obligations or any other agreement or instrument relating to any of the
foregoing, (b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to any departure from the Credit Agreement, any other Loan
Document or any other agreement or instrument relating to any of the foregoing,
(c) any exchange, release or nonperfection of any other collateral, or any
release or amendment or waiver of or consent to or departure from any guaranty,
for all or any of the Obligations or (d) any other circumstance that might
otherwise constitute a defense available to, or a discharge of, any Pledgor in
respect of the Obligations or in respect of this Agreement (other than the
payment in full of all the Obligations).
SECTION 14. Termination or Release. (a) This Agreement and the security
interests granted hereby shall terminate when all the Obligations have been paid
in full, the Lenders have no further commitment to lend under the Credit
Agreement, the L/C Exposure has been reduced to zero and the Issuing Banks have
<PAGE>
10
no further obligation to issue Letters of Credit under the Credit Agreement.
(b) Upon any sale or other transfer by any Pledgor of any Collateral
that is permitted under the Credit Agreement to any person that is not a
Pledgor, or, upon the effectiveness of any written consent to the release of the
security interest granted hereby in any Collateral pursuant to Section 9.08(b)
of the Credit Agreement, the security interest in such Collateral shall be
automatically released.
(c) In connection with any termination or release pursuant to paragraph
(a) or (b), the Collateral Agent shall execute and deliver to any Pledgor, at
such Pledgor's expense, all documents that such Pledgor shall reasonably request
to evidence such termination or release. Any execution and delivery of documents
pursuant to this Section 14 shall be without recourse to or warranty by the
Collateral Agent.
SECTION 15. Notices. All communications and notices hereunder shall be
in writing and given as provided in Section 9.01 of the Credit Agreement. All
communications and notices hereunder to any Subsidiary Pledgor shall be given to
it in care of Terex.
SECTION 16. Further Assurances. Each Pledgor agrees to do such further
acts and things, and to execute and deliver such additional conveyances,
assignments, agreements and instruments, as the Collateral Agent may at any time
reasonably request in connection with the administration and enforcement of this
Agreement or with respect to the Collateral or any part thereof or in order
better to assure and confirm unto the Collateral Agent its rights and remedies
hereunder.
SECTION 17. Binding Effect; Several Agreement; Assignments. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of any Pledgor that are contained in
this Agreement shall bind and inure to the benefit of its successors and
assigns. This Agreement shall become effective as to any Pledgor when a
counterpart hereof executed on behalf of such Pledgor shall have been delivered
to the Collateral Agent and a counterpart hereof shall have been executed on
behalf of the Collateral Agent, and thereafter shall be binding upon such
Pledgor and the Collateral Agent and their respective successors and assigns,
and shall inure to the benefit of such Pledgor, the Collateral Agent and the
other Secured Parties, and their respective successors and assigns, except that
no Pledgor shall have the right to assign its rights hereunder or any interest
herein or in the Collateral (and any such attempted assignment shall be void),
except as expressly contemplated by this Agreement or the other Loan Documents.
If all of the capital stock of a Pledgor is sold, transferred or otherwise
disposed of to a person that is not an Affiliate of Terex pursuant to a
transaction permitted by Section 6.05 of the Credit Agreement, such Pledgor
shall be released from its obligations under this Agreement without further
action. This Agreement shall be construed as a separate agreement with respect
to each Pledgor and may be amended, modified, supplemented, waived or released
with respect to any Pledgor without the approval of any other Pledgor and
without affecting the obligations of any other Pledgor hereunder
SECTION 18. Survival of Agreement; Severability. (a) All covenants,
agreements, representations and warranties made by each Pledgor herein and in
the certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Collateral Agent and the other Secured Parties and
shall survive the making by the Lenders of the Loans and the issuance of the
Letters of Credit by the Issuing Banks, regardless of any investigation made by
the Secured Parties or on their behalf, and shall continue in full force and
effect as long as the principal of or any accrued interest on any Loan or any
other fee or amount payable under this Agreement or any other Loan Document is
outstanding and unpaid or the L/C Exposure does not equal zero and as long as
the Commitments and the L/C Commitments have not been terminated.
<PAGE>
11
(b) In the event any one or more of the provisions contained in this
Agreement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby (it being understood
that the invalidity of a particular provision in a particular jurisdiction shall
not in and of itself affect the validity of such provision in any other
jurisdiction). The parties shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 19. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 20. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute a single contract (subject to Section 17), and
shall become effective as provided in Section 17. Delivery of an executed
counterpart of a signature page to this Agreement by facsimile transmission
shall be as effective as delivery of a manually executed counterpart of this
Agreement.
SECTION 21. Rules of Interpretation. The rules of interpretation
specified in Section 1.02 of the Credit Agreement shall be applicable to this
Agreement. Section headings used herein are for convenience of reference only,
are not part of this Agreement and are not to affect the construction of, or to
be taken into consideration in interpreting this Agreement.
SECTION 22. Jurisdiction; Consent to Service of Process. (a) Each
Pledgor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that, to the extent permitted by applicable law, all
claims in respect of any such action or proceeding may be heard and determined
in such New York State or, to the extent permitted by law, in such Federal
court. Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that the Collateral Agent or
any other Secured Party may otherwise have to bring any action or proceeding
relating to this Agreement or the other Loan Documents against any Pledgor or
its properties in the courts of any jurisdiction.
(b) Each Pledgor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection that it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Loan Documents in any
New York State or Federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 15. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 23. Waiver Of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY HERETO (A) CERTIFIES THAT
NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
<PAGE>
12
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 24. Additional Pledgors. Pursuant to Section 5.11 of the Credit
Agreement, each Domestic Subsidiary of Terex that was not in existence or not a
Domestic Subsidiary on the date of the Credit Agreement is required to enter in
this Agreement as a Subsidiary Pledgor upon becoming a Domestic Subsidiary if
such Domestic Subsidiary owns or possesses property of a type that would be
considered Collateral hereunder. Upon execution and delivery by the Collateral
Agent and a Subsidiary of an instrument in the form of Annex 1, such Subsidiary
shall become a Subsidiary Pledgor hereunder with the same force and effect as if
originally named as a Subsidiary Pledgor herein. The execution and delivery of
such instrument shall not require the consent of any Pledgor hereunder. The
rights and obligations of each Pledgor hereunder shall remain in full force and
effect notwithstanding the addition of any new Subsidiary Pledgor as a party to
this Agreement.
SECTION 25. Credit Agreement. Notwithstanding any provision of this
Agreement to the contrary, each Pledgor may do any act or omit to do any act or
cause or permit any condition or circumstance to exist, in each case to the
extent expressly permitted by the Credit Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
TEREX CORPORATION,
by
--------------------------
Name:
Title:
THE SUBSIDIARY PLEDGORS LISTED ON
SCHEDULE I HERETO,
by
--------------------------
Name:
Title: Authorized Officer
CREDIT SUISSE FIRST BOSTON, as Collateral
Agent,
by
--------------------------
Name:
Title: Authorized Officer
by
--------------------------
Name:
Title: Authorized Officer
<PAGE>
13
Schedule I to the
Pledge Agreement
SUBSIDIARY PLEDGORS
Name [Address]
<PAGE>
14
Schedule II to the
Pledge Agreement
CAPITAL STOCK
Issuer Number of Registered Number and Percentage of
Certificate Owner Class of Shares Shares
DEBT SECURITIES
Issuer Principal Date of Note Maturity Date
Amount
<PAGE>
1
SUPPLEMENT NO. dated as of , to the PLEDGE
AGREEMENT dated as of March 6, 1998, among TEREX
CORPORATION, a Delaware corporation ("Terex") and
each subsidiary of the Terex listed on Schedule I
hereto (each such subsidiary individually a
"Subsidiary Pledgor" and collectively, the
"Subsidiary Pledgors"; Terex and Subsidiary Pledgors
are referred to collectively herein as the
"Pledgors") and CREDIT SUISSE FIRST BOSTON, a bank
organized under the laws of Switzerland, acting
through its New York branch ("CSFB"), as collateral
agent (in such capacity, the "Collateral Agent") for
the Secured Parties (as defined in the Credit
Agreement referred to below)
A. Reference is made to (a) the Credit Agreement dated as of March 6,
1998 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among Terex, Terex Equipment Limited, a company organized
under the laws of Scotland, P.P.M. S.A., a company organized under the laws of
the Republic of France, Unit Rig (Australia) Pty. Ltd., a company organized
under the laws of New South Wales, and P.P.M. Sp.A., a company organized under
the laws of the Republic of Italy, the Lenders (as defined in Article I
thereto), the Issuing Banks (as defined in Article I thereto) and CSFB, as
administrative agent and as collateral agent for the Lenders, (b) the Guarantee
Agreement dated as of March 6, 1998 (as amended, supplemented or otherwise
modified from time to time, the "Subsidiary Guarantee Agreement") among the
Subsidiary Pledgors and the Collateral Agent and (c) the Guarantee Agreement
dated as of March 6, 1998 (as amended, supplemented or otherwise modified from
time to time, the "Terex Guarantee Agreement") between Terex and the Collateral
Agent.
B. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Credit Agreement.
C. The Pledgors have entered into the Pledge Agreement in order to
induce the Lenders to make Loans and the Issuing Banks to issue Letters of
Credit. Pursuant to Section 5.11 of the Credit Agreement, each Domestic
Subsidiary that was not in existence or not a Domestic Subsidiary on the date of
the Credit Agreement is required to enter into the Pledge Agreement as a
Subsidiary Pledgor upon becoming a Domestic Subsidiary if such Domestic
Subsidiary owns or possesses property of a type that would be considered
Collateral under the Pledge Agreement. Pursuant to Section 5.13 of the Credit
Agreement, Foreign Subsidiaries of Terex may be required to enter into the
Pledge Agreement as Subsidiary Pledgors. Section 24 of the Pledge Agreement
provides that such Subsidiaries may become Subsidiary Pledgors under the Pledge
Agreement by execution and delivery of an instrument in the form of this
Supplement. The undersigned Subsidiary (the "New Pledgor") is executing this
Supplement in accordance with the requirements of the Credit Agreement to become
a Subsidiary Pledgor under the Pledge Agreement in order to induce the Lenders
to make additional Loans and the Issuing Bank to issue additional Letters of
Credit and as consideration for Loans previously made and Letters of Credit
previously issued.
Accordingly, the Collateral Agent and the New Pledgor agree as follows:
SECTION 1. In accordance with Section 24 of the Pledge Agreement, the
New Pledgor by its signature below becomes a Pledgor under the Pledge Agreement
with the same force and effect as if originally named therein as a Pledgor and
the New Pledgor hereby agrees (a) to all the terms and provisions of the Pledge
Agreement applicable to it as a Pledgor thereunder and (b) represents and
warrants that the representations and warranties made by it as a Pledgor there
under are true and correct on and as of the date hereof. In furtherance of the
foregoing, the New Pledgor, as security for the payment and performance in full
of the Obligations (as defined in the Pledge Agreement), does hereby create and
grant to the Collateral Agent, its successors and assigns, for the benefit of
the Secured Parties, their successors and assigns, a security interest in and
lien on all of the New Pledgor's right, title and interest in and to the
Collateral (as defined in the Pledge Agreement) of the New Pledgor. Each
reference to a "Subsidiary Pledgor" or a
<PAGE>
2
"Pledgor" in the Pledge Agreement shall be deemed to include the New Pledgor.
The Pledge Agreement is hereby incorporated herein by reference.
SECTION 2. The New Pledgor represents and warrants to the Collateral
Agent and the other Secured Parties that this Supplement has been duly
authorized, executed and delivered by it and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law.
SECTION 3. This Supplement may be executed in counterparts, each of
which shall constitute an original, but all of which when taken together shall
constitute a single contract. This Supplement shall become effective when the
Collateral Agent shall have received counterparts of this Supplement that, when
taken together, bear the signatures of the New Pledgor and the Collateral Agent.
Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Supplement.
SECTION 4. The New Pledgor hereby represents and warrants that set
forth on Schedule I attached hereto is a true and correct schedule of all its
Pledged Securities.
SECTION 5. Except as expressly supplemented hereby, the Pledge
Agreement shall remain in full force and effect.
SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 7. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect,
neither party hereto shall be required to comply with such provision for so long
as such provision is held to be invalid, illegal or unenforceable, but the
validity, legality and enforceability of the remaining provisions contained
herein and in the Pledge Agreement shall not in any way be affected or impaired.
The parties hereto shall endeavor in good-faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
SECTION 8. All communications and notices hereunder shall be in writing
and given as provided in Section 15 of the Pledge Agreement. All communications
and notices hereunder to the New Pledgor shall be given to it in care of Terex.
SECTION 9. The Collateral Agent shall be reimbursed, in accordance with
Section 9.05(a) of the Credit Agreement, for its reasonable out-of-pocket
expenses incurred in connection with this Supplement, including the reasonable
fees, other charges and disbursements of counsel for the Collateral Agent.
IN WITNESS WHEREOF, the New Pledgor and the Collateral Agent have duly
executed this Supplement to the Pledge Agreement as of the day and year first
above written.
[Name of New Pledgor],
by
--------------------------------
Name:
Title:
Address:
CREDIT SUISSE FIRST BOSTON, as
Collateral Agent,
by
--------------------------------
Name:
Title:
by
--------------------------------
Name:
Title:
<PAGE>
3
Schedule I to
Supplement No.
to the Pledge Agreement
Pledged Securities of the New Pledgor
CAPITAL STOCK
Issuer Number of Registered Number and Percentage of
Certificate Owner Class of Shares Shares
DEBT SECURITIES
Issuer Principal Date of Note Maturity Date
Amount
MORTGAGE, LEASEHOLD MORTGAGE, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FINANCING STATEMENT
By
[ ]
Mortgagor,
To
CREDIT SUISSE FIRST BOSTON
Mortgagee,
Relating to Premises in:
[ ]
DATED AS OF: March 6, 1998
This instrument prepared by and, after
recording, please return to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019-7475
Attention: David V. Armstrong
<PAGE>
1
MORTGAGE, LEASEHOLD MORTGAGE, ASSIGNMENT
OF LEASES AND RENTS, SECURITY AGREEMENT
AND FINANCING STATEMENT
THIS MORTGAGE, LEASEHOLD MORTGAGE, ASSIGNMENT OF
LEASES AND RENTS, SECURITY AGREEMENT AND FINANCING STATEMENT
dated as of March 6, 1998 (this "Mortgage"), by [ ], an [ ]
corporation, having an office at [ ] (the "Mortgagor"), to
CREDIT SUISSE FIRST BOSTON, a bank organized under the laws of
Switzerland, acting through its New York branch ("CSFB"),
having an office at 11 Madison Avenue, New York, New York
10010, as Collateral Agent (in such capacity, the "Collateral
Agent") for the benefit of the Secured Parties (as defined
below) (the "Mortgagee").
WITNESSETH THAT:
A. Reference is made to (a) the Credit Agreement dated as of March 6,
1998 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among [Terex Corporation, a Delaware corporation] [the
Mortgagor], Terex Equipment Limited, a company organized under the laws of
Scotland, P.P.M. S.A., a company organized under the laws of the Republic of
France, Unit Rig (Australia) Pty. Ltd., a company organized under the laws of
New South Wales, and P.P.M. Sp.A., a company organized under the laws of the
Republic of Italy, the Lenders (as defined in Article I thereto), the Issuing
Banks (as defined in Article I thereto) and CSFB, as administrative agent and as
collateral agent for the Lenders,(b) the Guarantee Agreement dated as of March
6, 1998 (as amended, supplemented or otherwise modified from time to time, the
"Subsidiary Guarantee Agreement") among the subsidiaries of Terex listed on
Schedule I thereto and the Collateral Agent and (c) the Guarantee Agreement
dated as of March 6, 1998 (as amended, supplemented or otherwise modified from
time to time, the "Terex Guarantee Agreement") between Terex and the Collateral
Agent. Each capitalized term used herein but not defined herein shall have the
meaning assigned to such term in the Credit Agreement. As used herein, the term
"Secured Parties" shall mean (i) the Lenders, (ii) the Administrative Agent,
(iii) the Collateral Agent, (iv) the Issuing Banks, (v) each counterparty to a
Hedging Agreement entered into with any Borrower if such counterparty was a
Lender at the time the Hedging Agreement was entered into, (vi) the
beneficiaries of each indemnification obligation undertaken by any Loan Party
under any Loan Document and (vii) the successors and assigns of each of the
foregoing. Pursuant to the Credit Agreement, (i) the Lenders have lent or have
<PAGE>
2
agreed to lend to the Borrowers (a) on a term basis, Term Loans in an aggregate
principal amount not in excess of $375,000,000, and (b) on a revolving basis,
Revolving Loans, at any time and from time to time prior to the Revolving Credit
Maturity Date, in an aggregate principal amount at any time outstanding not in
excess of $125,000,000 and (ii) the Issuing Banks have issued and have agreed to
issue Letters of Credit in an aggregate face amount at any time outstanding not
in excess of $35,000,000 in each case on the terms and subject to the conditions
of the Credit Agreement.
B. In order to induce the Lenders to make Loans and the Issuing Banks
to issue Letters of Credit, the Subsidiary Guarantors have agreed to guarantee,
pursuant to the Subsidiary Guarantee Agreement, among other things, all the
obligations of the Borrowers under the Credit Agreement. Terex has agreed to
guarantee, pursuant to the Terex Guarantee Agreement, among other things, all
the obligations of the Subsidiary Borrowers under the Credit Agreement.
C. The obligations of the Lenders to make Loans and of the Issuing
Banks to issue Letters of Credit under the Credit Agreement are conditioned
upon, among other things, the execution and delivery by the Mortgagor of this
Mortgage in the form hereof, to secure (a) the due and punctual payment by the
Borrowers of (i) the principal of and premium, if any, and interest (including
interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Loans, when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, (ii) each payment required to be made by any Borrower under the
Credit Agreement in respect of any Letter of Credit, when and as due, including
payments in respect of reimbursement of disbursements, interest thereon and
obligations to provide cash collateral and (iii) all other monetary obligations,
including fees, costs, expenses and indemnities, whether primary, secondary,
direct, contingent, fixed or otherwise (including monetary obligations incurred
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding), of
the Borrowers to the Secured Parties under the Credit Agreement and the other
Loan Documents, (b) the due and punctual performance of all covenants,
agreements, obligations and liabilities of the Borrowers under or pursuant to
the Credit Agreement and the other Loan Documents, (c) the due and punctual
<PAGE>
3
payment and performance of all the covenants, agreements, obligations and
liabilities of each other Loan Party under or pursuant to this Mortgage and the
other Loan Documents and (d) the due and punctual payment and performance of all
obligations of the Borrowers under each Hedging Agreement entered into with any
counterparty that was a Lender at the time such Hedging Agreement was entered
into (all the monetary and other obligations referred to in this paragraph C
being referred to collectively as the "Obligations")[; provided, however, that
this Mortgage shall secure no more than $[ ] of the total amount of the
Obligations]1.
