As filed with the Securities and Exchange Commission on June 9, 1999.
Registration No. 333-77811
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-4/A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
TEREX CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 3530 34-1531521
(State or other jurisdiction of (Primary standard industrial (I.R.S. employer
incorporation or organization) classification code number) identification no.)
500 Post Road East
Westport, Connecticut 06880
(203) 222-7170
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
TEREX CRANES, INC.
(Exact name of Co-Registrant as specified in its charter)
Delaware 3530 06-1423889
(State or other jurisdiction of (Primary standard industrial (I.R.S. employer
incorporation or organization) classification code number) identification no.)
c/o Terex Corporation
500 Post Road East
Westport, Connecticut 06880
(203) 222-7170
(Address, including zip code, and
telephone number, including area code, of
Co-Registrant's principal executive office)
PPM CRANES, INC.
(Exact name of Co-Registrant as specified in its charter)
Delaware 3530 39-1611683
(State or other jurisdiction of (Primary standard industrial (I.R.S. employer
incorporation or organization) classification code number) identification no.)
Atlantic Center for Business and Industry
Highway 501 East
Conway, South Carolina 29526
(803) 349-6900
(Address, including zip code, and telephone number,
including area code, of Co-Registrant's principal executive offices)
<PAGE>
KOEHRING CRANES, INC.
(Exact name of Co-Registrant as specified in its charter)
Delaware 3530 06-1423888
(State or other jurisdiction of (Primary standard industrial (I.R.S. employer
incorporation or organization) classification code number) identification no.)
106 12th Street S.E.
Waverly, Iowa 50677
(319) 352-3920
(Address, including zip code, and telephone number,
including area code, of Co-Registrant's principal executive offices)
TEREX-TELELECT, INC.
(Exact name of Co-Registrant as specified in its charter)
Delaware 3530 41-1603748
(State or other jurisdiction of (Primary standard industrial (I.R.S. employer
incorporation or organization) classification code number) identification no.)
600 Oakwood Road
Watertown, South Dakota 57201
(605) 882-4000
(Address, including zip code, and telephone number,
including area code, of Co-Registrant's principal executive offices)
TEREX-RO CORPORATION
(Exact name of Co-Registrant as specified in its charter)
Kansas 3530 44-0565380
(State or other jurisdiction of (Primary standard industrial (I.R.S. employer
incorporation or organization) classification code number) identification no.)
550 Old Highway 56
Olathe, Kansas 66061
(913) 782-1200
(Address, including zip code, and telephone number,
including area code, of Co-Registrant's principal executive offices)
TEREX AERIALS, INC.
(Exact name of Co-Registrant as specified in its charter)
Wisconsin 3530 39-1028686
(State or other jurisdiction of (Primary standard industrial (I.R.S. employer
incorporation or organization) classification code number) identification no.)
10600 W. Brown Deer Road
Milwaukee, Wisconsin 53224
(414) 355-0832
(Address, including zip code, and telephone number,
including area code, of Co-Registrant's principal executive offices)
<PAGE>
TEREX MINING EQUIPMENT, INC.
(Exact name of Co-Registrant as specified in its charter)
Delaware 3530 06-1503634
(State or other jurisdiction of (Primary standard industrial (I.R.S. employer
incorporation or organization) classification code number) identification no.)
c/o Terex Corporation
500 Post Road East
Westport, Connecticut 06880
(203) 222-7170
(Address, including zip code, and telephone number,
including area code, of Co-Registrant's principal executive offices)
O&K ORENSTEIN & KOPPEL, INC.
(Exact name of Co-Registrant as specified in its charter)
Delaware 3530 58-2084520
(State or other jurisdiction of (Primary standard industrial (I.R.S. employer
incorporation or organization) classification code number) identification no.)
5400 South 49th West Avenue
Tulsa, Oklahoma 74107
(918) 446-5581
(Address, including zip code, and telephone number,
including area code, of Co-Registrant's principal executive offices)
PAYHAULER CORP.
(Exact name of Co-Registrant as specified in its charter)
Illinois 3530 36-3195008
(State or other jurisdiction of (Primary standard industrial (I.R.S. employer
incorporation or organization) classification code number) identification no.)
5400 South 49th West Avenue
Tulsa, Oklahoma 74107
(918) 446-5581
(Address, including zip code, and telephone number,
including area code, of Co-Registrant's principal executive offices)
THE AMERICAN CRANE CORPORATION
(Exact name of Co-Registrant as specified in its charter)
North Carolina 3530 56-1570091
(State or other jurisdiction of (Primary standard industrial (I.R.S. employer
incorporation or organization) classification code number) identification no.)
202 Raleigh Street
Wilmington, North Carolina 28412
(910) 395-8500
(Address, including zip code, and telephone number,
including area code, of Co-Registrant's principal executive offices)
<PAGE>
AMIDA INDUSTRIES, INC.
(Exact name of Co-Registrant as specified in its charter)
South Carolina 3530 57-0531930
(State or other jurisdiction of (Primary standard industrial (I.R.S. employer
incorporation or organization) classification code number) identification no.)
590 Huey Road
Rock Hill, South Carolina 29730
(803) 324-3011
(Address, including zip code, and telephone number,
including area code, of Co-Registrant's principal executive offices)
Eric I Cohen, Esq.
Terex Corporation
500 Post Road East
Westport, Connecticut 06880
(203) 222-7170
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy To:
Robinson Silverman Pearce Aronsohn & Berman LLP
1290 Avenue of the Americas
New York, New York 10104
Attention: Stuart A. Gordon, Esq.