D. Pursuant to the requirements of the Credit Agreement, the Mortgagor
is entering into this Mortgage to create a security interest in the Mortgaged
Property (as defined herein) to secure the performance and payment of the
Obligations. The Credit Agreement also requires the granting by the Mortgagor
and certain other Loan Parties of other mortgages and deeds of trust (the "Other
Mortgages") that create security interests in certain Mortgaged Properties other
than the Mortgaged Property to secure the performance of the Obligations.
Granting Clauses
NOW, THEREFORE, IN CONSIDERATION OF the foregoing and in order to
secure (A) the due and punctual payment and performance of the Obligations[;
provided, however, that this Mortgage shall secure no more than $[ ] of the
total amount of the Obligations,]2 (B) the due and punctual payment by the
Mortgagor of all taxes and insurance premiums relating to the Mortgaged Property
and (C) all disbursements made by Mortgagee for the payment of taxes, common
area charges or insurance premiums, all fees, expenses or advances in connection
with or relating to the Mortgaged Property, and interest on such disbursements
and other amounts not timely paid in accordance with the terms of the Credit
Agreement, this Mortgage and the other Loan Documents, Mortgagor hereby grants,
conveys, mortgages, assigns and pledges to the Mortgagee (for the ratable
benefit of the Secured Parties), a security interest in, all the following
described property (the "Mortgaged Property") whether now owned or held or
- ---------------------
1 To be included in mortgage tax states only
2 To be included in mortgage tax states only
<PAGE>
4
hereafter acquired:
(1) all Mortgagor's right, title and interest in all the land
more particularly described on Exhibit A hereto (the "Owned Land");
(2) all Mortgagor's right, title and interest in and to each
leasehold estate created pursuant to the lease or leases more
particularly described in Exhibit B hereto (such lease or leases, as
amended, supplemented, or otherwise modified from time to time,
individually, a "Subject Lease" and, collectively, the "Subject
Leases") and affecting the land more particularly described in Exhibit
B hereto (the "Leased Land", together with the Owned Land, the "Land"),
including, without limitation, all rights of the lessee under each
Subject Lease;
(3) all Mortgagor's right, title and interest in all rights
appurtenant to the Land, including the easements over certain other
adjoining land granted by any easement agreements, covenant or
restrictive agreements and all air rights, mineral rights, water
rights, oil and gas rights and development rights, if any, relating
thereto, and also together with all of the other easements, rights,
privileges, interests, hereditaments and appurtenances thereunto
belonging or in anyway appertaining and all of the estate, right,
title, interest, claim or demand whatsoever of Mortgagor therein and in
the streets and ways adjacent thereto, either in law or in equity, in
possession or expectancy, now or hereafter acquired (the Land and the
property described in this subparagraph (3), the "Premises");
(4) all Mortgagor's right, title and interest in all
buildings, improvements, structures, paving, parking areas, walkways
and landscaping now or hereafter erected or located upon the Land, and
all fixtures of every kind and type affixed to the Premises or attached
to or forming part of any structures, buildings or improvements and
replacements thereof now or hereafter erected or located upon the Land
(the "Improvements");
(5) all Mortgagor's right, title and interest in all
apparatus, movable appliances, building materials, equipment, fittings,
furnishings, furniture, machinery and other articles of tangible
<PAGE>
5
property of every kind and nature, and replacements thereof, now or at
any time hereafter placed upon or used in any way in connection with
the use, enjoyment, occupancy or operation of the Improvements or the
Premises, including all of Mortgagor's books and records relating
thereto and including all pumps, tanks, goods, machinery, tools,
equipment, lifts (including fire sprinklers and alarm systems, fire
prevention or control systems, cleaning rigs, air conditioning,
heating, boilers, refrigerating, electronic monitoring, water, loading,
unloading, lighting, power, sanitation, waste removal, entertainment,
communications, computers, recreational, window or structural,
maintenance, truck or car repair and all other equipment of every
kind), restaurant, bar and all other indoor or outdoor furniture
(including tables, chairs, booths, serving stands, planters, desks,
sofas, racks, shelves, lockers and cabinets), bar equipment, glasses,
cutlery, uniforms, linens, memorabilia and other decorative items,
furnishings, appliances, supplies, inventory, rugs, carpets and other
floor coverings, draperies, drapery rods and brackets, awnings,
venetian blinds, partitions, chandeliers and other lighting fixtures,
freezers, refrigerators, walk-in coolers, signs (indoor and outdoor),
computer sys tems, cash registers and inventory control systems, and
all other apparatus, equipment, furniture, furnishings, and articles
used in connection with the use or operation of the Improvements or the
Premises, it being understood that the enumeration of any specific
articles of property shall in no way result in or be held to exclude
any items of property not specifically mentioned (the property referred
to in this subparagraph (3), the "Personal Property");
(6) all Mortgagor's right, title and interest in all general
intangibles relating to design, development, operation, management and
use of the Premises or the Improvements, all certificates of occupancy,
zoning variances, building, use or other permits, approvals,
authorizations and consents obtained from and all materials prepared
for filing or filed with any governmental agency in connection with the
development, use, operation or management of the Premises and
Improvements, all construction, service, engineering, consulting,
leasing, architectural and other similar contracts concerning the
design, construction, management, operation, occupancy and/or use of
the Premises and Improvements, all architectural drawings, plans,
<PAGE>
6
specifications, soil tests, feasibility studies, appraisals,
environmental studies, engineering reports and similar materials
relating to any portion of or all of the Premises and Improvements, and
all payment and performance bonds or warranties or guarantees relating
to the Premises or the Improvements, all to the extent assignable (the
"Permits, Plans and Warranties");
(7) Mortgagor's interest in and rights under any and all now
or hereafter existing leases or licenses (under which Mortgagor is
landlord or licensor) and subleases (under which Mortgagor is
sublandlord), concession, management, mineral or other agreements of a
similar kind that permit the use or occupancy of the Premises or the
Improvements for any purpose in return for any payment, or the
extraction or taking of any gas, oil, water or other minerals from the
Premises in return for payment of any fee, rent or royalty
(collectively, "Leases"), and all agreements or contracts for the sale
or other disposition of all or any part of the Premises or the
Improvements, now or hereafter entered into by Mortgagor, together with
all charges, fees, income, issues, profits, receipts, rents, revenues
or royalties payable thereunder ("Rents");
(8) all Mortgagor's right, title and interest in and to all
real estate tax refunds and all proceeds of the conversion, voluntary
or involuntary, of any of the Mortgaged Property into cash or
liquidated claims ("Proceeds"), including Proceeds of insurance
maintained by the Mortgagor and condemnation awards, any awards that
may become due by reason of the taking by eminent domain or any
transfer in lieu thereof of the whole or any part of the Premises or
Improvements or any rights appurtenant thereto, and any awards for
change of grade of streets, together with any and all moneys now or
hereafter on deposit for the payment of real estate taxes, assessments
or common area charges levied against the Mortgaged Property, unearned
premiums on policies of fire and other insurance maintained by the
Mortgagor covering any interest in the Mortgaged Property or required
by the Credit Agreement; and
(9) all Mortgagor's right, title and interest in and to all
extensions, improvements, betterments, renewals, substitutes and
replacements of and all additions and appurtenances to, the Land, the
Premises, the Improvements, the Personal Property, the Permits, Plans
and Warranties and the Leases, hereinafter acquired by or released to
<PAGE>
7
the Mortgagor or constructed, assembled or placed by the Mortgagor on
the Land, the Premises or the Improvements, and all conversions of the
security constituted thereby, immediately upon such acquisition,
release, construction, assembling, placement or conversion, as the case
may be, and in each such case, without any further mortgage, deed of
trust, conveyance, assignment or other act by the Mortgagor, all of
which shall become subject to the lien of this Mortgage as fully and
completely, and with the same effect, as though now owned by the
Mortgagor and specifically described herein.
TO HAVE AND TO HOLD the Mortgaged Property unto the Mortgagee, its
successors and assigns, for the ratable benefit of the Secured Parties, forever,
subject only to the Permitted Encumbrances (as hereinafter defined) and to
satisfaction and cancelation as provided in Section 3.04.
ARTICLE I
Representations, Warranties and Covenants of Mortgagor
Mortgagor agrees, covenants, represents and/or warrants as follows:
SECTION 1.01. Title. (a) Mortgagor has good and marketable title to an
indefeasible fee estate in the Owned Land and Improvements located thereon
subject to no lien, charge or encumbrance other than Liens permitted by Section
6.02 of the Credit Agreement (collectively, the "Permitted Encumbrances").
Mortgagor is lawfully seized and possessed of and has a valid subsisting
leasehold estate in the Leased Land and Improvements located thereon subject to
no lien, charge or encumbrance other than the Permitted Encumbrances. This
Mortgage is and will remain a valid and enforceable first and prior Lien on the
Premises, Improvements and Rents subject only to the Permitted Encumbrances. The
Permitted Encumbrances do not materially interfere with the current use,
enjoyment, occupancy or operation of the Mortgaged Property.
(b) The Mortgaged Property is served by water, gas, electric, septic,
storm and sanitary sewage facilities, as may be applicable, and such utilities
serving the Premises and the Improvements are located in and in the future will
be located fully within the Premises or, in the case of such utilities, within
<PAGE>
8
any right of way abutting the Premises. There is vehicular access to the
Premises and the Improvements which is provided by either a public right-of-way
abutting and contiguous with the Land or valid recorded unsubordinated
easements.
(c) Except as set forth on Schedule A, there are no leases (under which
Mortgagor is the lessor) affecting a material portion of the Mortgaged Property.
Each Lease is in full force and effect, and, except as set forth on Schedule A
hereto, Mortgagor has not given nor received any uncured or unwaived notice of
default with respect to any material obligation under any Lease. Each Lease is
subject to no lien, charge or encumbrance other than this Mortgage and the
Permitted Encumbrances. There is no pending or contemplated condemnation
proceeding affecting the Mortgaged Property or any sale or disposition thereof
in lieu of condemnation. Mortgagor is not obligated under any right of first
refusal, option or other contractual right to sell, assign or otherwise dispose
of any Mortgaged Property or any interest therein.
(d) All easement agreements, covenant or restrictive agreements,
supplemental agreements and any other instruments hereinabove referred to and
mortgaged hereby (collectively, the "Agreements") are and will remain valid,
subsisting and in full force and effect, unless the failure to remain valid,
subsisting and in full force and effect, individually or in the aggregate, could
not reasonably be expected to have a material adverse effect on the use and
operation of the Mortgaged Property by the Mortgagor for its intended use
("Material Adverse Effect"), and Mortgagor is not in default thereunder and has
fully performed the material terms thereof required to be performed through the
date hereof, and has no knowledge of any default thereunder or failure to fully
perform the terms thereof by any other party, nor of the occurrence of any event
that after notice or the passage of time or both will constitute a default
thereunder except such default as could not reasonably be expected to have a
Material Adverse Effect. The Mortgaged Property complies with all laws,
statutes, codes, ordinances, orders, judgments, decrees, injunctions, rules,
regulations and requirements pertaining to the Mortgaged Property (including any
applicable environmental, zoning, building, fire, occupational health and
safety, use and land use laws, ordinances, rules or regulations, approvals,
building permits and certificates of occupancy (collectively, the "Legal
Requirements")), except for any Legal Requirements, the failure to comply with
which shall not materially and adversely affect the use of the Mortgaged
<PAGE>
9
Property for the business conducted on, the Mortgaged Property.
(e) To the extent required, certificates of occupancy and permits are
in effect for the Mortgaged Property as currently constructed.
(f) Mortgagor has good and lawful right and full power and authority to
mortgage the Mortgaged Property and will forever warrant and defend its title to
the Mortgaged Property, the rights of Mortgagee therein under this Mortgage and
the validity and priority of the lien of this Mortgage thereon against the
claims of all persons and parties except those having rights under Permitted
Encumbrances to the extent of those rights.
(g) This Mortgage, when duly recorded in the appropriate public records
and when financing statements are duly filed in the appropriate public records,
will create a valid, perfected and enforceable lien upon and security interest
in all the Mortgaged Property and there are no defenses or offsets to this
Mortgage or to any of the Obligations secured hereby.
SECTION 1.02. Credit Agreement; Certain Amounts. (a) This Mortgage is
given pursuant to the Credit Agreement. Each and every term and provision of the
Credit Agreement (excluding the governing law provisions thereof), including the
rights, remedies, obligations, covenants, conditions, agreements, indemnities,
representations and warranties of the parties thereto, shall be considered as if
a part of this Mortgage.
(b) To the extent the representations and covenants contained in this
Mortgage are more stringent or expansive than comparable representations and
covenants contained in the Credit Agreement, the representations and covenants
contained herein shall be construed to supplement the representations and
covenants in the Credit Agreement without creating a conflict or inconsistency
therewith, and Mortgagor shall be bound to the more stringent or expansive
representations and covenants hereunder, provided, however, that any item,
claim, action, omission or other matter expressly permitted by the Credit
Agreement with respect to the Mortgaged Property shall be permitted hereunder.
(c) If any remedy or right of Mortgagee pursuant hereto is acted upon
by Mortgagee or if any actions or proceedings (including any bankruptcy,
<PAGE>
10
insolvency or reorganization proceedings) are commenced in which Mortgagee is
made a party and is obliged to defend or uphold or enforce this Mortgage or the
rights of Mortgagee hereunder or the terms of any Lease, or if a condemnation
proceeding is instituted affecting the Mortgaged Property, Mortgagor will pay
all reasonable sums, including reasonable attorneys' fees and disbursements,
incurred by Mortgagee related to the exercise of any remedy or right of
Mortgagee pursuant hereto or for the expense of any such action or proceeding
together with all statutory or other costs, disbursements and allowances,
interest thereon from the date of demand for payment thereof at the rate
specified in Section 2.07(d) of the Credit Agreement (the "Default Interest
Rate"), and such sums and the interest thereon shall, to the extent permissible
by law, be a lien on the Mortgaged Property prior to any right, title to,
interest in or claim upon the Mortgaged Property attaching or accruing
subsequent to the recording of this Mortgage and shall be secured by this
Mortgage to the extent permitted by law. Any payment of amounts due under this
Mortgage not made on or before the due date for such payments shall accrue
interest daily without notice from the due date until paid at the Default
Interest Rate, and such interest at the Default Interest Rate shall be
immediately due upon demand by Mortgagee.
SECTION 1.03. Payment of Taxes, Liens and Charges. (a) Except as may be
expressly permitted by the Credit Agreement, Mortgagor will pay and discharge
from time to time prior to the time when the same shall become delinquent, and
before any interest or penalty accrues thereon or attaches thereto, all taxes of
every kind and nature, all general and special assessments, levies, permits,
inspection and license fees, all water and sewer rents, all vault charges, and
all other public charges, and all service charges, common area charges, private
maintenance charges, utility charges and all other private charges, whether of a
like or different nature, imposed upon or assessed against the Mortgaged
Property or any part thereof or upon the Rents from the Mortgaged Property or
arising in respect of the occupancy, use or possession thereof.
(b) In the event of the passage of any state, Federal, municipal or
other governmental law, order, rule or regulation subsequent to the date hereof
(i) deducting from the value of real property for the purpose of taxation any
lien or encumbrance thereon or in any manner changing or modifying the laws now
in force governing the taxation of this Mortgage or debts secured by mortgages
<PAGE>
11
or deeds of trust (other than laws governing income, franchise and similar taxes
generally) or the manner of collecting taxes thereon and (ii) imposing a tax to
be paid by Mortgagee, either directly or indirectly, on this Mortgage or any of
the Loan Documents or to require an amount of taxes to be withheld or deducted
therefrom, Mortgagor will promptly after obtaining notice or having knowledge of
such event notify Mortgagee of such event. In such event Mortgagor shall (i)
agree to enter into such further instruments as may be reasonably necessary or
desirable to obligate Mortgagor to make any applicable additional payments and
(ii) Mortgagor shall make such additional payments.
(c) At any time that an Event of Default shall have occurred hereunder
and be continuing, or if required by any law applicable to Mortgagor or to
Mortgagee, Mortgagee shall have the right to direct Mortgagor to make an initial
deposit on account of real estate taxes and assessments, insurance premiums and
common area charges, levied against or payable in respect of the Mortgaged
Property in advance and thereafter semi-annually, each such deposit to be equal
to one-half of any such annual charges estimated in a reasonable manner by
Mortgagee in order to accumulate with Mortgagee sufficient funds to pay such
taxes, assessments, insurance premiums and charges.
SECTION 1.04. Payment of Closing Costs. Mortgagor shall pay all
reasonable costs in connection with, relating to or arising out of the
preparation, execution and recording of this Mortgage, including title company
premiums and charges, inspection costs, survey costs, recording fees and taxes,
reasonable attorneys' fees and disbursements and all other similar reasonable
expenses of every kind.
SECTION 1.05. Alterations and Waste; Plans. (a) Mortgagor will not
alter, demolish, remove, renovate, expand, add to or erect any additions to the
existing Improvements or other structures or any part thereof on the Premises
which will materially interfere with the operation conducted thereon on the date
hereof, without the written consent of Mortgagee (which consent will not be
unreasonably withheld). Mortgagor will not commit any waste on the Mortgaged
Property or make any alteration to, or change in the use of, the Mortgaged
Property that will diminish the utility thereof for the operation of the
business except as may be permitted under the Credit Agreement or materially
increase any ordinary fire or other hazard arising out of construction or
operation, but in no event shall any such alteration or change by contrary to
<PAGE>
12
the terms of any insurance policy required to be kept pursuant to Section 1.06.
Mortgagor will maintain and operate the Improvements and Personal Property in
commercially reasonable working order and condition.
(b) To the extent the same exist on the date hereof or are obtained in
connection with future permitted alterations, Mortgagor shall maintain a
complete set of final plans, specifications, blueprints and drawings for the
Mortgaged Property either at the Mortgaged Property or in a particular office at
the headquarters of Mortgagor to which Mortgagee shall have access upon
reasonable advance notice and at reasonable times.
SECTION 1.06. Insurance. Mortgagor will keep, cause to be kept or
ensure that Terex keeps the Improvements and Personal Property insured against
such risks, and in the manner, required by Section 5.02 of the Credit Agreement.
SECTION 1.07. Casualty and Condemnation. (a) The Mortgagor will furnish
to the Mortgagee prompt written notice of any casualty or other insured damage
to the Mortgaged Property or any portion thereof ("Casualty") or the taking of
the Mortgaged Property or any part thereof or interest therein under power of
eminent domain or by condemnation or similar proceeding ("Condemnation") or the
commencement of any action or proceeding for Condemnation.
(b) If any Casualty results in cash proceeds (whether in the
form of insurance proceeds or otherwise) ("Casualty Proceeds") or any
Condemnation results in cash proceeds ("Condemnation Proceeds", and together
with Casualty Proceeds, "Proceeds"), the Mortgagee is authorized to collect such
Proceeds and, if received by the Mortgagor, such Proceeds shall be paid over to
the Mortgagee; provided that (i) if the aggregate Proceeds in respect of such
event (other than proceeds of business interruption insurance) are less than
$1,000,000, such Proceeds shall be paid over to the Mortgagor unless a Default
or Event of Default has occurred and is continuing, and (ii) all proceeds of
business income insurance shall be paid over to the Mortgagor unless a Default
or Event of Default has occurred and is continuing. All such Proceeds retained
by or paid over to the Mortgagee shall be held by the Mortgagee and released or
applied in accordance with this Section 1.07.
<PAGE>
13
(c) Proceeds relating to the Mortgaged Property held by the Mortgagee
pursuant to subsection (b) of this Section 1.07 shall be applied by the
Mortgagee to the payment of the cost of restoring or replacing the Mortgaged
Property so damaged, destroyed or taken or of the portion or portions of the
Mortgaged Property not so taken (the "Work") and shall be paid out from time to
time to the Mortgagor as and to the extent the Work (or the location and
acquisition of any replacement of the Mortgaged Property) progresses for the
payment thereof, but subject to each of the following conditions:
(i) the Mortgagor must promptly commence the restoration
process or the location, acquisition and replacement process in
connection with the Mortgaged Property;
(ii) the improvements shall (A) be in compliance with all
requirements of applicable Governmental Authorities such that all
representations and warranties of the Mortgagor relating to the
compliance of such Mortgaged Property with applicable laws, rules or
regulations in the Credit Agreement or this Mortgage will be correct in
all respects and (B) be at least equal in value and general utility to
the improvements that were on such Mortgaged Property (or that were on
the Mortgaged Property that has been replaced, if applicable) prior to
the casualty or condemnation, and in the case of a condemnation,
subject to the effect of such condemnation;
(iii) except as provided in (iv) below, each request for payment
shall be made on three business days' prior notice to the Mortgagee and
shall be accompanied by a certificate of the Mortgagor, stating (A)
that the sum requested is justly required to reimburse the Mortgagor
for payments by the Mortgagor to, or is justly due to, the contractor,
subcontractors, materialmen, laborers, engineers, architects or other
persons rendering services or materials for the Work (giving a brief
description of such services and materials), (B) no Event of Default
has occurred and is continuing and (C) that, when added to all sums
previously paid out by the Mortgagee, the sum requested does not exceed
the value of the Work done to the date of such certificate;
(iv) each request for payment in connection with the
acquisition of a replacement Mortgaged Property shall be made on
<PAGE>
14
30 days' prior notice to the Mortgagee and, in connection therewith,
(A) each such request shall be accompanied by a copy of the sales
contract or other document governing the acquisition of the replacement
property by the Mortgagor and a certificate of the Mortgagor stating
that the sum requested represents the sales price under such contract
or document and the related reasonable transaction fees and expenses
(including brokerage fees) and setting forth in sufficient detail the
various components of such requested sum and (B) the Mortgagor shall
(I) in addition to any other items required to be delivered under this
Section 1.07), provide the Mortgagee with such opinions, documents,
certificates, title insurance policies, surveys and other insurance
policies as they may reasonably request and (II) take such other
actions as the Mortgagee may reasonably deem necessary or appropriate
(including actions with respect to the delivery to the Mortgagee of a
first priority Mortgage with respect to such real property for the
ratable benefit of the Secured Parties);
(v) upon request of the Mortgagee, the Mortgagor shall provide
the Mortgagee with waivers of lien satisfactory to the Mortgagee
covering that part of the Work for which payment or reimbursement is
being requested and, if required by the Mortgagee, by a search prepared
by a title company or licensed abstractor or by other evidence
satisfactory to the Mortgagee, that there has not been filed with
respect to such Mortgaged Property any mechanics' or other lien or
instrument for the retention of title in respect of any part of the
Work not discharged of record or bonded to the reasonable satisfaction
of the Mortgagee;
(vi) there shall be no Event of Default that has occurred and
is continuing;
(vii) the request for any payment after the Work has been
completed shall be accompanied by a copy of any certificate or
certificates required by law to render occupancy of the improvements
being rebuilt, repaired or restored legal; and
(viii) after commencing the Work, the Mortgagor shall continue to
perform the Work diligently and in good faith to completion in
<PAGE>
15
accordance with the approved plans and specifications.
(d) If requested by Mortgagor, or if any Proceeds retained by
or paid over to the Mortgagee as provided above continue to be held by the
Mortgagee on the date that is 365 days after the occurrence of the event
resulting in such Proceeds, then such Proceeds shall be applied to prepay Term
Borrowings as provided in Section 2.13(f) of the Credit Agreement.
(e) Nothing in this Section 1.07 shall prevent the Mortgagee
from applying at any time all or any part of any Proceeds to (i) the curing of
any Event of Default under the Credit Agreement or (ii) the payment of any of
the Obligations after the occurrence and during the continuance of an Event of
Default.
SECTION 1.08. Assignment of Leases and Rents. (a) Mortgagor hereby
irrevocably and absolutely grants, transfers and assigns and grants a security
interest in all of its right title and interest in all Leases, together with any
and all extensions and renewals thereof for purposes of securing and discharging
the performance by Mortgagor of the Obligations. Mortgagor has not assigned or
executed any assignment of, and will not assign or execute any assignment of,
any other Lease or their respective Rents to anyone other than Mortgagee.
(b) Without Mortgagee's prior written consent, Mortgagor will not
modify, amend, terminate or consent to the cancelation, surrender or assignment
of any Lease if such modification, amendment, termination or consent could
reasonably be expected to be adverse to the interests of the Secured Parties or
the lien created by this Mortgage or have a materially adverse effect on the
value of the Mortgaged Property.
(c) Subject to Section 1.08(d), Mortgagor has assigned and transferred
to Mortgagee all of Mortgagor's right, title and interest in and to the Rents
now or hereafter arising from each Lease heretofore or hereafter made or agreed
to by Mortgagor, it being intended that this assignment establish, subject to
Section 1.08(b), an absolute transfer and assignment of all Rents and all Leases
to Mortgagee and not merely to grant a security interest therein. Subject to
Section 1.08(d), Mortgagee may in Mortgagor's name and stead (with or without
first taking possession of any of the Mortgaged Property personally or by
<PAGE>
16
receiver as provided herein) operate the Mortgaged Property and rent, lease or
let all or any portion of any of the Mortgaged Property to any party or parties
at such rental and upon such terms as Mortgagee shall, in its sole discretion,
determine, and may collect and have the benefit of all of said Rents arising
from or accruing at any time thereafter or that may thereafter become due under
any Lease.
(d) So long as an Event of Default shall not have occurred and be
continuing, Mortgagee will not exercise any of its rights under Section 1.08(c),
and Mortgagor shall receive and collect the Rents accruing under any Lease; but
after the happening and during the continuance of any Event of Default,
Mortgagee may, at its option, receive and collect all Rents and enter upon the
Premises and Improvements through its officers, agents, employees or attorneys
for such purpose and for the operation and maintenance thereof and otherwise may
act in accordance with Section 2.03. Mortgagor hereby irrevocably authorizes and
directs each tenant, if any, and each successor, if any, to the interest of any
tenant under any Lease, respectively, to rely upon any notice of a claimed Event
of Default sent by Mortgagee to any such tenant or any of such tenant's
successors in interest, and thereafter to pay Rents to Mortgagee without any
obligation or right to inquire as to whether an Event of Default actually exists
and even if some notice to the contrary is received from the Mortgagor, who
shall have no right or claim against any such tenant or successor in interest
for any such Rents so paid to Mortgagee. Each tenant or any of such tenant's
successors in interest from whom Mortgagee or any officer, agent, attorney or
employee of Mortgagee shall have collected any Rents, shall be authorized to pay
Rents to Mortgagor only after such tenant or any of their successors in interest
shall have received written notice from Mortgagee that the Event of Default is
no longer continuing, unless and until a further notice of an Event of Default
is given by Mortgagee to such tenant or any of its successors in interest.
(e) Mortgagee will not become a mortgagee in possession so long as it
does not enter or take actual possession of the Mortgaged Property. In addition,
Mortgagee shall not be responsible or liable for performing any of the
obligations of the landlord under any Lease, for any waste by any tenant, or
others, for any dangerous or defective conditions of any of the Mortgaged
Property, for negligence in the management, upkeep, repair or control of any of
the Mortgaged Property or any other act or omission by any other person.
<PAGE>
17
(f) Mortgagor shall furnish to Mortgagee, within 30 days after a
request by Mortgagee to do so, a written statement containing the names of all
tenants, subtenants and concessionaires of the Premises or Improvements, the
terms of any Lease, the space occupied and the rentals or license fees payable
thereunder.
SECTION 1.09. Restrictions on Transfers and Encumbrances. Except as
expressly permitted by the Credit Agreement, Mortgagor shall not directly or
indirectly sell, convey, deed over, alienate, assign, lease, sublease, license,
mortgage, pledge, encumber or otherwise transfer, create, consent to or suffer
the creation of any lien, charges or any form of encumbrance upon any interest
in or any part of the Mortgaged Property, or be divested of its title to the
Mortgaged Property or any interest therein in any manner or way, whether
voluntarily or involuntarily (other than resulting from a condemnation), or
engage in any common, cooperative, joint, time-sharing or other congregate
ownership of all or part thereof; provided, however, that Mortgagor may in the
ordinary course of business within reasonable commercial standards, enter into
easement or covenant agreements that relate to and/or benefit the operation of
the Mortgaged Property and that do not materially and adversely affect the use
and operation of the same (except for customary utility easements that service
the Mortgaged Property, which are permitted).
SECTION 1.10. Security Agreement. This Mortgage is both a mortgage of
real property and a grant of a security interest in personal property, and shall
constitute and serve as a "Security Agreement" within the meaning of the uniform
commercial code as adopted in the state wherein the Premises are located
("UCC"). Mortgagor has hereby granted unto Mortgagee a security interest in and
to all the Mortgaged Property described in this Mortgage that is not real
property, and simultaneously with the recording of this Mortgage, Mortgagor has
filed or will file UCC financing statements, and will file continuation
statements prior to the lapse thereof, at the appropriate offices in the state
in which the Premises are located to perfect the security interest granted by
this Mortgage in all the Mortgaged Property that is not real property. Mortgagor
hereby appoints Mortgagee as its true and lawful attorney-in-fact and agent, for
Mortgagor and in its name, place and stead, in any and all capacities, to
execute any document and to file the same in the appropriate offices (to the
extent it may lawfully do so), and to perform each and every act and thing
<PAGE>
18
reasonably requisite and necessary to be done to perfect the security interest
contemplated by the preceding sentence. Mortgagee shall have all rights with
respect to the part of the Mortgaged Property that is the subject of a security
interest afforded by the UCC in addition to, but not in limitation of, the other
rights afforded Mortgagee hereunder and under the Security Agreement.
SECTION 1.11. Filing and Recording. Mortgagor will cause this Mortgage,
any other security instrument creating a security interest in or evidencing the
lien hereof upon the Mortgaged Property and each instrument of further assurance
to be filed, registered or recorded in such manner and in such places as may be
required by any present or future law in order to publish notice of and fully to
protect the lien hereof upon, and the security interest of Mortgagee in, the
Mortgaged Property. Mortgagor will pay all filing, registration or recording
fees, and all expenses incidental to the execution and acknowledgment of this
Mortgage, any mortgage supplemental hereto, any security instrument with respect
to the Personal Property, and any instrument of further assurance and all
Federal, state, county and municipal recording, documentary or intangible taxes
and other taxes, duties, imposts, assessments and charges arising out of or in
connection with the execution, delivery and recording of this Mortgage, any
mortgage supplemental hereto, any security instrument with respect to the
Personal Property or any instrument of further assurance.
SECTION 1.12. Further Assurances. Upon demand by Mortgagee, Mortgagor
will, at the cost of Mortgagor and without expense to Mortgagee, do, execute,
acknowledge and deliver all such further acts, deeds, conveyances, mortgages,
assignments, notices of assignment, transfers and assurances as Mortgagee shall
from time to time require for the better assuring, conveying, assigning,
transferring and confirming unto Mortgagee the property and rights hereby
conveyed or assigned or intended now or hereafter so to be, or which Mortgagor
may be or may hereafter become bound to convey or assign to Mortgagee, or for
carrying out the intention or facilitating the performance of the terms of this
Mortgage, or for filing, registering or recording this Mortgage, and on demand,
Mortgagor will also execute and deliver and hereby appoints Mortgagee as its
true and lawful attorney-in-fact and agent, for Mortgagor and in its name, place
and stead, in any and all capacities, to execute and file to the extent it may
lawfully do so, one or more financing statements, chattel mortgages or
comparable security instruments reasonably requested by Mortgagee to evidence
<PAGE>
19
more effectively the lien hereof upon the Personal Property and to perform each
and every act and thing requisite and necessary to be done to accomplish the
same.
SECTION 1.13. Additions to Mortgaged Property. All right, title and
interest of Mortgagor in and to all extensions, improvements, betterments,
renewals, substitutes and replacements of, and all additions and appurtenances
to, the Mortgaged Property hereafter acquired by or released to Mortgagor or
constructed, assembled or placed by Mortgagor upon the Premises or the
Improvements, and all conversions of the security constituted thereby,
immediately upon such acquisition, release, construction, assembling, placement
or conversion, as the case may be, and in each such case without any further
mortgage, conveyance, assignment or other act by Mortgagor, shall become subject
to the lien and security interest of this Mortgage as fully and completely and
with the same effect as though now owned by Mortgagor and specifically described
in the grant of the Mortgaged Property above, but at any and all times Mortgagor
will execute and deliver to Mortgagee any and all such further assurances,
mortgages, conveyances or assignments thereof as Mortgagee may require for the
purpose of expressly and specifically subjecting the same to the lien and
security interest of this Mortgage.
SECTION 1.14. No Claims Against Mortgagee. Nothing contained in this
Mortgage shall constitute any consent or request by Mortgagee, express or
implied, for the performance of any labor or services or the furnishing of any
materials or other property in respect of the Mortgaged Property or any part
thereof, nor as giving Mortgagor any right, power or authority to contract for
or permit the performance of any labor or services or the furnishing of any
materials or other property in such fashion as would permit the making of any
claim against Mortgagee in respect thereof.
SECTION 1.15. Fixture Filing. Certain of the Mortgaged Property is or
will become "fixtures" (as that term is defined in the UCC) on the Land, and
this Mortgage upon being filed for record in the real estate records of the
county wherein such fixtures are situated shall operate also as a financing
statement filed as a fixture filing in accordance with the applicable provisions
of said UCC upon such of the Mortgaged Property that is or may become fixtures.
<PAGE>
20
ARTICLE II
Defaults and Remedies
SECTION 2.01. Events of Default. Any Event of Default under the Credit
Agreement (as such term is defined therein) shall constitute an Event of Default
under this Mortgage.
SECTION 2.02. Demand for Payment. If an Event of Default shall occur
and be continuing, then, upon written demand of Mortgagee, Mortgagor will pay to
Mortgagee all amounts due hereunder and such further amount as shall be
sufficient to cover the costs and expenses of collection, including attorneys'
fees, disbursements and expenses incurred by Mortgagee and Mortgagee shall be
entitled and empowered to institute an action or proceedings at law or in equity
for the collection of the sums so due and unpaid, to prosecute any such action
or proceedings to judgment or final decree, to enforce any such judgment or
final decree against Mortgagor and to collect, in any manner provided by law,
all moneys adjudged or decreed to be payable.
SECTION 2.03. Rights To Take Possession, Operate and Apply Revenues.
(a) If an Event of Default shall occur and be continuing, Mortgagor shall, upon
demand of Mortgagee, forthwith surrender to Mortgagee actual possession of the
Mortgaged Property and, if and to the extent not prohibited by applicable law,
Mortgagee itself, or by such officers or agents as it may appoint, may then
enter and take possession of all the Mortgaged Property without the appointment
of a receiver or an application therefor, exclude Mortgagor and its agents and
employees wholly therefrom, and have access to the books, papers and accounts of
Mortgagor.
(b) If Mortgagor shall for any reason fail to surrender or deliver the
Mortgaged Property or any part thereof after such demand by Mortgagee, Mortgagee
may to the extent not prohibited by applicable law, obtain a judgment or decree
conferring upon Mortgagee the right to immediate possession or requiring
Mortgagor to deliver immediate possession of the Mortgaged Property to
Mortgagee, to the entry of which judgment or decree Mortgagor hereby
specifically consents. Mortgagor will pay to Mortgagee, upon demand, all
reasonable expenses of obtaining such judgment or decree, including reasonable
compensation to Mortgagee's attorneys and agents with interest thereon at the
<PAGE>
21
Default Interest Rate; and all such expenses and compensation shall, until paid,
be secured by this Mortgage.