Perry Wildes, Esq.
(212) 541-2000
Approximate date of commencement of proposed sale to public: As soon as
practicable after the Registration Statement becomes effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: |_|
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
If this form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
The Registrant and the Co-Registrants hereby amend this Registration
Statement on such date or dates as may be necessary to delay its effective date
until the Registrant and the Co-Registrants shall file a further amendment which
specifically states that this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of 1933 or until
the Registration Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JUNE 9, 1999
OFFER TO EXCHANGE
all outstanding
8-7/8% Series C Senior Subordinated Notes due 2008
($100,000,000 principal amount outstanding)
for
8-7/8% Series D Senior Subordinated Notes due 2008
Which Have Been Registered Under the Securities Act of 1933
of
TEREX CORPORATION
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , 1999, UNLESS EXTENDED
We are offering you the opportunity to exchange your 8-7/8% Series C Senior
Subordinated Notes due 2008 for our new 8-7/8% Senior Series D Subordinated
Notes due 2008 that are registered under the Securities Act of 1933 in the
Exchange Offer. Your Old Notes are not registered under the Securities Act of
1933. Exchanging your Old Notes for New Notes will provide you with notes that
may be easier to sell and transfer.
Material terms of the Exchange Offer are:
o EXPIRATION. The exchange offer will expire at 5:00 p.m., New York City
time, on _________, 1999, unless we extend it.
o EXCHANGE. We will exchange all outstanding Old Notes that are validly
tendered and not validly withdrawn before the exchange offer expires.
o TERMS OF THE NOTES. The terms of the New Notes are substantially identical
to the Old Notes, except that the New Notes are registered under the
Securities Act of 1933. Certain transfer restrictions and registration
rights relating to the Old Notes do not apply to the New Notes.
o REPRESENTATIONS OF HOLDERS. You will be required to make various
representations including that (1) any New Notes received will be acquired
in the ordinary course of business, (2) you are not participating in the
distribution of the New Notes, (3) you are not an affiliate of Terex, and
(4) you are not a broker-dealer, and if you are a broker-dealer that you
will receive the New Notes for your own account, you will deliver a
prospectus on resale of your New Notes and that you acquired your Old notes
as a result of market making activities or other trading activities.
o WITHDRAWAL RIGHTS. You may withdraw tenders of Old Notes at any time before
the exchange offer expires.
o TAX CONSEQUENCES. We believe that the exchange of notes will not be a
taxable event for U. S. federal income tax purposes, but you should see
"Certain United States Federal Income Tax Considerations" on page 78 for
more information.
o USE OF PROCEEDS. We will not receive any proceeds from the exchange offer.
o TRADING. There is no existing market for the New Notes and we will not
apply to list them on any securities exchange.
See "Risk Factors" beginning on page 9 for a discussion of certain risks that
should be considered by holders who tender their Old Notes in connection with
this the exchange offer.
These securities have not been approved or disapproved by the Securities and
Exchange Commission or any state securities commission nor has the Securities
and Exchange Commission or any state securities commission passed upon the
accuracy of adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this Prospectus is __________, 1999
We may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus and the
accompanying Letter of Transmittal are not an offer to sell these securities and
they are not soliciting an offer to buy these securities in any state where the
offer or sale is not permitted.
<PAGE>
You should rely only on information contained in this document or to which
we have referred you. We have not authorized anyone to provide you with
information that is different. This document may only be used where it is legal
to sell these securities. The information in this document may only be accurate
on the date of this document.
TABLE OF CONTENTS
Page
PROSPECTUS SUMMARY........................................................... 1
RISK FACTORS................................................................. 9
Holders Responsible for Compliance with Exchange Offer;
No Notice of Defects or Irregularities.............................. 9
Consequences of Not Exchanging Old Notes For New Notes................. 9
Debt of Terex.......................................................... 9
Restrictive Debt Covenants............................................. 10
Subordination of Notes and the Guarantees of Subsidiaries.............. 10
Fraudulent Conveyance Matters.......................................... 11
Acquisition Strategy; Integration of New Businesses.................... 11
Industry Cycles and Competition........................................ 11
Tax Audit Issues....................................................... 12
Ability to Use Net Operating Loss Carryovers........................... 13
Reliance On Key Management............................................. 13
Foreign Currencies; International Operations........................... 13
Environmental and Related Matters...................................... 13
Possible Inability to Purchase Notes on Change of Control.............. 13
You Cannot Be Sure That an Active Trading Market
Will Develop for the New Notes..................................... 14
THE COMPANY.................................................................. 14
THE EXCHANGE OFFER........................................................... 16
USE OF PROCEEDS.............................................................. 23
CAPITALIZATION............................................................... 24
SELECTED CONSOLIDATED FINANCIAL DATA......................................... 25
INDUSTRY OVERVIEW AND OUTLOOK FOR PRINCIPAL PRODUCTS......................... 26
BUSINESS..................................................................... 29
DESCRIPTION OF CERTAIN INDEBTEDNESS.......................................... 38
DESCRIPTION OF THE NOTES..................................................... 40
CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS............................. 78
PLAN OF DISTRIBUTION......................................................... 79
LEGAL MATTERS................................................................ 80
EXPERTS...................................................................... 80
AVAILABLE INFORMATION........................................................ 80
INCORPORATION OF DOCUMENTS BY REFERENCE...................................... 81
i
<PAGE>
FORWARD-LOOKING STATEMENTS
This Prospectus and the documents incorporated by reference contain and
refer to forward-looking statements that involve risks and uncertainties.
Generally, the words "may," "expects," "intends," "anticipates," "plans,"
"projects," "estimates" or similar words are intended to identify
forward-looking statements. However, the absence of these words does not mean
that the statement is not forward-looking. We have based these forward-looking
statements on our current expectations and projections about future events.
These statements are not guarantees of future performance. It is possible that
actual events and results will differ materially as future events are difficult
to predict. In addition, many of the risks, uncertainties and assumptions about
Terex are beyond our control. Some of these risks, uncertainties and assumptions
are:
o construction and mining activity are affected by interest rates, government
spending and general economic conditions;
o our ability to successfully integrate new businesses may affect our future
performance;
o changes in our key management personnel;
o our businesses are in very competitive industries and may be affected by
pricing, product and other actions taken by our competitors;
o changes in laws and regulations;
o we manufacture and sell our products in many countries and we may be
affected by changes in exchange rates between currencies, as well as
international politics;
o our ability to manufacture and deliver our products to customers on a
timely basis;
o the ability of our suppliers to supply us with parts and components at
competitive prices on a timely basis;
o continued use of net operating loss carryovers;
o we have a significant amount of debt and our debt agreements contain a
number of restrictive covenants;
o certain of our federal income tax returns are being audited by the Internal
Revenue Service; and
o we are subject to various environmental laws and regulations.
The forward-looking statements made or referred to in this Prospectus and
the documents incorporated by reference reflect our expectations and projections
at the time the statement was made. We do not undertake any obligation to update
publicly any forward-looking statement which may result from changes in events,
conditions, circumstances or expectations on which we have based any
forward-looking statement.
ii
<PAGE>
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this Prospectus.
This summary is not complete and may not contain all of the information that you
should consider before investing in the Notes. You should read the entire
Prospectus carefully, including the "Risk Factors" section and the financial
statements and notes to those statements located in this Prospectus or in
Terex's filings with the Securities and Exchange Commission. References in this
Prospectus to "Terex" are generally meant to refer to Terex Corporation and its
subsidiaries, unless indicated otherwise.
The Company
Terex is a global manufacturer of a broad range of construction and mining
related capital equipment. Terex strives to manufacture high quality machines
which are low cost, simple to use and easy to maintain. We operate in two
business segments: Terex Lifting and Terex Earthmoving. Our products are
manufactured at 21 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. We believe that Terex
is benefiting from industry trends. For example, Terex Lifting is benefiting
from the growing importance of rental fleet operators, and Terex Earthmoving is
benefiting from an increasing level of worldwide development of infrastructure.
The principal executive offices of Terex are located at 500 Post Road East,
Westport, Connecticut 06880 and our telephone number is (203) 222-7170.
Terex Lifting
Terex Lifting manufactures and sells telescopic mobile cranes (including
rough terrain, truck and all terrain mobile cranes), tower cranes, lattice boom
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. Construction
and industrial customers, as well as utility companies, are the primary users of
these products. Customers use these products to lift equipment, material or
workers to various heights. Terex believes that it is the second largest
manufacturer of rough terrain, truck and all terrain telescopic mobile cranes in
the United States and the leading manufacturer in France and Italy.
Terex Earthmoving
Terex Earthmoving manufactures and sells articulated and rigid off-highway
trucks, high capacity surface mining trucks, large hydraulic mining shovels, and
related components and replacement parts. Construction, mining and government
customers are the primary users of these products. Customers use hydraulic
excavators to load coal, copper ore, iron ore, other mineral-bearing materials
or rocks into trucks. Terex believes that it has the leading global market share
for large hydraulic mining shovel models having machine weights in excess of 200
tons.
Industry Overview and Outlook for Principal Products
Terex Lifting
We believe that Terex Lifting's markets will benefit from a number of
industry trends:
o The large number of telescopic mobile cranes produced in the late 1970s in
North America are beginning to reach the end of their useful lives. We have
seen an increase in industry demand for telescopic mobile cranes as users
begin to replace their aging equipment.
1
<PAGE>
o Most of the primary markets in which Terex Lifting sells its telescopic
mobile cranes are undergoing a strong and sustained period of construction
activity and infrastructure development.
o In North America, rental fleet operators purchase an estimated 85% of all
new telescopic mobile cranes and an estimated 90% of all new aerial work
platforms. We aim to take advantage of rental fleet operators' desire to
maximize returns on product investment through our 'best value' strategy of
providing high quality products which are low cost, simple to use and easy
to maintain.
o There is a trend in the utility industry to subcontract maintenance
functions to private contractors in order to reduce costs. We expect that
our sales of utility aerial devices will benefit from Terex's strong
relationships with these private contractors and our ability to supply
these products at a low cost.
Terex Earthmoving
We believe that Terex Earthmoving will benefit from the following trends in
its primary markets:
o The primary markets for Terex's articulated and rigid frame off-highway
trucks are the worldwide large private construction project market and the
public infrastructure development market. The primary customers for Terex
Earthmoving's products are rental fleet operators and contractors and large
construction companies. Terex's best value strategy for its off-highway
trucks appeals to these customers because of their focus on availability,
reliability and hauling efficiency at a low cost.
o The worldwide surface mining market is Terex's largest market for its high
capacity surface mining trucks and large hydraulic excavators. The advanced
technology included in Terex's high capacity surface mining trucks and
hydraulic mining shovels allows Terex to market cost efficient machines
that are more reliable and productive than the machines offered by
competing technologies.
o Mining companies tend to extract material from smaller mines with shorter
lives than had previously been the practice. Mine operators are also more
selective in what they extract from mines. These changes favor Terex's
hydraulic mining shovels which offer high maneuverability and greater
operating time at a lower initial investment than comparably sized
alternatives sold by competitors.
o Mining companies often use mining products around the clock in intensive
earthmoving operations. This use generates a profitable replacement parts
and service business for Terex because customers require replacement parts
and service in order to keep the mining products operating continuously. In
addition, as Terex sells more original equipment, there is greater demand
for replacement parts and service.