(c) Upon every such entry or taking of possession, Mortgagee may, to
the extent not prohibited by applicable law, hold, store, use, operate, manage
and control the Mortgaged Property, conduct the business thereof and, from time
to time, (i) make all necessary and proper maintenance, repairs, renewals,
replacements, additions, betterments and improvements thereto and thereon, (ii)
purchase or otherwise acquire additional fixtures, personalty and other
property, (iii) insure or keep the Mortgaged Property insured, (iv) manage and
operate the Mortgaged Property and exercise all the rights and powers of
Mortgagor to the same extent as Mortgagor could in its own name or otherwise
with respect to the same, and (v) enter into any and all agreements with respect
to the exercise by others of any of the powers herein granted Mortgagee, all as
may from time to time be directed or determined by Mortgagee to be in its best
interest and Mortgagor hereby appoints Mortgagee as its true and lawful
attorney-in-fact and agent, for Mortgagor and in its name, place and stead, in
any and all capacities, to perform any of the foregoing acts. Mortgagee may
collect and receive all the Rents, issues, profits and revenues from the
Mortgaged Property, including those past due as well as those accruing
thereafter, and, after deducting (i) all expenses of taking, holding, managing
and operating the Mortgaged Property (including compensation for the services of
all persons employed for such purposes), (ii) the costs of all such maintenance,
repairs, renewals, replacements, additions, betterments, improvements, purchases
and acquisitions, (iii) the costs of insurance, (iv) such taxes, assessments and
other similar charges as Mortgagee may at its option pay, (v) other proper
charges upon the Mortgaged Property or any part thereof and (vi) the
compensation, expenses and disbursements of the attorneys and agents of
Mortgagee, Mortgagee shall apply the remainder of the moneys and proceeds so
received first to the payment of the Mortgagee for the satisfaction of the
Obligations, and second, if there is any surplus, to Mortgagor, subject to the
entitlement of others thereto under applicable law.
(d) Whenever, before any sale of the Mortgaged Property under Section
2.06, all Obligations that are then due shall have been paid and all Events of
Default fully cured, Mortgagee will surrender possession of the Mortgaged
Property back to Mortgagor, its successors or assigns. The same right of taking
<PAGE>
22
possession shall, however, arise again if any subsequent Event of Default shall
occur and be continuing.
SECTION 2.04. Right To Cure Failure to Perform. Should Mortgagor [or
Terex]3 fail in the payment, performance or observance of any term, covenant or
condition required by this Mortgage or the Credit Agreement (with respect to the
Mortgaged Property), Mortgagee may at any time after ten days notice to the
Mortgager (or, to the extent the Mortgagee deems it necessary to act prior the
end of such ten day notice period in order to preserve the Mortgaged Property,
the Mortgagor's rights to and use of the Mortgaged Property or the lien created
by this Mortgage any shorter notice period) pay, perform or observe the same,
and all payments made or costs or expenses incurred by Mortgagee in connection
therewith shall be secured hereby and shall be, without demand, immediately
repaid by Mortgagor to Mortgagee with interest thereon at the Default Interest
Rate. Mortgagee shall be the sole judge of the necessity for any such actions
and of the amounts to be paid. Mortgagee is hereby empowered to enter and to
authorize others to enter upon the Premises or the Improvements or any part
thereof for the purpose of performing or observing any such defaulted term,
covenant or condition without having any obligation to so perform or observe and
without thereby becoming liable to Mortgagor, to any person in possession
holding under Mortgagor or to any other person.
SECTION 2.05. Right to a Receiver. If an Event of Default shall occur
and be continuing, Mortgagee, upon application to a court of competent
jurisdiction, shall be entitled as a matter of right to the appointment of a
receiver to take possession of and to operate the Mortgaged Property and to
collect and apply the Rents. The receiver shall have all of the rights and
powers permitted under the laws of the state wherein the Mortgaged Property is
located. Mortgagor shall pay to Mortgagee upon demand all expenses, including
receiver's fees, attorney's fees and disbursements, costs and agent's
compensation incurred pursuant to the provisions of this Section 2.05; and all
such expenses shall be secured by this Mortgage and shall be, without demand,
immediately repaid by Mortgagor to Mortgagee with interest thereon at the
Default Interest Rate.
SECTION 2.06. Foreclosure and Sale. (a) If an Event of Default shall
occur and be continuing, Mortgagee may elect to sell the Mortgaged Property or
- ---------------
3 Include where Mortgagor is not Terex.
<PAGE>
23
any part of the Mortgaged Property by exercise of the power of foreclosure or of
sale granted to Mortgagee by applicable law or this Mortgage. In such case,
Mortgagee may commence a civil action to foreclose this Mortgage, or it may
proceed and sell the Mortgaged Property to satisfy any Obligation. Mortgagee or
an officer appointed by a judgment of foreclosure to sell the Mortgaged
Property, may sell all or such parts of the Mortgaged Property as may be chosen
by Mortgagee at the time and place of sale fixed by it in a notice of sale,
either as a whole or in separate lots, parcels or items as Mortgagee shall deem
expedient, and in such order as it may determine, at public auction to the
highest bidder. Mortgagee or an officer appointed by a judgment of foreclosure
to sell the Mortgaged Property may postpone any foreclosure or other sale of all
or any portion of the Mortgaged Property by public announcement at such time and
place of sale, and from time to time thereafter may postpone such sale by public
announcement or subsequently noticed sale. Without further notice, Mortgagee or
an officer appointed to sell the Mortgaged Property may make such sale at the
time fixed by the last postponement, or may, in its discretion, give a new
notice of sale. Any person, including Mortgagor or Mortgagee or any designee or
affiliate thereof, may purchase at such sale.
(b) The Mortgaged Property may be sold subject to unpaid taxes and
Permitted Encumbrances, and, after deducting all costs, fees and expenses of
Mortgagee (including costs of evidence of title in connection with the sale),
Mortgagee or an officer that makes any sale shall apply the proceeds of sale in
the manner set forth in Section 2.08.
(c) Any foreclosure or other sale of less than the whole of the
Mortgaged Property or any defective or irregular sale made hereunder shall not
exhaust the power of foreclosure or of sale provided for herein; and subsequent
sales may be made hereunder until the Obligations have been satisfied, or the
entirety of the Mortgaged Property has been sold.
(d) If an Event of Default shall occur and be continuing, Mortgagee may
instead of, or in addition to, exercising the rights described in Section
2.06(a) above and either with or without entry or taking possession as herein
permitted, proceed by a suit or suits in law or in equity or by any other
appropriate proceeding or remedy (i) to specifically enforce payment of some or
all of the Obligations, or the performance of any term, covenant, condition or
agreement of this Mortgage or any other Loan Document or any other right, or
<PAGE>
24
(ii) to pursue any other remedy available to Mortgagee, all as Mortgagee shall
determine most effectual for such purposes.
SECTION 2.07. Other Remedies. (a) In case an Event of Default shall
occur and be continuing, Mortgagee may also exercise, to the extent not
prohibited by law, any or all of the remedies available to a secured party under
the UCC.
(b) In connection with a sale of the Mortgaged Property or any Personal
Property and the application of the proceeds of sale as provided in Section
2.08, Mortgagee shall be entitled to enforce payment of and to receive up to the
principal amount of the Obligations, plus all other charges, payments and costs
due under this Mortgage, and to recover a deficiency judgment for any portion of
the aggregate principal amount of the Obligations remaining unpaid, with
interest.
SECTION 2.08. Application of Sale Proceeds and Rents. After any
foreclosure sale of all or any of the Mortgaged Property, Mortgagee shall
receive the proceeds of sale, no purchaser shall be required to see to the
application of the proceeds and Mortgagee shall apply the proceeds of the sale
together with any Rents that may have been collected and any other sums that
then may be held by Mortgagee under this Mortgage as follows:
FIRST, to the payment of all costs and expenses incurred by
the Mortgagee, Administrative Agent or the Collateral Agent (in their
capacities as such hereunder or under any other Loan Document) in
connection with such collection or sale or otherwise in connection with
this Mortgage or any of the Obligations, including all court costs and
the fees and expenses of its agents and legal counsel, the repayment of
all advances made by the Mortgagee hereunder, the Collateral Agent
under any other Loan Document on behalf of the Mortgagor or any other
Loan Party and any other costs or expenses incurred in connection with
the exercise of any right or remedy hereunder or under any other Loan
Document;
SECOND, to the payment in full of the Obligations (the amounts
so applied to be distributed among the Secured Parties pro rata in
accordance with the amounts of the Obligations owed to them on the date
of any such distribution); and
<PAGE>
25
THIRD, to the Mortgagor, its successors or assigns, or as a
court of competent jurisdiction may otherwise direct.
The Mortgagee shall have absolute discretion as to the time of application of
any such proceeds, moneys or balances in accordance with this Mortgage. Upon any
sale of the Mortgaged Property by the Mortgagee (including pursuant to a power
of sale granted by statute or under a judicial proceeding), the receipt of the
Mortgagee or of the officer making the sale shall be a sufficient discharge to
the purchaser or purchasers of the Mortgaged Property so sold and such purchaser
or purchasers shall not be obligated to see to the application of any part of
the purchase money paid over to the Mortgagee or such officer or be answerable
in any way for the misapplication thereof.
SECTION 2.09. Mortgagor as Tenant Holding Over. If Mortgagor remains in
possession of any of the Mortgaged Property after any foreclosure sale by
Mortgagee, at Mortgagee's election Mortgagor shall be deemed a tenant holding
over and shall forthwith surrender possession to the purchaser or purchasers at
such sale or be summarily dispossessed or evicted according to provisions of law
applicable to tenants holding over.
SECTION 2.10. Waiver of Appraisement, Valuation, Stay, Extension and
Redemption Laws. Mortgagor waives, to the extent not prohibited by law, (i) the
benefit of all laws now existing or that hereafter may be enacted providing for
any appraisement of any portion of the Mortgaged Property, (ii) the benefit of
all laws now existing or that may be hereafter enacted in any way extending the
time for the enforcement or the collection of amounts due under any of the
Obligations or creating or extending a period of redemption from any sale made
in collecting said debt or any other amounts due Mortgagee, (iii) any right to
at any time insist upon, plead, claim or take the benefit or advantage of any
law now or hereafter in force providing for any appraisement, homestead
exemption, valuation, stay, statute of limitations, extension or redemption, or
sale of the Mortgaged Property as separate tracts, units or estates or as a
single parcel in the event of foreclosure or notice of deficiency, and (iv) all
rights of redemption, valuation, appraisement, stay of execution, notice of
election to mature or declare due the whole of or each of the Obligations and
marshaling in the event of foreclosure of this Mortgage.
SECTION 2.11. Discontinuance of Proceedings. In case Mortgagee shall
proceed to enforce any right, power or remedy under this Mortgage by
<PAGE>
26
foreclosure, entry or otherwise, and such proceedings shall be discontinued or
abandoned for any reason, or shall be determined adversely to Mortgagee, then
and in every such case Mortgagor and Mortgagee shall be restored to their former
positions and rights hereunder, and all rights, powers and remedies of Mortgagee
shall continue as if no such proceeding had been taken.
SECTION 2.12. Suits To Protect the Mortgaged Property. Mortgagee shall
have power (a) to institute and maintain suits and proceedings to prevent any
impairment of the Mortgaged Property by any acts that may be unlawful or in
violation of this Mortgage, (b) to preserve or protect its interest in the
Mortgaged Property and in the Rents arising therefrom and (c) to restrain the
enforcement of or compliance with any legislation or other governmental
enactment, rule or order that may be unconstitutional or otherwise invalid if
the enforcement of or compliance with such enactment, rule or order would impair
the security or be prejudicial to the interest of Mortgagee hereunder.
SECTION 2.13. Filing Proofs of Claim. In case of any receivership,
insolvency, bankruptcy, reorganization, arrangement, adjustment, composition or
other proceedings affecting Mortgagor, Mortgagee shall, to the extent permitted
by law, be entitled to file such proofs of claim and other documents as may be
necessary or advisable in order to have the claims of Mortgagee allowed in such
proceedings for the Obligations secured by this Mortgage at the date of the
institution of such proceedings and for any interest accrued, late charges and
additional interest or other amounts due or that may become due and payable
hereunder after such date.
SECTION 2.14. Possession by Mortgagee. Notwithstanding the appointment
of any receiver, liquidator or trustee of Mortgagor, any of its property or the
Mortgaged Property, Mortgagee shall be entitled, to the extent not prohibited by
law, to remain in possession and control of all parts of the Mortgaged Property
now or hereafter granted under this Mortgage to Mortgagee in accordance with the
terms hereof and applicable law.
SECTION 2.15. Waiver. (a) No delay or failure by Mortgagee to exercise
any right, power or remedy accruing upon any breach or Event of Default shall
exhaust or impair any such right, power or remedy or be construed to be a waiver
of any
<PAGE>
27
such breach or Event of Default or acquiescence therein; and every right, power
and remedy given by this Mortgage to Mortgagee may be exercised from time to
time and as often as may be deemed expedient by Mortgagee. No consent or waiver
by Mortgagee to or of any breach or default by Mortgagor in the performance of
the Obligations shall be deemed or construed to be a consent or waiver to or of
any other breach or Event of Default in the performance of the same or any other
Obligations by Mortgagor hereunder. No failure on the part of Mortgagee to
complain of any act or failure to act or to declare an Event of Default,
irrespective of how long such failure continues, shall constitute a waiver by
Mortgagee of its rights hereunder or impair any rights, powers or remedies
consequent on any future Event of Default by Mortgagor.
(b) Even if Mortgagee (i) grants some forbearance or an extension of
time for the payment of any sums secured hereby, (ii) takes other or additional
security for the payment of any sums secured hereby, (iii) waives or does not
exercise some right granted herein or under the Loan Documents, (iv) releases a
part of the Mortgaged Property from this Mortgage, (v) agrees to change some of
the terms, covenants, conditions or agreements of any of the Loan Documents,
(vi) consents to the filing of a map, plat or replat affecting the Premises,
(vii) consents to the granting of an easement or other right affecting the
Premises or (viii) makes or consents to an agreement subordinating Mortgagee's
lien on the Mortgaged Property hereunder; no such act or omission shall preclude
Mortgagee from exercising any other right, power or privilege herein granted or
intended to be granted in the event of any breach or Event of Default then made
or of any subsequent default; nor, except as otherwise expressly provided in an
instrument executed by Mortgagee, shall this Mortgage be altered thereby. In the
event of the sale or transfer by operation of law or otherwise of all or part of
the Mortgaged Property, Mortgagee is hereby authorized and empowered to deal
with any vendee or transferee with reference to the Mortgaged Property secured
hereby, or with reference to any of the terms, covenants, conditions or
agreements hereof, as fully and to the same extent as it might deal with the
original parties hereto and without in any way releasing or discharging any
liabilities, obligations or undertakings.
SECTION 2.16. Remedies Cumulative. No right, power or remedy conferred
upon or reserved to Mortgagee by this Mortgage is intended to be exclusive of
any other right, power or remedy, and each and every such right, power and
<PAGE>
28
remedy shall be cumulative and concurrent and in addition to any other right,
power and remedy given hereunder or now or hereafter existing at law or in
equity or by statute.
ARTICLE III
Miscellaneous
SECTION 3.01. Partial Invalidity. In the event any one or more of the
provisions contained in this Mortgage should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein, at the option of Mortgagee, shall not in
any way be affected or impaired thereby. The parties shall endeavor in
good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
SECTION 3.02. Notices. All notices and communications hereunder shall
be in writing and given as provided in Section 9.01 of the Credit Agreement.
[All communications and notices hereunder to the Mortgagor shall be given to it
in care of Terex.]4
SECTION 3.03. Successors and Assigns. All of the grants, covenants,
terms, provisions and conditions herein shall run with the Premises and the
Improvements and shall apply to, bind and inure to, the benefit of the permitted
successors and assigns of Mortgagor and the successors and assigns of Mortgagee.
SECTION 3.04. Satisfaction and Cancelation. (a) The conveyance to
Mortgagee of the Mortgaged Property as security, created and consummated by this
Mortgage shall be null and void when all the Obligations have been paid in full,
the Lenders have no further commitment to lend under the Credit Agreement, the
L/C Exposure has been reduced to zero and the Issuing Bank has no further
obligation to issue Letters of Credit under the Credit Agreement.
- ------------
4 Include where Mortgagee is not Terex.
<PAGE>
29
(b) Upon a sale or other transfer by the Mortgagor to any Person who is
not a Loan Party of all or any portion of the Mortgaged Property that is
permitted under the Credit Agreement and the application of the Net Cash
Proceeds of such sale or financing in accordance with the Credit Agreement, or,
upon the effectiveness of any written consent to the release of the lien of this
Mortgage in all or any portion of the Mortgaged Property, the lien of this
Mortgage shall be released from the applicable portion of the Mortgaged
Property. The Mortgagor shall give the Mortgagee reasonable written notice of
any sale or financing of the Mortgaged Property prior to the closing of such
sale or financing.
(c) In connection with any termination or release pursuant to paragraph
(a) or (b), the Mortgage shall be marked "satisfied" by the Mortgagee, and this
Mortgage shall be canceled of record at the request and at the expense of the
Mortgagor. Mortgagee shall execute any documents reasonably requested by
Mortgagor to evidence the foregoing and Mortgagor will pay all costs and
expenses, including reasonable attorneys' fees, disbursements and other charges,
incurred by Mortgagee in connection with the preparation and execution of such
documents.
SECTION 3.05. Definitions. As used in this Mortgage, the singular shall
include the plural as the context requires and the following words and phrases
shall have the following meanings: (a) "including" shall mean "including but not
limited to"; (b) "provisions" shall mean "provisions, terms, covenants and/or
conditions"; (c) "lien" shall mean "lien, charge, encumbrance, security
interest, mortgage or deed of trust"; (d) "obligation" shall mean "obligation,
duty, covenant and/or condition"; and (e) "any of the Mortgaged Property" shall
mean "the Mortgaged Property or any part thereof or interest therein". Any act
that Mortgagee is permitted to perform hereunder may be performed at any time
and from time to time by Mortgagee or any person or entity designated by
Mortgagee. Any act that is prohibited to Mortgagor hereunder is also prohibited
to all lessees of any of the Mortgaged Property. Each appoint ment of Mortgagee
as attorney-in-fact for Mortgagor under the Mortgage is irrevocable, with power
of substitution and coupled with an interest. Subject to the applicable
provisions hereof, Mortgagee has the right to refuse to grant its consent,
approval or acceptance or to indicate its satisfaction, in its sole discretion,
whenever such consent, approval, acceptance or satisfaction is required
hereunder.