Business Strategy
Under the direction of Ronald M. DeFeo, Terex's Chairman of the Board and
Chief Executive Officer, and our new management team, we have implemented a
series of interrelated strategic initiatives designed to improve manufacturing
efficiency, offer our products at a lower cost than our competitors and increase
market share. While these initiatives are designed to increase sales and
earnings of current operations, Terex also focuses on accelerating its growth
through acquisitions.
Increase Sales Through Best Value Strategy--We have focused our product
lines on products which we can manufacture at lower cost than our competitors.
We have eliminated unprofitable product lines and simplified our product
designs. We have also increased the number of interchangeable parts between
models. This strategy has enabled Terex to offer many of its products at prices
that we believe are often 10% to 15% below those offered by our competitors with
virtually the same usefulness and marketability as the competition's products.
We believe that as a result we are able to offer our customers a more attractive
return on their invested capital than our competitors. The key targets of this
strategy are rental fleet operators, Terex Lifting's primary customers. Rental
fleet operators are generally unable to charge a premium rental rate for
equipment that has sophisticated, but nonessential features. Terex believes that
by offering its customers a simplified product design at a lower price, it can
increase sales and gain market share.
2
<PAGE>
Focus on Core Businesses--Over the past several years we have focused on
growing and improving operations of our core lifting and earthmoving businesses.
We have also expanded the size and scope of our core businesses both through
acquisitions and through development of new products in order to increase our
market share. Management believes that these initiatives have helped insulate
Terex from potential cyclical changes in any one market. These initiatives have
also expanded Terex's product lines within its core businesses, added new
technology and improved Terex's distribution network.
Grow through Acquisitions--During the past several years, we have invested
approximately $460 million to strengthen our core lifting and earthmoving
businesses through 11 strategic acquisitions listed below:
<TABLE>
<CAPTION>
Acquired
Operating or Licensed
Date Acquisition Purchase Price Location Products Brand Names
<S> <C> <C> <C> <C> <C>
5/95 PPM $105 million South Carolina, Telescopic Mobile P&H, PPM, BENDINI
France, Italy Cranes
4/97 Simon Access $90 million Kansas, South Dakota, Aerial Work Platforms, SIMON, TELELECT, RO,
Wisconsin, Ireland, Utility Aerial CELLA
Italy Devices, Boom Trucks
4/97 Baraga (terms not Michigan Telescopic Rough SQUARE SHOOTER
Products disclosed) Terrain Lift Trucks
1/98 Payhauler (terms not Illinois Heavy Duty Rigid PAYHAULER
disclosed) Hauling Trucks
3/98 O&K Mining $168 million Germany Large Hydraulic Mining O&K
Shovels
5/98 Holland Lift $4 million The Netherlands Scissor Lifts HOLLAND LIFT
8/98 American Crane $18 million North Carolina Lattice Boom Cranes AMERICAN
11/98 Italmacchine (terms not Italy Telescopic Material ITALMACCHINE
disclosed) Handlers
11/98 Peiner HTS (terms not Germany Tower Cranes PEINER
disclosed)
12/98 Gru Comedil (terms not Italy Tower Cranes COMEDIL
disclosed)
4/99 Amida (terms not South Carolina Light Towers AMIDA
disclosed)
</TABLE>
Terex expects that acquisitions will continue to be an important component
of our growth strategy and is continually reviewing opportunities to make
additional acquisitions, some of which, individually or in the aggregate, could
be material to Terex. As with our previous acquisitions, Terex will continue to
pursue strategic acquisitions which accomplish the following goals:
o complement Terex's core operations;
o offer cost reduction opportunities as well as distribution and purchasing
synergies; and
o provide product diversification.
Reduce Costs and Improve Manufacturing Efficiency--Over the past few years,
we have initiated several programs to reduce costs and improve manufacturing
efficiency in order to increase profitability. As part of this strategy, we
evaluate the cost of every aspect of our existing and acquired businesses.
Typically we:
o combine manufacturing operations;
3
<PAGE>
o increase the efficiency of manufacturing processes by improving the flow of
materials through the various stages of production;
o subcontract specific tasks to third parties;
o reduce fixed costs; and
o emphasize those products that are the most profitable, including the
replacement parts business.
Some recent examples of our cost reduction initiatives include:
o Terex acquired P.P.M. S.A. and certain of its subsidiaries and Legris
Industries, Inc. in May 1995. Since the acquisition, we have reduced the
total number of PPM employees from approximately 840 to approximately 560
at December 31, 1998 and reduced the number of employees not directly
involved in the manufacture and sale of equipment from approximately 430 to
approximately 200 at December 31, 1998. During that same period, sales at
PPM increased. In addition, we reduced selling, general and administrative
expenses as a percentage of total sales from approximately 21.0% in 1994 to
approximately 7.2% for the year ended December 31, 1998.
o Terex acquired certain of the former subsidiaries of Simon Engineering plc
in April 1997. During the 90 days immediately following the acquisition, we
reduced the total number of Simon employees by approximately 130, primarily
those employees not directly involved in the manufacture and sale of
equipment. In addition, we reduced selling, general and administrative
expenses as a percentage of total sales from approximately 13.8% in 1996 to
approximately 6.5% for the year ended December 31, 1998.
o Terex acquired O&K Mining GmbH in March 1998. As a result of the
acquisition, the number of employees at Terex Earthmoving has been reduced
by approximately 140. In addition, we estimate cost reduction initiatives
have reduced annual operating expenses by over $8.5 million.
Recent Developments
In April 1999, Terex acquired Amida Industries, Inc. Amida is based in Rock
Hill, South Carolina and manufactures and sells mobile light towers, concrete
screeds (leveling devices), motorized front dumpers and directional arrow boards
under the Amida brand name. Amida has industry leading market shares in each of
its product categories, and will expand our product offering to the rapidly
growing rental segment of the construction business.
Summary of Terms of the Exchange Offer
The Exchange Offer.... We are offering to exchange up to $100,000,000
aggregate principal amount of our new 8-7/8%
Series D Senior Subordinated Notes due 2008, or
New Notes, which have been registered under the
Securities Act of 1933, for a like amount of our
outstanding 8-7/8% Series C Senior Subordinated Notes
due 2008, or Old Notes, which we issued on March 9,
1999 in a private offering. To exchange your Old Notes,
you must tender them, by following the procedures
under the heading "The Exchange Offer," and we must
accept them. We are offering to issue the New Notes to
satisfy our obligations contained in the Registration
Rights Agreement entered into when the Old Notes
were originally sold.
Expiration Date......... The exchange offer expires at 5:00 p.m., New York City
time, on ______________, 1999, unless we extend it.
Withdrawal Rights....... You may withdraw the tender of your Old Notes
at any time before 5:00 p.m., New York City
time, on the expiration date. If we decide for any
reason not to accept any Old Notes for exchange, we
will return to you your Old Notes without expense
promptly after the expiration or termination of the
exchange offer.
4
<PAGE>
Conditions to
the Exchange Offer.... The exchange offer is subject to customary
conditions, some of which we may waive. We
reserve the right to terminate and amend the exchange
offer at any time if any such condition occurs
before the expiration date.
Interest Payments....... The New Notes will bear interest from the date issued.
Interest on your Old Notes accepted for exchange will
cease to accrue interest upon issuance of the New
Notes.
Procedures for Tendering
Old Notes............ If you are a holder of old Notes who wishes to accept
the exchange offer for New Notes:
o you must complete, sign and date the accompanying
Letter of Transmittal, or a facsimile thereof;
o arrange for The Depository Trust Company to transmit
certain require information to the exchange agent in
connection with a book-entry transfer; or
o mail or otherwise deliver such documentation, together
with your Old Notes, to the exchange agent at the
address set forth under "The Exchange Offer--Exchange
Agent."
Do not send Letters of Transmittal and certificates
representing Old Notes to us.
By tendering your Old Notes in this manner, you will be
representing, among other things, that:
o the New Notes you acquire pursuant to the exchange
offer are being acquired in the ordinary course of your
business;
o you are not participating, do not intend to
participate, and have no arrangement or understanding
with any person to participate, in the distribution of
the New Notes issued to you in the exchange offer;
o you are not an "affiliate" of ours; and
o you are not a broker-dealer, and if you are a
broker-dealer that you will receive the New Notes for
your own account, you will deliver a prospectus on
resale of your New Notes and that you acquired your Old
notes as a result of market making activities or other
trading activities.
Special Procedures for
Beneficial Owners............. If you are a beneficial owner whose Old Notes
are registered in the name of a broker,
dealer, commercial bank, trust company or
other nominee and wish to tender our Old
Notes in the exchange offer, please contact
the registered owner as soon as possible and
instruct it to tender on your behalf. If you
wish to tender on your own behalf, you must,
prior to completing and executing the Letter
of Transmittal and delivering your Old Notes,
either arrange to have your Old Notes
registered in your name or obtain a properly
completed bond power from the registered
holder. The transfer of registered ownership
may take considerable time.
5
<PAGE>
Guaranteed Delivery Procedures... If you wish to tender your Old Notes and time
will not permit your required documents to
reach the exchange agent by the expiration
date, or the procedure for book-entry
transfer cannot be completed on time, you may
tender your Old Notes according to the
guaranteed delivery procedures set forth in
"The Exchange offer--Procedures for
Tendering."
Appraisal or Dissenters' Rights.. Owners of Old Notes do not have any appraisal
or dissenters' rights in the Exchange Offer.
Consequences of Not Exchanging
Old Notes..................... If you do not tender your Old Notes or we
reject your tender, you will not be entitled
to any further registration rights or
exchange rights, except under limited
circumstances, and your Old Notes will
continue to be subject to certain
restrictions on transfer. However, your Old
Notes will remain outstanding and entitled to
the benefits of the indenture governing the
Old Notes.
Resales.......................... We believe that you can offer for resale,
resell or otherwise transfer the New Notes
without complying with further registration
and prospectus delivery requirements of the
Securities Act, provided you make the
representations described above under
"Procedures for Tendering Old Notes."
If you are unable to make any of
such representations and you
transfer any new Notes without
delivering a proper prospectus or
without qualifying for a
registration exemption, you may
incur liability under the Securities
Act and applicable state securities
laws. We will not assume or
indemnify you against such
liability.
Federal Tax Consequences......... Your exchange of Old Notes for New Notes
pursuant to the exchange offer generally will
not result in any gain or loss to you for
United States federal income tax purposes.
Use of Proceeds.................. We will receive no proceeds from the exchange
offer.
Exchange Agent................... United States Trust Company of New York.
For more complete information about the Exchange Offer, see the "The
Exchange Offer" section of this Prospectus.