<PAGE>
30
SECTION 3.06. Multisite Real Estate Transaction. Mortgagor acknowledges
that this Mortgage is one of a number of Other Mortgages and Security Documents
that secure the Obligations. Mortgagor agrees that the lien of this Mortgage
shall be absolute and unconditional and shall not in any manner be affected or
impaired by any acts or omissions whatsoever of Mortgagee and without limiting
the generality of the foregoing, the lien hereof shall not be impaired by any
acceptance by the Mortgagee of any security for or guarantees of any of the
Obligations hereby secured, or by any failure, neglect or omission on the part
of Mortgagee to realize upon or protect any Obligation or indebtedness hereby
secured or any collateral security therefor including the Other Mortgages and
other Security Documents. The lien hereof shall not in any manner be impaired or
affected by any release (except as to the property released), sale, pledge,
surrender, compromise, settlement, renewal, extension, indulgence, alteration,
changing, modification or disposition of any of the Obligations secured or of
any of the collateral security therefor, including the Other Mortgages and other
Security Documents or of any guarantee thereof, and Mortgagee may at its
discretion foreclose, exercise any power of sale, or exercise any other remedy
available to it under any or all of the Other Mortgages and other Security
Documents without first exercising or enforcing any of its rights and remedies
hereunder. Such exercise of Mortgagee's rights and remedies under any or all of
the Other Mortgages and other Security Documents shall not in any manner impair
the indebtedness hereby secured or the lien of this Mortgage and any exercise of
the rights or remedies of Mortgagee hereunder shall not impair the lien of any
of the Other Mortgages and other Security Documents or any of Mortgagee's rights
and remedies thereunder. Mortgagor specifically consents and agrees that
Mortgagee may exercise its rights and remedies hereunder and under the Other
Mortgages and other Security Documents separately or concurrently and in any
order that it may deem appropriate and waives any rights of subrogation.
ARTICLE IV
Subject Leases
SECTION 4.01. The Subject Leases. (a) Each Subject Lease is in full
force and effect in accordance with the terms thereof, and has not been modified
except as expressly set forth on Exhibit B hereto. Mortgagor has delivered to
Mortgagee a true, correct and complete copy of each Subject Lease. No material
<PAGE>
31
default exists, and to the best knowledge of Mortgagor, no event or act has
occurred and no condition exists which with the passage of time or the giving of
notice or both would constitute a default, under any Subject Lease. The
execution and delivery of this Mortgage by Mortgagor (i) does not require the
consent or approval of the landlord under any Subject Lease (or, if any consent
or approval of the landlord is required, such has been obtained and a copy of
such consent or approval has been delivered to Mortgagee or the Mortgagor will
use commercially reasonable efforts to obtain such consent or approval) and (ii)
will not violate or result in a default under any Subject Lease.
(b) Without the prior written consent of Mortgagee, Mortgagor
shall not modify, amend, or in any way alter the terms of any Subject Lease if
such modification, amendment or alteration would increase the monetary
obligations of the Mortgagor under the Subject Lease or otherwise be adverse in
any respect to the interests of Mortgagee or materially lower the value of the
Mortgaged Property. Except to the extent expressly permitted under the Credit
Agreement, without the prior written consent of Mortgagee (which consent shall
not be unreasonably withheld) Mortgagor shall not (i) in any way cancel,
release, terminate, surrender or reduce the term of any Subject Lease, (ii)
waive, excuse, condone or in any way release or discharge landlord of or from
the obligations, covenants, conditions and agreements by said landlord to be
done and performed or (iv) consent to the subordination of any Subject Lease to
any mortgage unless such subordination is required by the terms of such Subject
Lease; provided that the Mortgagor shall take all commercially reasonable steps
to ensure such Subject Lease does not require such consent. Any attempt on the
part of Mortgagor to do any of the foregoing without such written consent of
Mortgagee shall be null and void and of no effect and shall constitute a Default
hereunder.
(c) Mortgagor shall at all times promptly and faithfully keep
and perform in all material respects, or cause to be kept and performed in all
material respects, all the covenants and conditions contained in each Subject
Lease by the lessee therein to be kept and performed and shall in all material
respects conform to and comply with the terms and conditions of each Subject
Lease and Mortgagor further covenants that it will not do or permit anything to
be done, the doing of which, or refrain from doing anything, the omission of
which, will impair the security of this Mortgage or will be reason for
<PAGE>
32
declaring a material default under any Subject Lease.
(d) Mortgagor shall give Mortgagee notice in writing promptly
after obtaining knowledge thereof of any material default on the part of the
landlord under any Subject Lease or of the receipt by Mortgagor of any notice of
default from the landlord thereunder by providing to Mortgagee a copy of any
such notice received by Mortgagor from such landlord and this shall be done
without regard to the fact that Mortgagee may be entitled to such notice
directly from the landlord. Mortgagor shall promptly notify Mortgagee of any
default under any Subject Lease by landlord or giving of any notice by the
landlord to Mortgagor of such landlord's intention to end the term thereof.
Mortgagor shall furnish to Mortgagee promptly upon Mortgagee's reasonable
request any and all information concerning the performance by Mortgagor of the
covenants of any Subject Lease and shall permit Mortgagee or its representative
at all reasonable times, upon reasonable notice, to make investigation or
examination concerning the performance by Mortgagor of the covenants of any
Subject Lease.
(e) Mortgagee may (but shall not be obligated to) at any time after ten
days notice to the Mortgagor (or, to the extent the Mortgagee deems it necessary
to act prior the end of such ten day notice period on order to preserve the
Mortgaged Property, the Mortgagor's rights to and use of the Mortgaged Property
or the lien created by this Mortgage, any shorter notice period) take any such
action Mortgagee deems necessary or desirable to cure, in whole or in part, any
failure of compliance by Mortgagor under any Subject Lease; and upon the receipt
by Mortgagee from Mortgagor or the landlord under any Subject Lease of any
written notice of default by Mortgagor as the lessee thereunder, Mortgagee may
rely thereon, and such notice shall constitute full authority and protection to
Mortgagee for any action taken or omitted to be taken in good faith reliance
thereon. All sums, including reasonable attorneys' fees, so expended by the
Mortgagee to cure or prevent any such default, or expended to sustain the lien
of this Mortgage or its priority, shall be deemed secured by this Mortgage and
shall be paid by the Mortgagor on demand, with interest accruing thereon at the
Default Interest Rate. Subject to the provisions set forth in the first sentence
of this Section 4.01(e), Mortgagor hereby expressly grants to Mortgagee (subject
to the terms of each Subject Lease), and agrees that Mortgagee shall have, the
absolute and immediate right to enter in and upon the Leased Land and the
<PAGE>
33
Improvements or any part thereof to such extent and as often as Mortgagee, in
its discretion, deems necessary or desirable in order to cure any such default
or alleged default by Mortgagor.
(f) Upon the occurrence and continuance of any Event of
Default hereunder, all lessee's options, elections and approval rights, together
with the right of termination, cancelation, modification, change, supplement,
alteration or amendment of each Subject Lease, all of which have been assigned
for collateral purposes to Mortgagee, shall automatically vest exclusively in
and be exercisable solely by Mortgagee.
(g) INTENTIONALLY OMITTED
(h) Mortgagor will give Mortgagee prompt written notice of the
commencement of any arbitration or appraisal proceeding under and pursuant to
the provisions of the Subject Lease. Upon the occurrence and continuance of any
Event of Default hereunder, Mortgagee shall have the right, but not the
obligation, to intervene and participate in any such proceeding and Mortgagor
shall confer with Mortgagee to the extent which Mortgagee deems necessary for
the protection of Mortgagee. Mortgagor may compromise any dispute or approval
which is the subject of an arbitration or appraisal proceeding with the prior
written consent of Mortgagee which will not be unreasonably withheld or delayed.
(i) So long as this Mortgage is in effect, there shall be no
merger of any Subject Lease or any interest therein, or of the leasehold estate
created thereby, with the fee estate in the Land or any portion thereof by
reason of the fact that such Subject Lease or such interest therein may be held
directly or indirectly by or for the account of any person who shall hold the
landlord's leasehold estate or fee estate in the Land or any portion thereof or
any interest of the landlord under such Subject Lease. In case the Mortgagor
acquires fee title to the Land, this Mortgage shall attach to and cover and be a
lien upon the fee title or such other estate so acquired, and such fee title or
other estate shall, without further assignment, mortgage or conveyance, become
and be subject to the lien of and covered by this Mortgage. Mortgagor shall
notify Mortgagee of any such acquisition and, on written request by Mortgagee,
shall cause to be executed and recorded all such other and further assurances or
other instruments in writing as may in the reasonable opinion of Mortgagee be
necessary or appropriate to effect the intent and meaning hereof and shall
<PAGE>
34
deliver to Mortgagee an endorsement to Mortgagee's loan title insurance policy
insuring that such fee title or other estate is subject to the lien of this
Mortgage.
(j) In the event that the Mortgagor as lessee under any
Subject Lease exercises any option or right to purchase any parcel of land which
option or right is granted under said Subject Lease, then upon the vesting of
the title of such parcel in the Mortgagor, this Mortgage shall attach to and
cover and be a lien upon the fee title or such other estate so acquired, and
such fee title or other estate shall, without further assignment, mortgage or
conveyance, become and be subject to the lien of and covered by this Mortgage.
(k) If any action or proceeding shall be instituted to evict
Mortgagor or to recover possession of any leasehold parcel or any part thereof
or interest therein or any action or proceeding otherwise affecting any Subject
Lease or this Mortgage shall be instituted, then Mortgagor will, promptly upon
service thereof on or to Mortgagor, deliver to Mortgagee a notice of motion,
order to show cause and of all other provisions, pleadings, and papers, however
designated, served in any such action or proceeding.
(l) The lien of this Mortgage shall attach to all of
Mortgagor's rights and remedies at any time arising under or pursuant to
Subsection 365(h) of the Bankruptcy Code, 11 U.S.C. 365(h), as the same may
hereafter be amended (the "Bankruptcy Code"), including, without limitation, all
of Mortgagor's rights to remain in possession of each leasehold parcel.
(m) Mortgagor hereby unconditionally assigns, transfers and
sets over to Mortgagee all of Mortgagor's claims and rights to the payment of
damages arising from any rejection of any Subject Lease by the lessor or any
other fee owner of any leasehold parcel or any portion thereof under the
Bankruptcy Code. Mortgagee shall have the right to proceed in its own name or in
the name of Mortgagor in respect of any claim, suit, action or proceeding
relating to the rejection of the Subject Lease, including, without limitation,
the right to file and prosecute, without joining or the joinder of Mortgagor,
any proofs of claim, complaints, motions, applications, notices and other
documents, in any case with respect to the lessor or any fee owner of all or a
portion of any leasehold parcel under the Bankruptcy Code. This assignment
<PAGE>
35
constitutes a present, irrevocable and unconditional assignment of the foregoing
claims, rights and remedies, and shall continue in effect until, pursuant to
Section 3.04 hereof, the conveyance of the Mortgaged Property to Mortgagee is
null and void. Any amounts received by Mortgagee as damages arising out of the
rejection of the Subject Lease as aforesaid shall be applied first to all costs
and expenses of Mortgagee (including, without limitation, attorneys' fees)
incurred in connection with the exercise of any of its rights or remedies under
this paragraph. Mortgagor shall promptly make, execute, acknowledge and deliver,
in form and substance satisfactory to Mortgagee, a UCC financing statement (Form
UCC-1) and all such additional instruments, agreements and other documents, as
may at any time hereafter be required by Mortgagee to effectuate and carry out
the assignment pursuant to this paragraph.
(n) If pursuant to Subsection 365(h)(2) of the Bankruptcy
Code, 11 U.S.C. ss. 365(h)(2), Mortgagor shall seek to offset against the rent
reserved in any Subject Lease the amount of any damages caused by the
nonperformance by the lessor or any fee owner of any of their respective
obligations under such Subject Lease after the rejection by the lessor or any
fee owner of such Subject Lease under the Bankruptcy Code, then Mortgagor shall,
prior to effecting such offset, notify Mortgagee of its intent to do so, setting
forth the amount proposed to be so offset and the basis therefor. Mortgagee
shall have the right to object to all or any part of such offset that, in the
reasonable judgment of Mortgagee, would constitute a breach of such Subject
Lease, and in the event of such objection, Mortgagor shall not effect any offset
of the amounts so objected to by Mortgagee. Neither Mortgagee's failure to
object as aforesaid nor any objection relating to such offset shall constitute
an approval of any such offset by Mortgagee.
(o) If any action, proceeding, motion or notice shall be
commenced or filed in respect of the lessor or any fee owner of any leasehold
parcel, or any portion thereof or interest therein, or any Subject Lease in
connection with any case under the Bankruptcy Code, then Mortgagee shall have
the option, exercisable upon written notice from Mortgagee to Mortgagor, to
conduct and control any such litigation with counsel of Mortgagee's choice.
Mortgagee may proceed in its own name or in the name of Mortgagor in connection
with any such litigation, and Mortgagor agrees to execute any and all powers,
authorizations, consents or other documents required by Mortgagee in connection
<PAGE>
36
therewith. Mortgagor shall, upon demand, pay to Mortgagee all costs and expenses
(including attorneys' fees) paid or incurred by Mortgagee in connection with the
prosecution or conduct of any such proceedings. Mortgagor shall not commence any
action, suit, proceeding or case, or file any application or make any motion, in
respect of any Subject Lease in any such case under Bankruptcy Code without the
prior written consent of Mortgagee.
(p) Mortgagor shall, after obtaining knowledge thereof,
promptly notify Mortgagee of any filing by or against the lessor or fee owner of
any leasehold parcel of a petition under the Bankruptcy Code. At Mortgagee's
request, Mortgagor shall promptly deliver to Mortgagee, following receipt,
copies of any and all notices, summonses, pleadings, applications and other
documents received by Mortgagor in connection with any such petition and any
proceedings relating thereto.
(q) If there shall be filed by or against Mortgagor a petition
under the Bankruptcy Code and Mortgagor, as lessee under any Subject Lease,
shall determine to reject such Subject Lease pursuant to Section 365(a) of the
Bankruptcy Code, then Mortgagor shall give Mortgagee not less than twenty days'
prior notice of the date on which Mortgagor shall apply to the Bankruptcy Court
for authority to reject such Subject Lease. Mortgagee shall have the right, but
not the obligation, to serve upon Mortgagor within such twenty day period a
notice stating that Mortgagee demands that Mortgagor assume and assign such
Subject Lease to Mortgagee pursuant to Section 365 of the Bankruptcy Code. If
Mortgagee shall serve upon Mortgagor the notice described in the preceding
sentence, Mortgagor shall not seek to reject such Subject Lease and shall comply
with the demand provided for in the preceding sentence.
(r) Effective upon the entry of an order for relief with
respect to Mortgagor under the Bankruptcy Code, Mortgagor hereby assigns and
transfers to Mortgagee a non-exclusive right to apply to the Bankruptcy Court
under subsection 365(d)(4) of the Bankruptcy Code for an order extending the
period during which any Subject Lease may be rejected or assumed.
<PAGE>
37
ARTICLE V
Particular Provisions
This Mortgage is subject to the following provisions relating to the
particular laws of the state wherein the Premises are located:
SECTION 5.01. Applicable Law; Certain Particular Provisions. This
Mortgage shall be governed by and construed in accordance with the internal law
of the State of New York; provided, however, that the provisions of this
Mortgage relating to the creation, perfection and enforcement of the lien and
security interest created by this Mortgage in respect of the Mortgaged Property
and the exercise of each remedy provided hereby, including the power of
foreclosure or power of sale procedures set forth in this Mortgage, shall be
governed by and construed in accordance with the internal law of the state where
the Mortgaged Property is located, and Mortgagor and Mortgagee agrees to submit
to jurisdiction and the laying of venue for any suit on this Mortgage in such
state. The terms and provisions set forth in Appendix A attached hereto are
hereby incorporated by reference as though fully set forth herein. In the event
of any conflict between the terms and provisions contained in the body of this
Mortgage and the terms and provisions set forth in Appendix A, the terms and
provisions set forth in Appendix A shall govern and control.
IN WITNESS WHEREOF, this Mortgage has been duly executed and delivered
to Mortgagee by Mortgagor on the date of the acknowledgment attached hereto.
[ ],
by:
----------------------
Name:
Title:
Seal:
<PAGE>
38
STATE OF NEW YORK )
)
COUNTY OF NEW YORK )
I, the undersigned, a Notary Public in and for said County in
said State, do hereby certify that _______________, whose name as of
_______________, an ________ corporation, is signed to the foregoing instrument,
and who is known to me, and known to be such officer, acknowledged before me on
this day that, being informed of the contents of said instrument, (s)he, as such
officer and with full authority, executed the same voluntarily for and as the
act of said corporation.
Given under my hand and official seal this the day of , 199__.
<PAGE>
39
Exhibit A
to Mortgage
Legal Description
<PAGE>
40
Schedule A
to Mortgage
Leases of Mortgaged Property
<PAGE>
41
Appendix A
to Mortgage
Local Law Provisions
<PAGE>
42
EXHIBIT B
to Mortgage
Subject Leases
<PAGE>
1
Doc.-No.____________/1997/124
Notarial Deed
Transacted at Basel, Switzerland, this 18th (eighteenth) of December 1997
(nineteen hundred and ninety seven)
Before me, the undersigned
Dr. iur. Werner Wenger
duly authorized and appointed Swiss Notary Public with offices at CH-4010 Basel,
Aeschenvorstadt 55 there appeared today:
1. Dr. Alexander Loos, born 17 (seventeenth) May 1950, German citizen with
residence at 40212 Dusseldorf, Konigsallee 92a acting not in his own name,
but in the name and on behalf of
Terex Mining Equipment Inc., a company duly incorporated under the laws of
Delaware with registered offices in Westport, Connecticut, USA
as attorney without authorization and subject to ratification.
2. Mr. Jurgen Georg Ralf Dircks, born 13 (thirteenth) January 1950, German
citizen, with residence at D-44149 Dortmund, , Karl-Funke Stra(beta) 30,
living at D-50453 Cologne, Peter-Burchem-Strasse 4, acting not in his own
name, but in the name and on behalf of
O&K Orenstein & Koppel Aktiengesellschaft with registered offices in Berlin
and registered with the Commercial Register of the Amtsgericht
Berlin-Charlottenburg under 93 HRB 1167
as attorney without authorization and subject to ratification.