Summary Terms of the New Notes and the Guarantees
The Exchange Offer relates to the exchange of up to $100,000,000 aggregate
principal amount of the Old Notes for an equal aggregate principal amount of New
Notes. The form and terms of the New Notes will be the same as the form and
terms of the Old Notes, except that the New Notes will be registered under the
Securities Act and, therefore, will not bear legends restricting the transfer.
The New Notes will evidence the same debt as the Old Notes and will be entitled
to the benefits of the Indenture. Where we refer to "Notes" in this Prospectus,
we are referring to both the Old Notes and the New Notes. For more complete
information about the New Notes, see the "Description of the Notes" section of
this Prospectus.
Issuer........................... Terex Corporation.
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Securities Offered............... $100,000,000 aggregate principal amount of
8-7/8% Series D Senior Subordinated Notes due
2008.
Maturity......................... April 1, 2008.
Interest Payment Dates........... We will pay interest on the New Notes
semi-annually on April 1 and October 1 of
each year, beginning October 1, 1999.
Ranking.......................... The New Notes will be our senior subordinated
unsecured obligations. They will rank senior
in right of payment to any of our future
subordinated indebtedness, equal in right of
payment with any of our existing and future
senior subordinated indebtedness, and
subordinated in right of payment to any of
our existing and future senior indebtedness.
The New Notes will be effectively
subordinated to indebtedness and other
liabilities of our subsidiaries which are not
guarantors. As of March 31, 1999, we had
approximately $434 million of senior
indebtedness and approximately $244 million
of senior subordinated indebtedness, our
subsidiaries which are guarantors had
approximately $356 million of senior
indebtedness and approximately $244 million
of senior subordinated indebtedness, and our
subsidiaries which are not guarantors had
approximately $78 million of indebtedness.
Guarantees....................... Substantially all of our domestic
subsidiaries will guarantee the New Notes
with unconditional guarantees of payment that
will effectively rank below their senior
debt, but will rank equal to their other
senior subordinated debt, in right of
payment.
Optional Redemption by Us........ Except in the case of certain equity
offerings by us, we cannot choose to redeem
the New Notes until April 1, 2003. At any
time after that date (which may be more than
once), we can choose to redeem some or all of
the New Notes at certain specified prices
plus accrued interest.
Optional Redemption after
Equity Offerings................. At any time (which may be more than once)
before April 1, 2001, we can we choose to
redeem up to 33.3% of the outstanding New
Notes with money that we raise in one or more
public equity offerings, as long as we pay
108.875% of the principal amount of the New
Notes plus accrued interest and at least 65%
of the New Notes originally issued remain
outstanding afterwards.
Change of Control................ Upon the occurrence of certain change of
control events, each holder may require us to
repurchase all or a portion of the New Notes
at a purchase price of 101% of their
principal amount plus accrued interest, if
any, to the date of purchase.
Covenants........................ The indenture contains covenants that limit
what we (and most or all of our subsidiaries)
may do. The indenture will limit our ability
to:
o incur additional indebtedness;
o pay dividends and make distributions;
o make certain investments;
o permit payment or dividend restrictions on
certain of our subsidiaries;
o transfer and sell assets;
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o create certain liens;
o engage in certain transactions with
affiliates;
o issue stock of subsidiaries; and
o consolidate or merge or sell all or
substantially all of our assets and
the assets of our subsidiaries.
In addition, we will be obligated to
offer to repurchase the New Notes at a
price of 100% of their principal
amount plus accrued interest to the
date of repurchase in the event of
certain asset sales.
These restrictions and prohibitions
are subject to a number of important
qualifications and exceptions.
Original Issue Discount............... For United States federal income tax
purposes, the New Notes will be treated
as having been issued with an "original
issue discount" equal to the excess of
the stated redemption price at maturity
of a Note over its issue price.Each
holder of a Note must include as gross
income for federal income tax purposes a
portion of such original issue discount
for each day during each taxable year in
which a Note is held even though there
is no corresponding receipt of cash
attributable to such income. Stated
interest on a Note will be includable in
the gross income of a holder in
accordance with the holder's regular
method of accounting.
Risk Factors
You should carefully consider the discussion of risks beginning on page 9
and the other information included or referred to in this Prospectus before
deciding to tender your Old Notes in the Exchange Offer.
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RISK FACTORS
You should carefully consider the following risk factors in connection with
the Exchange Offer and your decision to exchange your Old Notes for New Notes.
You should also consider the other information contained or incorporated by
reference in this Prospectus.
Holders Responsible for Compliance with Exchange Offer
Procedures; No Notice of Defects or Irregularities
Issuance of the New Notes in exchange for your Old Notes pursuant to this
Exchange Offer will be made only after a timely receipt by Terex of your Old
Notes, a properly completed and signed Letter of Transmittal and all other
required documents. Therefore, if you desire to tender your Old Notes in
exchange for New Notes you should allow sufficient time to ensure timely
delivery. Neither the Exchange Agent nor Terex is under any duty to notify you
of defects or irregularities in the tender of your Old Notes for exchange. Old
Notes that are not tendered or are tendered but not accepted for exchange will,
following the completion of this Exchange Offer, continue to be subject to the
existing restrictions on transfer of the Old Notes and, upon completion of this
Exchange Offer, our obligation to register your Old Notes will terminate.
Consequences of Not Exchanging Old Notes For New Notes
If you do not exchange your Old Notes for the New Notes pursuant to the
Exchange Offer, you will continue to be subject to the restrictions on transfer
of your Old Notes described in the legend on your Old Notes. In general, you may
only offer or sell the Old Notes if they are registered under the Securities Act
and applicable state securities laws, or offered and sold pursuant to an
exemption from such requirements. We do not intend to register the Old Notes
under any law. In addition, if you exchange your Old Notes in the Exchange Offer
for the purpose of participating in a distribution of the New Notes, you may be
deemed to have received restricted securities and, if so, will be required to
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction. To the extent Old
Notes are tendered and accepted in the Exchange Offer, the trading market, if
any, for the Old Notes would be damaged. For more information on the
consequences of not exchanging your Old Notes, see "The Exchange Offer --
Consequences of Failure to Exchange."
Debt of Terex
As of March 31, 1999, Terex had total debt of approximately $679 million,
which represented approximately 86% of our total capitalization.
There are several important consequences of having debt, including the
following:
o a substantial portion of our cash from operating activities will be
dedicated to payment of principal and interest on our debt;
o competitive pressures and adverse economic conditions are more likely
to have a negative effect on our business; and
o our ability to make acquisitions and to take advantage of significant
business opportunities may be negatively affected.
Terex's ability to pay the required interest and principal payments on our
debt depends on the future performance of our business. The performance of our
business is subject to general economic conditions and other financial and
business factors. Many of these factors are beyond our control. If Terex does
not have enough cash flow in the future to pay the required interest or
principal payments on our debt, we may be required to refinance all or a part of
our debt or borrow additional amounts. Terex does not know if refinancing our
debt will be possible at that time or if we will be able to find someone who
will lend us more money.
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In addition, because part of Terex's debt bears interest at floating rates,
an increase in interest rates could adversely affect our ability to make the
required interest and principal payments on our debt. Terex has entered into
agreements covering part of our floating rate debt which place a cap on the
applicable interest rates.
Restrictive Debt Covenants
The indenture for the Notes and Terex's other existing debt agreements
contain a number of significant covenants. These covenants limit our ability to,
among other things, borrow additional money, make capital expenditures, pay
dividends, dispose of assets and acquire new businesses. These covenants also
require us to meet certain financial tests. Changes in economic or business
conditions, results of operations or other factors could cause us to default
under our debt agreements. If we are unable to comply with these covenants,
there would be a default under our debt agreements. A default, if not waived by
our lenders, could result in acceleration of Terex's debt and possibly
bankruptcy.
Subordination of Notes and the Guarantees of Subsidiaries
The Old Notes are, and the New Notes will be, subordinated to the prior
payment in full of all existing and future senior indebtedness and equal in
right of payment with all other existing and future senior subordinated
indebtedness. The guarantees of our subsidiaries will be subordinated to the
prior payment in full of all senior indebtedness of each subsidiary that is a
guarantor of the Notes, including obligations under Terex's bank credit
facility, and equal in right of payment with all other existing and future
senior subordinated indebtedness of each such subsidiary. Because of the
subordination provisions of the Notes, in the event of our bankruptcy,
liquidation or reorganization, our assets and the assets of any of our
subsidiaries that are guarantors of the Notes would be available to pay
obligations on the Notes only after all payments have been made on our senior
indebtedness and the senior indebtedness of such subsidiary guarantors. Terex
cannot assure you that there will be sufficient assets remaining after all
payments have been made to pay amounts due on the Notes then outstanding. As of
March 31, 1999, Terex had (i) approximately $434 million of senior indebtedness
outstanding (excluding unused commitments), (ii) approximately $244 million of
senior subordinated indebtedness outstanding, and (iii) approximately $679
million of indebtedness outstanding, and the subsidiary guarantors had
approximately $356 million of senior indebtedness outstanding and approximately
$244 million of senior subordinated indebtedness outstanding. In addition,
certain events of default under our senior indebtedness would prohibit us from
making any payments on the Notes, including payments on interest when due. The
term "senior indebtedness" is defined in the "Description of the Notes" section
of this Prospectus. Terex is permitted to incur substantial additional
indebtedness, some or all of which may be senior indebtedness.
Some but not all of our subsidiaries will guarantee the Notes. Claims of
creditors of any subsidiaries which do not guarantee the Notes, including trade
creditors, secured creditors and creditors holding indebtedness and guarantees
issued by such subsidiaries, will generally have priority with respect to the
assets and earnings of such subsidiaries over the claims of creditors or Terex,
including holders of the Notes, even if the obligations of those subsidiaries do
not constitute senior indebtedness. As of March 31, 1999, subsidiaries of Terex
that are not guarantors had approximately $78 million of indebtedness
outstanding.
In addition to being subordinate to all of Terex's senior indebtedness, the
Notes will not be secured by any of our assets or the assets of the subsidiaries
that are guarantors of the Notes. Our obligations and the obligations of the
subsidiary guarantors under our bank credit facility are secured by a security
interest in substantially all of the property of Terex and such subsidiary
guarantors, including inventory, equipment, receivables and intangible assets
such as licenses, trademarks and customer lists. If we become insolvent or are
liquidated, or if payment under our bank credit facility is accelerated, lenders
under the bank credit facility would be entitled to exercise the remedies
available to a secured lender. Therefore, our bank lenders will have a claim on
such assets before the holders of the Notes. See "Description of Certain
Indebtedness." We cannot assure you that the liquidation value of our assets
would be sufficient to repay in full the indebtedness under the bank credit
facility and our other indebtedness, including the Notes.