2.1. The undersigned notary is requested to attach to this deed the simple
written ratifications of Terex Mining Equipment, Inc. and of O&K
Orenstein & Koppel Aktiengesellschaft after having received them.
With regard to this deed there have been notarized three referenced deeds,
namely the notarial deeds of notary Stephan Cueui, domiciled in Basel,
Switzerland, A.-Prot 1992/297 of 16 and 17 December and A-Prot 1997/302 of
17 and 18 December 1992 as well as the notarial deed of the acting notary
of 18 December 1997, A-Prot 1997/123 hereinafter collectively referred to
as "Disclosure Memorandum." Such referenced deeds are hereby referred to.
The referenced deeds have been available as originals during the
notarization of this deed. Their contents are known to the attendants. The
attendants have waived that such deeds be read out or attached.
The attendants as identified by German Federal Identity card thereafter
asked for the notarization of the following:
<PAGE>
2
Share Purchase Agreement
Section 1
Subject Matter of this Agreement/Corporate Ownership
1. The registered (share) capital of O&K Mining GmbH with registered offices
in Dortmund and registered with the Commercial Register of the Amtsgericht
Dortmund under HRB 5486 amounts to DM 20,000,000. The share capital is
divided as follows:
one share in the nominal amount of DM 19,000
one share in the nominal amount of DM 1,000
one share in the nominal amount of DM 30,000
one share in the nominal amount of DM 19,950,000
-----------------
DM 20,000,000
O&K Orenstein & Koppel Aktiengesellschaft, hereinafter sometimes referred
to as the "Seller," is the sole and unrestricted owner of the
aforementioned shares.
2. On December 28, 1993 the Seller and O&K Mining GmbH entered into a
controlling and profit and loss pooling agreement, which has been
registered with the Commercial Register of O&K Mining GmbH on July 13,
1994.
3. O&K Mining GmbH is the sole owner of all shares in the following companies:
3.1. O&K Australia Pty. Ltd. (Construction and Mining Machinery) with
registered offices at Seven Hills, Australia, and with a subscribed
capital in the amount of 7,010,000 AUD;
3.2. O&K Orenstein & Koppel Ltd. with registered offices at Watford
Village, Northampton, England, and with a subscribed capital in the
amount of 8,253,000 GDP; O&K Orenstein & Koppel Ltd. is the sole
shareholder of O&K Ireland Ltd. with registered office at Dublin,
Ireland, and with a subscribed capital in the amount of 1,000 IEP;
3.3. O&K Orenstein & Koppel Inc. with registered offices at Winterburn,
Alberta, Canada, and with a subscribed capital in the amount of
2,600,000 CAD;
3.4. O&K Far East Pte. Ltd. with registered offices in Singapore, Singapore
and with a subscribed capital in the amount of 300,000 SGD;
3.5. O&K Orenstein & Koppel (South Africa) Pty. Ltd. with registered
offices at Germiston, Republic of South Africa, and with a subscribed
capital in the amount of 63,570,000 ZAR;
3.6. O&K Orenstein & Koppel Inc. with registered office at Austell,
Georgia, USA, and with a subscribed capital in the amount of 1,200
USD.
<PAGE>
3
4. O&K Mining GmbH and the aforementioned companies are hereinafter
collectively sometimes referred to as "O&K Mining Group."
5. Neither O&K Mining GmbH nor any of its subsidiaries, as completely
enumerated under para. 3.1 to 3.6 owns any shares, quotas, or other
participation rights or any options to acquire or subscribe for such
participation rights in any other company, enterprise or silent partnership
nor is there any obligation of the O&K Mining Group to acquire or subscribe
for any such participation right except with respect to the private limited
company which is planned to be established as a wholly-owned subsidiary of
O&K Mining GmbH with registered offices in Jarkarta, Indonesia.
6. Seller shall take over the shares in O&K Ireland Ltd. with registered
offices at Dublin, Ireland at the Closing Date, the latest Seller does not
owe any consideration for the acquisition of shares in O&K Ireland Ltd.
Section 2
Sale of the Shares in O&K Mining GmbH
1. The Seller herewith sells with economic effect as of the Effective Date
(Section 5 of this Agreement) all of its shares in O&K Mining GmbH as
described in Section 1 para. 1 of this Agreement, including all rights and
obligations attached thereto, including all rights to receive dividends and
profits for the fiscal year beginning on January 1, 1998, to Terex Mining
Equipment, Inc., hereinafter sometimes referred to as the "Buyer." The
Buyer hereby accepts such sale.
2. The controlling and profit and loss pooling agreement between the Seller
and O&K Mining GmbH, as described in Section 1 para. 2 above, shall be
terminated with effect of expiry of December 31, 1997. The Parties
undertake to put each other for their internal relationship in a position
they would be in if O&K Mining GmbH has neither gained any profits nor
suffered any losses in the financial year ending December 31, 1997, and,
subject to Section 4 para 4 last half sentence, hold each other harmless
from all rights and obligations arising out of and in connection with the
profit and loss pooling agreement.
3. The execution in rem and the assignment of the shares shall take place by
virtue of a separate notarial deed, subject to the provisions of Section 5
of this Agreement.
Section 3
Consideration/Purchase Price
1. Upon execution in rem of this Agreement (Section 5) the Buyer shall provide
Seller with funds in the aggregate amount of
DM 320,000,000.--
(say: three hundred and twenty million Deutschmarks)
- hereinafter sometimes referred to as the "Consideration"
Such funds shall be provided by Buyer to Seller as follows:
<PAGE>
4
1.1. The Buyer shall pay to the Seller cash funds in the amount of DM 280
million by way of wire transfer to an account of the Seller to be
denoted by the Seller.
1.2. The Buyer shall further issue to the Seller 8 bearer notes
("Inhaberschuldverschreibungen") in the nominal amount of 5 Mio DM
each and in the total nominal amount of DM 40 millions bearing
interest at a rate of 6-Month-LIBOR for DM plus 8 per cent, per annum
in accordance with the wording agreed to.
The Consideration can only be increased according to para. 8 hereinafter.
2. The funds in the aggregate amount of DM 320,000,000 to be provided for by
Buyer to Seller pursuant to para. 1 shall become due and payable upon
execution in rem (Section 5 of this Agreement) against "Zug um Zug")
transfer of all shares not encumbered with rights of third parties, in O&K
Mining GmbH. Out of these funds an amount of
DM 160,000,000.--
(say: one hundred and sixty million Deutschmarks)
shall be allocated as the purchase price for the shares in O&K Mining GmbH
sold hereunder, including the rights to receive dividends and profits for
the fiscal year 1998 and thereafter.
- hereinafter sometimes referred to as the "Purchase Price."
3. The Seller undertakes and guarantees to use the remaining funds immediately
for the repayment of Net Financial Liabilities pursuant to Section 4 of
this Agreement.
4. As regards the Buyer's obligation to provide the Seller with funds in the
aggregate amount of DM 320,000,000 pursuant to para. 1, any rights of the
Buyer to set off and/or to withhold the Consideration or any part thereof
vis-a-vis the Seller are hereby expressly waived and excluded, except for
claims which have been conceded by the Seller, or which are subject to a
final and binding decision of a competent court.
5. The Purchase Price is based on the Seller's commitment that the
consolidated net financial liabilities of O&K Mining Group as of Closing
Date (hereinafter referred to as "Net Financial Liabilities") does not
exceed an amount of DM 160 million and that the consolidated working
capital of the O&K Mining Group as of the Closing Date (hereinafter
referred to as "Net Working Capital") amount to minimum DM 260 million.
5.1. The Net Financial Liabilities of the O&K Mining Group shall be the
balance of
5.1.1. the liabilities of O&K Mining Group to external financial
creditors from borrowings ("Darlehen"), liabilities in other
currencies than DEM shall be converted to DEM on the basis of the
selling rate determined by the Frankfurt Foreign Exchange for the
respective currency on the last banking day preceding the Closing
Date;
5.1.2. plus liabilities to Seller from intercompany cash management
and clearing;
<PAGE>
5
5.1.3. minus checks received and subsequently paid, cash at bank and
in hand postal giro balances and central bank balances, if in
other currencies than DEM converted to DEM on the basis of the
purchase rate determined by the Frankfurt Foreign Exchange for
the respective currency on the last banking day preceding the
Closing Date.
5.2. The Net Working Capital of the O&K Mining Group shall be the balance
of
5.2.1. all stock minus deposits received;
5.2.2. plus all accounts receivables including those accounts
receivables vis-a-vis affiliated and associated companies other
than the companies of the O&K Mining Group.
5.2.3. minus all accounts payable arising from trade liabilities
including accounts payable arising from trade liabilities
vis-a-vis affiliated and associated companies other than the
companies of the O&K Mining Group.
Stock, accounts receivables and accounts payable accounted for in
other currencies than DEM shall be converted to DEM on the basis of the
purchasing rate determined by the Frankfurt Foreign Exchange for the
respective currency on the last banking day preceding the Closing Date.
5.3. The amount of the net Financial Liabilities as of the Closing Date
shall be determined by the parties within a period of thirty (30) days
after the Closing Date on the basis of the statements of the banks,
and of statements relating to the group clearing accounts confirmed by
C&L Deutsch Revision AG Wirtschaftsprufungsgesellschaft and confirmed
by Dr. Kocke & Partner GmbH, member of Price Waterhouse, Dusseldorf.
5.4. The amount of the Net Working Capital as of Closing Date shall be
determined within the same period. The Net Working Capital as of
Closing Date shall be derived from the audited annual financial
statements of the O&K Mining GmbH and the companies listed in Section
1 para. 3 as of December 31, 1997 which shall be submitted by Seller
to the Buyer seven days prior to Closing Date, the latest (hereinafter
the "Annual Financial Statements 1997"), and shall be brought down
("fortgeschrieben") to the Closing Date. The entries made to the
Annual Financial statements 1997 to arrive at Net Working Capital at
the Closing Date will be made in accordance with the German generally
accepted accounting and valuation principles and, where permissible,
in a manner that is consistent with the past practice of the company
and that such entries fairly represent the changes to such accounts of
the O&K Mining Group for the time since January 1, 1998. Such entries
have to be confirmed by C&L Deutsche Revision AG
Wirtschaftsprufungsgesellschaft and confirmed by Dr. Kocke & Partner
GmbH, member of Price Waterhouse, Dusseldorf.
6. If and to the extent the actual Net Financial Liabilities exceed the
aforementioned amount of DM 160 million as of Closing Date, the Seller
shall be entitled to acquire with effect as of the Closing Date accounts
receivables and/or other current assets of O&K Mining GmbH, and/or of one
of the companies listed in Section 1 para. 3 above, in order to reduce the
<PAGE>
6
Net Financial Liabilities to the target of DM 160 million, provided that
the Net Working Capital meets or exceeds DM 260 Mio. The acquisition of
accounts receivables shall be undertaken by way of factoring or forfeiting
factoring. Accounts receivables in currencies other than DEM shall be
converted according to the official middle rate determined by the Frankfurt
foreign exchange at the last banking day prior to Closing Date. Seller
shall select, at its own discretion but subject to the consent and approval
of the Buyer, the accounts receivables and/or other current assets he
acquires. Buyer shall not unreasonably withhold his consent and approval.
The Buyer represents and warrants that the O&K Mining Group shall support
the Seller by using its best efforts to collect the acquired accounts
receivables and/or to realize the value of the other acquired assets
respectively. If on the Closing Date, after any purchase of current assets
according to the aforesaid, the Net Financial Liabilities exceed DM 160
million, then the Purchase Price will be reduced by the amount of such
excess.
7. If and to the extent the Net Financial Liabilities shall be lower than the
aforementioned amount and the Net Working Capital meets or exceeds the
amount of DM 260 million, the allocation of the Consideration to the
Purchase Price shall be increased by the amount by which the Net Financial
Liabilities fall short from the amount of DM 160 million.
8. If, after the purchase of current assets according to para. 6 hereof, the
Net Financial Liabilities meet the amount of DM 160 million, whereas the
Net Working Capital is less than DM 255 million, then the Seller is obliged
to repay an amount equaling the shortfall from DM 255 million. If, after
the purchase of current assets according to para. 6 hereof, the Net
Financial Liabilities meet the amount of DM 160 million, whereas Net
Working Capital on the Closing Date exceeds the amount of DM 265 million,
then Buyer is obliged to pay the amount by which the Net Working Capital
exceeds DM 265 million. Irrespective of the allowance ("Freibetrag") of DM
5 million to the committed Net Working Capital, Seller shall use its best
efforts to secure that O&K Mining GmbH shall have a Net Working Capital on
Closing Date of DM 260 million.
Section 4
Assumption of the Financing Responsibility
1. Upon execution in rem of this Agreement, the Net Financial Liabilities of
the O&K Mining Group as of the Closing Date in the amount of DM 160 million
shall be repaid out of the Consideration to be provided by the Buyer to the
Seller pursuant Section 3 para. 1 of this Agreement as follows:
1.1. Seller, in lieu of performance, shall accept for the repayment of a
corresponding partial amount of the debit balance of O&K Mining Group
on the group clearing account conducted by the Seller the bearer notes
issued by Buyer to the Seller.
1.2. The Seller undertakes to use the cash funds provided by Buyer to
Seller immediately for the repayment of liabilities of the companies
of the O&K Mining Group to external financial creditors from loans.
The remaining amount shall be deemed as full repayment of all Net
Financial Liabilities of O&K Mining Group to the Seller from the group
clearing account (Section 267 para. 1 German Civil Code/BGB).
<PAGE>
7
1.3. If and to the extent the Net Financial Liabilities shall be lower than
the amount of DM 160 million, Seller shall keep the amount which is
not required for repayment of Net Financial Liabilities as additional
Purchase Price pursuant to Section 3 para. 7 to settle the remaining
Net Financial Liabilities.
1.4. If and to the extent the Net Financial Liabilities on Closing Date
shall exceed the amount of DM 160 million, Seller is entitled and
obliged to use the purchase price for accounts receivables and/or
other current assets acquired by Seller as provided for in Section 3
para. 6 to settle the remaining Net Financial Liabilities. The Buyer
represents and warrants that the O&K Mining Group shall support the
Seller by taking all required measures in connection with the
settlement of the remaining Net Financial Liabilities.
The Seller represents and warrants that the Net Financial Liabilities
of the O&K Mining Group reduced through any means arising from the
acquisition of accounts receivables and/or other current assets under
Section 3 para. 6 by the Seller will be completely settled through the
funds provided by the Buyer to the Seller as described above.
2. Upon execution in rem of this Agreement and settlement of the Net Financial
Liabilities as described above, the Buyer shall assume the entire financing
responsibility for the O&K Mining Group.
3. As of the execution in rem of this Agreement, the Buyer further undertakes
to use its best efforts to release the Seller from all liabilities, in
particular arising out of credit orders ("Kreditauftrage"), collaterals
("Burgschaften") and any warranties for the O&K Mining Group, guarantees
("Avalen"), comfort letters and group liability declarations, guarantees in
connection with repurchase obligations and indemnity letters
("Ausfallgarantien") and the like assumed for customers of the O&K Mining
Group. A survey of such liabilities as of October 31, 1997, has been
disclosed in the Disclosure Memorandum and will be permanently updated up
to Closing Date.
4. The Buyer represents and warrants that O&K Mining GmbH will comply with all
of its obligations and liabilities for which Seller can be held liable for,
including out of such securities Seller will possibly taken out in
connection with the termination of the controlling and profit and loss
pooling agreement between the Seller and O&K Mining GmbH according to
Section 303 Stock Corporation Act/Aktiengesetz; it is being understood that
neither O&K Mining GmbH nor Buyer will be required to provide securities.
5. With effect as of the execution in rem of this Agreement, the Seller is
entitled to revoke all credit orders which it has issued in favor of O&K
Mining GmbH and/or the companies mentioned in Section 1 para. 3. Without
prejudice to this right, the Buyer shall guarantee to the Seller that the
credit orders issued by the Seller and the credit lines provided or
guaranteed by it shall no longer be used.
Section 5
Effective Date / Execution in rem and Closing
1. The sale and the transfer of the shares in O&K Mining GmbH, including the
rights to receive profits and dividends, shall become economically
effective between the parties upon expiry of December 31, 1997 (heretofore
<PAGE>
8
and hereinafter sometimes referred to as the "Effective Date"). Except as
expressly provided for in this Agreement, the parties shall put each other
upon execution in rem of this Agreement in a position they would have been
if the Agreement had been executed in rem on the Effective Date. The Buyer
shall not bear any costs or expenses in addition to the Consideration due
to discrepancy ("Auseinanderfallen") of Effective Date and Closing Date.
2. The management board of Seller ("Vorstand") will seek approval by its
shareholders' meeting for the concept of the sale of the mining business of
the O&K group as a matter of legal precaution, in particular with respect
to the decisions of the German Federal Supreme Court ("Bundesgerichtshof")
regarding the participation of the shareholders' meeting with respect to
essential structural measures (see BGHZ 83, 122). Therefore, the parties
agree that an obligation to execute this Agreement in rem shall only exist
under the condition precedent that
2.1. the shareholders' meeting will have approved the concept of the sale
in the form as provided for by the requirements of the German Stock
Corporation Law/Aktiengesetz and
2.2. the management board of the Seller, on the basis of its due assessment
of the circumstances and in compliance with its obligations to the
company in accordance with German Stock Corporation Law, is entitled
to execute this Agreement in rem.
Independent and regardless of the foregoing conditions precedent, the
management board of the Seller will recommend the concept of the sale
of the mining business and use its best efforts to obtain the
shareholders' approval.
3. The Seller shall notify the Buyer as soon as the conditions for execution
in rem as set forth in para. 2 above, have been met. Seller and Buyer then
shall prepare the execution in rem within the following five weeks.
Execution in rem of this Agreement shall take place on the 35th day
following the receipt of the Seller's notification by Buyer pursuant to
sentence 1 (heretofore and hereinafter sometimes referred to as "Closing
Date").
4. If the management board of the Seller does not notify the Buyer by 31st
March, 1998 that the conditions of execution in rem have been met, Buyer
shall be entitled to withdraw from this Agreement within fourteen days
following the 31st March, 1998. If the management board of the Seller has
not serviced the mentioned notification by 20th May, 1998, then either
party shall be entitled to withdraw from this Agreement. The parties hereto
agree that in case of such withdrawal, any further claims do not exist and
are herewith expressly waived and excluded.
5. Upon execution in rem, the shares in O&K Mining GmbH shall be transferred
and assigned to the Buyer, and all further actions and measures under this
Agreement shall be taken against ("Zug um Zug") payment of the
Consideration.
6. Notwithstanding the execution in rem of this Agreement, the Buyer shall
grant access to all documents and information of the O&K Mining Group to
the Seller as subject of the uniform structure for corporate tax purposes
("korperschaftsteurliche Organschaft") and, by way of an agreement in favor
of third parties ("Vertrag zugunsten Dritter, Section 328 BGB"), to Fried,
Krupp AG Hoesch-Krupp as subject of the uniform structure for purposes of
<PAGE>
9
VAT and trade tax ("urnsatz- und gewerbesteuerliche Organschaft"), if and
to the extent the seller and/or Fried Krupp AG Hoesch-Krupp require such
documents and information for their tax purposes concerning the period
until and including December 31, 1997.
Section 6
Relationship between O&K Mining and Seller
Based on the joint understanding and assumption that the existing delivery and
services relationships and agreements between O&K Mining GmbH and the companies
listed in Section 1 para. 3 on the one side, and the Seller or the companies
controlled by the Seller on the other side have to fit the interests of the
companies of the O&K Mining Group, the Parties agree that in principle such
existing delivery and services relationships and agreements shall survive
Closing Date. Notwithstanding the aforesaid, Buyer shall review such existing
delivery and services relationships and may withdraw from this Agreement by
January 31, 1998, the latest, in case the review leads Buyer to the view that a
continuation of such delivery and services relationships and agreements do not
fit the interests of the O&K Mining Group.
Section 7
Guarantees
The Seller guarantees ("garantiert") in favor of Buyer within the meaning of an
independent promise of guarantee ("selbstandiges Garantieversprechen") that
subject to the provisions of Section 8 para. 6, the following is true and
correct on the date of signing of this Agreement and, if expressly provided for
hereinafter, on the Effective Date and/or the Closing Date:
1. Corporate Guarantees
1.1. All information given in Section 1 regarding the corporate structure
of the O&K Mining Group and the ownership in the shares is complete
and correct. The Seller has the corporate power and unrestricted
authority to sell the shares in O&K Mining GmbH according to the
provisions of this Agreement.
1.2. The shares in O&K Mining GmbH are the sole property of the Seller and
are not encumbered with rights of third parties. There are no
agreement with third parties with respect to the shares, in particular
no preemptive rights ("Vorkaufsrechte"), call options
("Andienungspflichten"), shareholder agreements, trust or fiduciary
relationships or similar arrangements. The rights and obligations of
the shareholders are exclusively governed by the articles of
association as disclosed on the Disclosure Memorandum.
1.3. The shares in the companies listed in Section 1 para. 3 are the sole
property of the O&K Mining GmbH and they are not encumbered with
rights of third parties. There are no arrangements with third parties
with respect to the shares, in particular no preemptive rights
("Vorkaufsrechte"), put options ("Andienungspflichten"), shareholder
agreements, trust or fiduciary relationships or similar arrangements.
There are no other shareholder agreements than those disclosed in the
Disclosure Memorandum.
<PAGE>
10
1.4. O&K Mining GmbH is a limited liability company, duly established under
the laws of the Federal Republic of Germany and validly existing under
the articles of association as of June 28, 1994. There is no
registration with the commercial register pending, regarding
shareholders' resolutions to change or amend the articles of
association. The companies listed in Section 1 para. 3 are duly
established and validly existing under the laws of the relevant
jurisdiction and the relevant articles of association as disclosed in
the Disclosure Memorandum.
1.5. All shares and participation rights ("Beteiligungsrechte") presently
owned by or existing in or subscribed for by any company of the O&K
Mining Group are fully paid up, and any respective contribution in
kind or in money has been made in full and has not been repaid neither
directly nor indirectly to the respective holder, owner or subscriber
or any third party closely connected ("nahestehende Dritte") with
Seller. The GmbH interests are non assessable ("nicht
nachschu(beta)pflichtig"). There are no obligations to repay any
contribution on shares and participation rights
("Beteiligungsrechte").
1.6. There are no controlling or profit and loss pooling agreements or any
other agreements within the scope of Section 291, 292 Stock
Corporation Act ("Unternehmensvertrage") between O&K Mining GmbH or
the companies listed in Section 1 para. 3 on the one side and third
parties on the other side. Neither O&K Mining GmbH nor the companies
listed in Section 1 para. 3 of this Agreement is party to an agreement
according to which they have in toto or in part to transfer to or to
share their profits with a third party. The aforesaid shall not apply
to arrangements to share profits under labor law. The controlling and
profit and loss pooling agreement referred to in Section 1 para. 2
shall be terminated with effect of expiry of December 31, 1997.
1.7. The O&K Mining Group is not overindebted ("uberschuldet") or insolvent
("zahlungsunfahig").
1.8. The aforementioned guarantees under para 1.1 to 1.7 shall also be true
and correct on Closing Date, except that Seller shall have acquired
the O&K Ireland Ltd. by Closing Date, the latest (Section 1 para. 6 of
this Agreement).
2. Annual Financial Statements
2.1. The annual financial statements of O&K Mining GmbH as of December 31,
1996 and as of December 31, 1997 bearing the unqualified certificate
of C&L Deutsche Revision AG Wirtschaftsprufungsgesellschaft have been
prepared with the due diligence of an orderly and prudent business man
in accordance with the German generally accepted accounting and
valuation principles and, where permissible, in a manner that is
consistent with the past practice of the company. Such financial
statements present a true and fair view of the asset position
("Vermogenslage"), financial position ("Finanzlage") and earnings
position ("Ertragslage") of the company within the meaning of Section
264 para. 2 German Commercial Code/HGB at the relevant date of the
balance sheet.
<PAGE>
11
2.2. Taking into consideration that the companies listed in Section 1 para.
3 continued to be economically integral member entities of the O&K
Mining Group, the annual financial statements of the companies listed
in Section 1 para. 3 as of December 31, 1996 and as of December 31,
1997, have or will have been prepared and certified in accordance with
the generally accepted accounting and valuation principles applicable
in the respective country and, where permissible, in a manner that is
consistent with the past practice of the company. Based on the
aforesaid assumption, such financial statements converted for
consolidation purposes into German law (balance sheet II/
"Handelsbilanz II") present a true and fair view of the asset position
("Vermogenslage"), financial position ("Finanslage") and earnings
position ("Ertragslage") of the company within the meaning of Section
264 para. 2 German Commercial Code/HGB at the relevant date of the
balance sheet.
2.3. Seller is not aware of any liabilities in excess of DM 100,000 in each
individual case of the O&K Mining Group which are not reflected in the
financial statements referred to in para. 2.1 and 2.2 and the notes
thereto but which should have been reflected therein in accordance
with the generally accepted accounting and valuation principles
applicable in the respective country, except for ordinary course
payments under agreements and arrangements previously disclosed or
made available to Buyer.
2.4. The aforementioned guarantees under para. 1 to 3 shall also be true
and correct on Closing Date.
3. Business Premises and Sites
3.1. The list of all owned and/or leased real estate, business premises and
sites as disclosed in the Disclosure Memorandum, including also the
real estate not necessarily required for operations, is complete and
correct.
3.2. Unless otherwise disclosed in the Disclosure Memorandum, O&K Mining
GmbH and/or the companies listed in Section 1 para. 3 are either the
sole owner of the real estate listed in the Disclosure Memorandum, or
have a right to use the real estate on the basis of a rental or lease
agreement or any other arrangement granting a right of use as
disclosed in the Disclosure Memorandum.
3.3. To the best of Seller's knowledge, there are no restrictions or
covenants which would affect the present use of the business premises
and sites by O&K Mining GmbH or one of the companies listed in Section
1 para. 3 of this Agreement on the basis of a rental or lease
agreement or any other arrangement granting the right of use as
disclosed in the Disclosure Memorandum, or the continued conduct of
the respective business in its present form as owner of the real
estate.
4. Other Fixed Assets and Current assets
By collateral agreement ("Raumsicherungsubereignungsvertrag") dated
June 12, 1996, O&K Mining GmbH transferred and assigned the machinery,
equipment and fittings of the Dortmund factory, except as those
machinery, equipment and fittings are owned by the Seller as part of
its real estate ("wesentliche Bestandteile"), as collateral for
financial debts of the Seller to the Dresdner Bank AG, branch
Essen/Dortmund, the latter acting as trustee for a banking pool secured
<PAGE>
12
by charges on real property ("Grundschuldsicherheiten-Pool"). With
commercial effect as per Closing Date, latest in exchange for the
Buyers' performance of his obligations under section 3 and 4 above, the
Seller undertakes and warrants as of the aforementioned machinery,
equipment and fittings will be transferred to O&K Mining GmbH. Except
as aforesaid, as of Closing Date all other fixed and current assets are
sole and unrestricted property of the O&K Mining Group, and are free of
rights of any third parties, with the exception of retention of title
clauses and liens under law or other securities within the scope of the
ordinary course of business.
1. Intellectual Property Rights
1.1. The Disclosure Memorandum sets out a correct and complete list of all
patents including utility patents and design patents ("Patente",
"Gebrauchsmuster" and "Geschmacksmuster"), and trademarks/service
marks (including logos), including respective applications which are
owned by, licensed to or used in the business of the O&K Mining Group
for products designed, manufactured and distributed as of the date of
this Agreement or in development as of the date of this Agreement
(hereinafter the "Rights"). The Disclosure Memorandum sets out a
correct and complete list of all of such Rights which are owned by the
O&K Mining Group.
1.2. The O&K Mining Group has fully carried out its business activities and
has used all the trademarks/service marks included in the Rights owned
by the O&K Mining Group to the extent required by law for the O&K
Mining Group to register and enforce such trademarks/service marks.
Third parties neither have challenged nor have threatened to challenge
the Rights by means of filing in writing objections and for taking
action in writing for cancellation vis-a-vis Seller and/or the O&K
Mining Group.
1.3. The O&K Mining Group owns and/or is entitled to use the business
secrets and the other know-how of the O&K Mining Group used in its
business (the business secrets and the know-how together "Know-How").
To the best knowledge of the Seller third parties do neither infringe
the Rights nor make unauthorized use of the Know-How.
1.4. To the best of Seller's knowledge, no intellectual property rights of
third parties are conflicting with or prevent the unlimited use of the
Rights and the Know-How unless disclosed in the documents deposited
with the Notary.
1.5. All rights owned by the O&K Mining Group as per signing this Agreement
and Effective Date in as far as registered at all are properly
registered and maintained or valid, or a proper application for
registration has been filed with regard to such Rights owned by the
O&K Mining Group.
1.6. The Buyer is aware of the fact that O&K Mining GmbH has granted free,
non-exclusive and non-assignable license rights to the Seller until
the expiry of the patent to use the patents listed in the Disclosure
Memorandum for the development, production, and distribution of
hydraulic excavators. With the exception of such existing
arrangements, the O&K Mining Group has not granted any license or
agreed to pay or receive any royalty in respect of the Rights owned by
the O&K Mining Group. The Rights owned by the O&K Mining Group are
<PAGE>
13
free and clear of any liens, encumbrances and other rights of third
parties except statutory claims according to the German
Arbeitnehmererfindungsgesetz.
1.7. All rights licensed to, but not owned by the O&K Mining Group are
shown in the Disclosure Memorandum and all such licenses are valid and
enforceable and the O&K Mining Group is not in breach or default with
respect to any such license or royalty agreements nor has it received
any written notice of termination thereunder.
1.8. The Disclosure Memorandum sets out a correct and complete list of all
copyrights ("Urheberrechte") registered for the O&K Mining Group.
1.9. The aforementioned guarantees under subpara. 2 (first sentence),
subpara. 3 (first sentence), shall also be true and correct on
Effective Date.
2. Taxes and Other Levies
2.1. O&K Mining GmbH and the companies listed in Section 1 para. 3 have,
unless otherwise disclosed in the Disclosure Memorandum, duly and
properly submitted all tax declarations and declarations with respect
to social security payments to be made until signing of this
Agreement, and have paid all taxes, social security payments and other
contributions or levies under public law due and payable.
2.2. O&K Mining GmbH and the companies listed in Section 1 para. 3 have
paid the current and required advance payments for all relevant taxes,
have duly withheld or collected all taxes the companies of O&K Mining
Group is required to withhold or collect and, to the extent required,
has paid such taxes to the proper governmental authorities.
2.3. The last tax field audit ("steuerliche Au(beta)enprufung") of the O&K
Mining GmbH and of the companies listed in Section 1 para. 3 has been
carried out as listed in the Disclosure Memorandum.
2.4. The aforementioned guarantees under para. 1 and 2 shall also be true
and correct on Closing Date.
3. Licenses and Permits
To the Seller's knowledge, O&K Mining GmbH and the companies listed in
Section 1 para. 3 have all licenses and permits required under public and
private law for the continuation of their current business and their
operational facilities and equipment.
4. Personnel, Employees
4.1. The Disclosure Memorandum contains a complete list of all employees of
O&K Mining GmbH and the companies listed in Section 1 para. 3 as of
October 31, 1997 (including information on entries and leaves as far
as foreseen by Seller as of signing this Agreement). The aggregate
amount of salaries and wages ("Personalaufwand" within the meaning of
Section 275 para. 2 number 6 of the German Commercial Code/HGB) paid
by the O&K Mining Group to its employees from January 1, 1997 to
<PAGE>
14
December 31, 1997, does not exceed DM 60 Mio (based on currency
exchange rates prevailing in 1997).
4.2. The Disclosure Memorandum contains a complete list of all managing
directors ("Geschaftsfuhrer") of O&K Mining GmbH and the companies
listed in Section 1 para. 3 as of October 31, 1997. Except as
disclosed in the Disclosure Memorandum, no managing director listed in
the Disclosure Memorandum has given notice for early termination of
his service agreement.
4.3. The Disclosure Memorandum contains a complete list of all shop
agreements ("Betriebsvereinbarungen") entered into by O&K Mining GmbH
and/or the companies listed in Section 1 para. 3, which provide for an
average financial obligation of more than DM 500, per employee and per
year.
4.4. The total amount of the cash value of the pension obligations imposed
on O&K Mining GmbH has been disclosed in the Disclosure Memorandum by
presentation of the corresponding actuarial expertise as of December
31, 1996. The underlying actuarial expertise opinions prepared by
[Heissmann] comply with applicable tax laws and are correct under the
principles under which they are prepared.
4.5. The pension accruals of O&K Mining GmbH and/or one of the companies
listed in Section 1 para. 3 as shown in their annual financial
statements as of December 1996 for present or former employees having
vested rights, who have direct pension claims ("Pensions,
Betriebsrenten oder sonstige Altersversorgungsanspruche") have been
established in accordance with the applicable tax laws. According to
Section 28 para 1 sent. 2 EGHGB, the obligations of O&K Mining GmbH to
O&K-Hilfe GmbH, Berlin, arising from indirect pension commitments or
similar undertakings in the amount of DM 6,984,000 as of December 31,
1996 have not been accrued for.
5. Insurances
5.1. All material insurance contracts of O&K Mining GmbH are managed by
Westdeutsche Assekuranz-Kontor GmbH, Essen ("WAKO"). A respective
confirmation of coverage under the insurance contracts listed true and
correct in the Disclosure Memorandum for the period until the Closing
Date has been provided by WAKO.
5.2. There are no claims filed by any company of the O&K Mining Group, but
not yet regulated, for any of the listed insurance policies exceeding
an aggregate amount of DM 1,000,000 or as a single claim the amount of
DM 50,000 unless completely listed (by policy number, claimant, cause
of damage, amount of damage, date of first knowledge of the insured
risk coverage and state of regulation in the Disclosure Memorandum.
5.3. The insurance cover as taken out and existing for O&K Mining GmbH and
all benefits as they have for any case or insured risk caused and
materialized prior to the Closing Date and covered under the terms and
conditions of the aforementioned insurance contracts will be available
and obtainable for two years following Closing Date and is not subject
to any setoff or other compensation due to or attributable to any
<PAGE>
15
other case of damage, or to any insurance contract of any other
company connected with seller (within the meaning of Section 15 German
Stock Corporation Act/AktG) and will not be restricted on the Closing
Date by a claims-made clause.
6. Guarantees
The Disclosure Memorandum contains a list of all guarantees and other
sureties which may lead to financial obligations of O&K Mining GmbH or
any of the companies listed in Section 1 para. 3 for any party other
than the aforesaid companies in excess of DM 100,000 in each
individual case, with the exception of customary performance and
warranty guaranties and those guaranties which have been assumed in
the ordinary course of business.
7. Environmental
7.1. Seller has disclosed to Buyer the decontamination scheme for the
former business premises at Trojan Circle, Batavia, NY, owned by O&K
Orenstein & Koppel, Inc., Georgia, USA. Seller shall take full
responsibility for any environmental liability arising from such
contamination of the aforementioned premises and shall indemnify and
hold harmless O&K Orenstein & Koppel, Inc. and/or O&K Mining GmbH from
all costs and expenses connected with the execution of the
decontamination scheme as far as the aggregate costs and expenses for
such decontamination cannot be covered and financed by current and
future consideration (less lessor's expenses) from the lease and sale
of such premises to the present tenant of the premises.
7.2. To the best of Seller's knowledge, there is no further material
contamination of soil and/or ground water and/or air by any toxic
and/or hazardous substances on the business premises owned and/or
leased by the O&K Mining Group the, cleaning up of which can be
requested from the O&K Mining Group under any environmental laws as
presently in full force and effect and as currently interpreted by the
competent courts and which are not disclosed in the Disclosure
Memorandum.
7.3. Except as disclosed in the Disclosure Memorandum the O&K Mining Group
is not involved in any administrative or court proceedings against any
of the companies of the O&K Mining Group pending or threatening,
regarding any contamination of soil and ground water or air on the
business premises.
8. Legal Disputes Litigation
8.1. Except for collection matters which involve an amount of not more than
DM 100,000 in each individual case and except for the litigation
matters listed in the Disclosure Memorandum, no company of the O&K
Mining Group is involved as defendant or plaintiff in any litigation
proceedings. The Seller is not aware that any further litigation
matters have been threatened in writing.
8.2. To the best of Seller's knowledge, during the last three years prior
to the Effective Date, neither product liability claims exceeding the
amount of DM 10,000 in each case have been asserted against O&K Mining
GmbH or one of the companies listed in Section 1 para. 3, nor have any
of these companies notified an insurance company that such product
liability claims have been asserted or settled.
<PAGE>
16
8.3. Seller has disclosed to Buyer the contractual exposures resulting from
(i) the Services Agreement entered into between O&K Orenstein &
Koppel, Ltd. and Foster Yeoman, Ltd., dated May 5, 1989, and (ii) the
Agreement regarding the Lease of Railway Rolling Stock by Norwich
Union Insurance Group (Equipment Finance) Limited to Foster Yeoman
Limited, dated March 8, 1989, and (iii) the Agreement regarding the
Lease of Railway Rolling Stock by Eastlease Limited to Foster Yeoman
Limited, dated March 12, 1989, Seller shall indemnify and hold
harmless O&K Orenstein & Koppel Ltd., Watford and/or O&K Mining GmbH
from all liabilities as incurred from time to time by O&K Orenstein &
Koppel, Ltd. or O&K Mining GmbH less any revenues generated in
connection therewith, provided that such claims lie within the
responsibility and/or liability of O&K Orenstein & Koppel, Ltd. prior
to Effective Date, Section 8 para. 5 of this Agreement shall apply.
9. Negative Representations
The companies of the O&K Mining Group are not party or subject to:
9.1. rental, leasing or similar contracts with continuing obligations
("Dauerschuldverhaltnisse") which provide for an annual payment by the
O&K Mining Group in excess of DM 500,000, in each individual case and
which cannot be terminated by giving notice of up to twelve-months
notice, with the exception of those listed in the Disclosure
Memorandum;
9.2. consultancy agreements which provide for an annual payment in excess
of DM 300,000 -- in each individual case with the exception of those
listed in the Disclosure Memorandum;
9.3. obligations owed to a benevolent fund ("Hilfs-und
Unterstutzungskassen") or to any other funds or parties other than
employees of the O&K Mining Group with respect to pension arrangements
or other agreements for payments in case of sickness disablement, or
age with the exception of those listed in the Disclosure Memorandum;
9.4. agreements regarding compensation dependent on profit or turnover
and/or profit sharing which have caused an annual payment in excess of
DM 150,000 -- in each individual case during the last financial year
1996 except for those listed in the Disclosure Memorandum.
9.5. contractual competition restraints ("Wettbewerbsbeschrankung")
restricting the present business activities of the O&K Mining Group in
a detrimental way, except exclusivity agreements for distributors
and/or agents or similar arrangements;
9.6. contingent or actual repayment obligations in connection with
subsidies received by the O&K Mining Group except as disclosed to
Buyer;
9.7. proceedings before court, administrative authorities, or arbitration
bodies, investigations by administrative authorities where the O&K
Mining Group is a party to and where properties or assets of the O&K
<PAGE>
17
Mining Group are involved in, with an aggregate value in dispute
("Streitwert") in excess of DM 500,000, except as disclosed in the
Disclosure Memorandum;
9.8. forward contracts regarding goods, foreign currencies and interest
("Waren, Devisen und Zinstermingeschafte"), except as listed in the
Disclosure Memorandum and/or with the exception of hedging contracts
("Kurssicherungsgeschafte"), in connection with the delivery of
products of the O&K Mining Group to foreign customers or with the
purchase from foreign suppliers by the O&K Mining Group;
9.9. commitments to pay out loans, or loans which have been paid out, by
the O&K Mining Group to third parties which provide for a repayment
obligation of such third party in excess of DM 100,000 in each
individual case, unless disclosed in the notarized Disclosure
Memorandum.
9.10.binding distribution agreements (distributorship or commercial agent
agreements) ("Eigenhandler-oder Handelsvertrelervertrage") including
commission arrangements under which a company of the O&K Mining Group
has made a turnover during the financial year 1996 in excess of DM
5,000,000, in each individual case with the exception of those listed
in the Disclosure Memorandum (disclosing separately the respective
company of the O&K Mining Group as distributor or commercial agent
and/or a third party as distributor or commercial agent of the
respective company of the O&K Mining Group);
9.11.orders by the companies of the O&K Mining Group for investments in
fixed assets exceeding DM 1.5 million in each individual case; the
aforesaid does not apply to any such orders in the ordinary course of
business or orders listed in the notarized Disclosure Memorandum.
9.12.any enforceable ("vollstreckbares") judgment or order rendered by
court or administrative proceedings or by any settlements entered into
in such context which would substantially impair or restrict the O&K
Mining Group in conducting its business in acquiring or selling of
goods or assets or in competing in the market.
9.13.any cash management and clearing except with Seller and/or any other
company of the O&K Mining Group.
10. Course of Business Following January 1, 1997, and Following Signing of this
Agreement
10.1.The business of O&K Mining GmbH and of the companies listed in Section
1 para. 3 has been conducted between January 1, 1997 and signing of
this Agreement in the ordinary course of business.
10.2.The seller will conduct the business of O&K Mining GmbH and the
companies listed in Section 1 para. 3 as of the date of signing of
this Agreement through the date of execution in rem of this Agreement
in the ordinary course of business. As this Agreement shall become
economically effective upon expiry of December 31, 1997, as from
January 1, 1998, Seller will consult in advance, or in case prior
consultation is impossible, due to imminent risks or urgency,
immediately thereafter, all major business decisions with the Buyer.
<PAGE>
18
Major business decisions means those transactions and measures which
require shareholders' approval pursuant to section 12 of the rules of
procedures ("Geschaftsordnung") for the managing board of the O&K
Mining GmbH disclosed in the Disclosure Memorandum. Seller shall
properly take into consideration any objections which Buyer may raise
against any such major business decision and shall take full
responsibility pursuant to Section 8 hereof, in case seller sets aside
any such objections.
Section 8
Remedies for Breach of Guaranties/Liability of Seller
1. If one of the aforesaid guaranties is not true or correct at the date of
signing of this Agreement or, if applicable, on the Effective Date and/or
the Closing Date, the Seller shall put the Buyer and/or the O&K Mining
Group in a position as if the respective guaranty had been true and
correct. Damages which are covered by an insurance or which would have been
covered by an insurance which existed at the Effective Date, but which has
not been continued, cannot be claimed. Claims for consequential damages and
a loss of profits are hereby expressly waived and excluded.
2. Guaranty claims and all statutory liability claims ("gesetzliche
Haftungsanspruche"), if any, can only be made if and to the extent they
exceed an amount of DM 1,000,000 in the aggregate plus those amounts which:
2.1. until the expiry of the guaranty period are paid on accounts
receivables which have already been completely written off or
depreciated in the last annual financial statements of O&K Mining GmbH
and/or one of the companies listed in Section 1 para. 3 of this
Agreement, or which, as far as the claims have only been partly
written off or depreciated, are paid for such part written off or
adjusted as to their value, or
2.2. until the expiry of the guaranty period result from the liquidation of
accruals reflected in the 1997 Annual Financial Statements
respectively the last annual financial statements of O&K Mining GmbH
and/or one of the companies mentioned in Section 1 para. 3, because
such accruals have become unnecessary or excessive.
If the amount mentioned in sentence 1 above exceeded, only the
exceeding amount can be claimed.
3. Guaranty claims for tax liabilities cannot be raised to the extent such an
additional expenditure for taxes is compensated by future tax savings (due
to mere periodic shifts).
4. If and to the extent a third party assets a claim against O&K Mining GmbH
and/or one of the companies listed in Section 1 para. 3 and/or the Buyer
which might lead to a liability of the Seller under the aforementioned
guaranties, the Buyer shall notify the Seller immediately and shall give
the Seller the unrestricted opportunity to defend such claims. All costs
and expenses related thereto shall be advanced and shall be borne by the
Seller. As far as it is necessary and appropriate in order to defend claims
raised by third parties and/or the Buyer which may lead to liabilities of
the Seller vis-a-vis the Buyer, the Buyer shall grant the Seller the right
at Seller's own expense to inspect the books, records, and documents of O&K
<PAGE>
19
Mining Group during normal business hours. In case the Buyer fails to
comply with one of the aforesaid obligations, the respective claims of the
Buyer against the Seller shall be excluded.
5. Except for Buyer's claims under Section 7, para. 11.1 para 12.3 hereabove,
all claims of the Buyer based on the aforesaid provisions (including those
from statutary liability claims, if any) shall become statute-barred 18
months following Closing Date. Claims under Section 7, para 1 and 11,
paras. 2 and 3 shall become statute-barred five years following the
Effective Date. The aforesaid limitation periods shall not apply to any
claims based on additional tax liabilities or obligations to pay social
security contributions or other public impositions, levies, and charges
under the public law, if any. Such claims shall become statute-barred six
months after the respective assessment or corrective assessment of the tax
authorities, the social security authorities or of any other public
authority will have become final or finally adjudicated (res judicata).
6. Facts and/or circumstances disclosed, mentioned, or included in the
Disclosure Memorandum to this Agreement, or in the document deposited with
the Notary, or any document referred to in the Disclosure Memorandum shall
constitute an integral part of the guaranties under Section 7, excluding
any liability of the Seller, and shall be deemed to be disclosed and known
to the Buyer. The same shall apply to those facts and circumstances which
are known otherwise by the Buyer and/or its advisors upon signing of this
Agreement.
7. The liability of the Seller arising out of and in connection with this
Agreement or from statutory liability claims, if any, in particular,
without limitation, relating to any guaranty claims, shall in the aggregate
be limited to a part of the Purchase Price in a maximum amount of DM
40,000,000.
8. The parties agree that the guarantees under Section 7, paras. 11.1 and 12.3
shall not be subject to the DM 1 Mio. threshold under para 2, the maximum
amount under para. 8, and shall become statute-barred within the period as
stipulated in Section 195 German Civil Code.
Section 9
Covenant Not to Compete
1. The Seller undertakes, for a period of three years as of the Effective
Date, to refrain from competing with the O&K Mining Group in respect of
large hydraulic excavators > RH 40, either indirectly or directly, in
particular by incorporation of, participation in or consulting of other
enterprises.
2. The Buyer hereby represents and guarantees that the O&K Mining Group shall
in any case refrain from own distribution of the large hydraulic excavators
RH 25 in the NAFTA markets at least until September 30, 2000, and that the
O&K Mining Group shall deliver the RH 25s determined for these markets
exclusively in an OEM version for the account of the construction machine
division of the Seller to its customers in the NAFTA markets.
3. Seller undertakes, for a period of three years as of the Effective Date,
not to develop and produce, either indirectly or directly, hydraulic
excavators which compete with the RH 30 and RH 40 being part of the product
program of O&K Mining GmbH, provided that Buyer supplies Seller with RH 30
<PAGE>
20
and RH 40 from O&K Mining GmbH's production (or from the production of any
third party as subcontractor for the O&K Mining Group) provided that Seller
will not use such supplies in the mining business; the aforementioned
undertaking shall not apply where such hydraulic excavators are obtainable
on more favorable terms elsewhere and Buyer is not prepared to offer the
same terms provided that Seller will not use such supplies in the mining
business. Buyer undertakes for the same period that the O&K Mining Group
shall not develop and produce, either indirectly or directly, hydraulic
excavators which compete with the RH 25 of the product program of the
construction business provided that Seller supplies Buyer with RH 25 from
his own production (or from the production of any third party as
subcontractor for Seller); the aforementioned undertaking shall not apply
where such hydraulic excavator is obtainable on more favorable terms
elsewhere and Seller is not prepared to offer the same terms.
Section 10
Name and Trademark License
1. The Seller shall grant to O&K Mining GmbH and the companies listed in
Section 1 para. 3 the assignable, free, and unlimited in time license to
use within the mining business the elements of the name "O&K" and/or
"Orenstein & Koppel" within its names, and to make use of the trademarks
"O&K" internationally registered on behalf of the Seller in different
configurations for the mining business, including designation of large
hydraulic excavators and pertinent components, equipment, and parts
produced by them as well as to utilize them in trade on business papers,
catalogs, et al., except for the manufacturing distribution and marketing
of RH 25. Such license is granted as an exclusive license with respect to
mining equipment. Where the aforementioned trademarks can be registered
separately from the construction business exclusively for the specific
purposes of the mining business and assigned to the O&K Mining GmbH, Buyer
may require that Seller shall assign at Buyer's expense such separated
trademark for the mining business to O&K Mining GmbH.
2. The Buyer undertakes to ensure that the name and logo and the trademarks
"O&K" and "Orenstein & Koppel" shall not be used by O&K Mining GmbH and the
companies listed in Section 1 para. 3 in any other form than licensed.
3. All intellectual property rights (including, but not limited to, patents,
trademarks, logos, know-how documentation of whatever kind, CAD licenses,
etc., as hereafter referred to as Technology Rights as ever used by or for
the benefit of O&K Mining Group, shall continue to be made available by
Seller to O&K Mining Group as follows:
3.1. Technology Rights which have been solely and exclusively used by/for
O&K Mining Group or its products and which will be or have been
registered in Seller's name shall be assigned and transferred to O&K
Mining GmbH so that O&K Mining GmbH shall become new registered owner.
3.2. Technology Rights, which (i) have been used mutually by/for O&K Mining
Group and O&K AG, and (ii) which have been used predominantly (to be
ascertained by turn-over derived from such use) by O&K Mining Group or
its products, shall be assigned and transferred to O&K Mining GmbH as
under (3.1), however, with the proviso that O&K Mining GmbH shall
grant a non-transferable, exclusive and royalty-free license for the
<PAGE>
21
construction business of O&K AG, which is unlimited in time.
3.3. Technology Rights other than under (3.1) and (3.2) shall be made
available by Seller to O&K Mining Group by a non-transferable,
exclusive, royalty-free license for the design, manufacture and/or
distribution of mining equipment, which shall be unlimited in time.
It is understood that any such Technology Right made available to O&K
Mining Group shall be for the purpose of designing, manufacturing and/or
distributing mining equipment only. Where legally possible, the use of such
Technology Right for the design, production, or distribution of
construction equipment may be retained or kept by Seller or Seller's
respective affiliates.
Section 11
Merger Control
1. This Agreement is subject to the condition precedent that Seller and/or
Buyer have obtained a nil obstat letter (Nichtuntersagungsverfugung") of
the German Federal Cartel Office or that the respective applicable time
period (Section 24a, para. 2 Act against Restraint of Competition/GWB)
during which the Federal Cartel Office may prohibit the transaction
contemplated hereunder pursuant to Section 24 Act against Restraint of
Competition/GWB has expired without the German Federal Cartel Office having
prohibited the transaction contemplated hereunder.
The parties shall use their best efforts to notify the merger hereunder
under Section 23, et seq. Act against Restraint of Competition/GWB to the
Federal Cartel Office as well as to any other authorities competent for the
merger control immediately after signing of this Agreement and to obtain a
nil obstat letter (Nichtuntersagungsverfugung") of the German Federal
Cartel Office and of any other authority competent for the merger control.
2. This Agreement is further subject to approval of the competente US merger
control authorities under the [US Hart-Scott-Rodino Anti-Trust Improvements
Act of 1976, as amended and the rules and regulations thereunder or the
elapse of the respective applicable waiting periods.]
Section 12
Costs and Taxes
1. Each party shall bear its own costs and expenses which have accrued or will
accrue in connection with the preparation and execution of this Agreement,
including the costs of their advisors, including cartel law advisors.
2. Costs of this Agreement and its consummation, in particular the
notarization costs shall be borne by Buyer. The same applies with respect
to all costs out of and in connection with the merger control in the US.
Any registration costs and the costs of the authorities competent for the
<PAGE>
22
merger control in Germany and any other country outside the US shall be
shared equally by Buyer and Seller.
3. Any transfer taxes ("Verkehrsteuern") imposed in connection with the
execution and consummation of this Agreement shall be shared equally by
Buyer and Seller.
Section 13
Final Provision
Any further claims of the Buyer of whatsoever nature or on whatsoever legal
basis, in particular, without limitation, any guaranty claims of the Buyer other
than those expressly agreed upon under this Agreement, are hereby expressly
waived and excluded. This shall in particular apply to claims based on breach of
contract ("positive Forderungsverletzung") and/or claims to reduce the Purchase
Price or any right to rescind this Agreement ("Wandlung"). The aforementioned
does not apply for claims for precontractual default (culpa in contrahendo). The
right to withdraw from this Agreement, notwithstanding the provision under
Section 5, paras. 4 and Section 6, is hereby also waived and excluded.
Section 14
Miscellaneous
1. This Agreement shall be subject to the substantive law of the Federal
Republic of Germany. Exclusive jurisdiction for any and all disputes
arising out of or in connection with this Agreement and its consummation
shall be with the competent courts of Berlin.
2. Changes and amendments to this Agreement shall be made in writing, unless
notarization is required. The same shall apply to any change of this clause
itself.
3. Should any provision of this Agreement be or become invalid, the validity
of the remaining provisions of this Agreement shall remain unaffected
thereby. The same shall apply if the Agreement contains any omission. The
invalid provision or the omission shall be replaced or completed by such
provision which, to the extent legally possible, comes as close as possible
to what the parties hereto had intended, in particular as to measure of
performance, time or time limits, or to what they would have intended, if
they had considered the specific issue.
4. The parties hereto shall agree on all press releases in connection with the
execution and consummation of this Agreement.
5. This Agreement will be executed in the German language only.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-Mos
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 28,700
<SECURITIES> 0
<RECEIVABLES> 143,800
<ALLOWANCES> 4,500
<INVENTORY> 232,100
<CURRENT-ASSETS> 426,500
<PP&E> 83,000
<DEPRECIATION> 35,200
<TOTAL-ASSETS> 588,500
<CURRENT-LIABILITIES> 236,100
<BONDS> 273,500
0
0
<COMMON> 200
<OTHER-SE> 59,400
<TOTAL-LIABILITY-AND-EQUITY> 588,500
<SALES> 842,300
<TOTAL-REVENUES> 842,300
<CGS> 702,700
<TOTAL-COSTS> 702,700
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 39,400
<INCOME-PRETAX> 31,000
<INCOME-TAX> 700
<INCOME-CONTINUING> 30,300
<DISCONTINUED> 0
<EXTRAORDINARY> (14,800)
<CHANGES> 0
<NET-INCOME> 15,500
<EPS-PRIMARY> 0.66
<EPS-DILUTED> 0.60
</TABLE>