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Fraudulent Conveyance Matters
Although laws differ among various jurisdictions, in general, under
fraudulent conveyance laws, a court could subordinate or avoid any guarantee and
require holders to return payments received from guarantors if it found that the
guarantee was incurred with actual intent to hinder, delay or defraud creditors
or the guarantor did not receive fair consideration or reasonably equivalent
value for the guarantee and the guarantor was any of the following:
o insolvent or was rendered insolvent because of the guarantee;
o engaged or about to engage in a business or transaction for which its
remaining assets constituted unreasonably small capital; or
o intended to incur, or believed or reasonably should have believed that
it would incur, debts beyond its ability to pay at maturity.
If a court avoided a guarantee as a result of fraudulent conveyance, or
held it unenforceable for any other reason, holders would cease to have a claim
against the guarantor and would be solely creditors of Terex.
Acquisition Strategy; Integration of New Businesses
Terex expects to continue its strategy of identifying and acquiring
businesses with complementary products and services which we believe will
enhance our operations and profitability. Terex may pay for future acquisitions
from internally generated funds, bank borrowings, public offerings, private
sales of stock or bonds, or some combination of these methods. However, we
cannot give any assurance that Terex will be able to continue to find suitable
businesses to purchase or that Terex will be able to raise the money necessary
to complete future acquisitions. In addition, we cannot guarantee that we will
be able to successfully integrate any business we purchase into our existing
business or that any acquired businesses will be profitable. The successful
integration of new businesses depends on our ability to manage these new
businesses and cut excess costs. If Terex is unable to complete the integration
of new businesses in a timely manner, it could have a materially adverse effect
on our results of operations and financial condition.
Industry Cycles and Competition
The demand for our products depends upon the general economic conditions of
the markets in which we compete. Downward economic cycles result in reductions
in sales of our products, which may reduce Terex's profits. We have taken a
number of steps to reduce our fixed costs of operations to decrease the negative
impact of these cycles.
Terex competes in a highly competitive industry. To compete successfully,
our products must excel in terms of quality, price, product line, ease of use,
safety and comfort, and we must also provide excellent customer service. The
greater financial resources of certain of our competitors may put Terex at a
competitive disadvantage.
Tax Audit Issues
Terex's federal income tax returns for the years 1987 through 1989 are
currently being audited by the Internal Revenue Service ("IRS"). In December
1994, we received an examination report from the IRS proposing a large tax
deficiency. The examination report raised many issues. Among these issues are
substantiation for certain tax deductions and whether we were able to use
certain net operating loss carryovers ("NOLs") to offset taxable income. In
April 1995, Terex filed an administrative appeal to the examination report. The
IRS is currently reviewing information we provided to it. The final outcome of
this audit is subject to the resolution of complicated legal and factual issues.
Given the number and complexity of the legal and administrative proceedings
involved, this audit could continue for several more years.
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If the IRS prevails on all the issues raised, the amount of the tax we
would have to pay would be approximately $56.0 million plus penalties of
approximately $12.8 million and interest through March 31, 1999 of
approximately $116.2 million. The penalties claimed by the IRS are between 20%
and 25% of the amount of the tax deficiency assessed against us. Interest on the
amount of tax deficiency and penalties assessed against us is currently accruing
at a rate of 9% per annum. The annual rate of interest has varied since 1987
from 7% to 12%.
If Terex is required to pay a significant portion of the tax deficiency
claimed by the IRS, we may not have or be able to obtain the money necessary to
pay the tax deficiency. If this were to occur, we may not be able to continue in
business. Terex believes, however, that we are able to provide adequate
documentation for a large part of the tax deductions the IRS has disallowed. We
also believe that there is substantial support for our past and future use of
the NOLs questioned by the IRS. Based on the advice of our consultants and tax
advisors, we believe that Terex will prevail on the NOL issue and many of the
other issues. As a result, we do not believe that the outcome of the audit will
have a material adverse effect on our financial condition or results of
operations. However, we may lose or have to use some of our NOLs as a result of
the audit. In addition, there is also a possibility that we will have to pay
some amount of tax, penalties and interest to the IRS to resolve this matter.
The final outcome of the audit cannot be determined or estimated at this time.
Accordingly, Terex does not have any additional reserves for money which might
be due as a result of the audit because the loss ranges from zero to $56 million
plus interest and penalties.
Ability to Use Net Operating Loss Carryovers
As of December 31, 1998, Terex had federal NOLs of approximately $244
million. Currently there is no annual limitation on our ability to use NOLs to
reduce future income taxes. However, if an ownership change as defined in
Section 382 of the Internal Revenue Code of 1986, as amended (the "Code"),
occurs with respect to our capital stock, our ability to use NOLs would be
limited to specific annual amounts. Generally, an ownership change occurs if
certain persons or groups increase their aggregate ownership by more than 50
percentage points of our total capital stock in any three-year period.
If an ownership change occurs, our ability to use NOLs to reduce income
taxes is limited to an annual amount based on the fair market value of Terex
immediately prior to the ownership change multiplied by the long-term tax-exempt
interest rate. The long-term tax-exempt interest rate is published monthly by
the IRS. As of the date of this Prospectus, the rate is approximately 4.85%. The
15-year period to use NOLs is not affected by the ownership change limitations.
Our use of new NOLs arising after the date of an ownership change would not be
affected.
It is impossible for Terex to ensure that an ownership change will not
occur in the future. We do not have the ability to restrict the purchase or sale
of our capital stock so as to prevent an ownership change. At any time, the
actions of one or more persons or groups under certain circumstances could by
themselves cause an ownership change and result in a limitation on our ability
to use NOLs. However, Terex has entered into an agreement with Mr. Randolph W.
Lenz which limits his ability to purchase and sell shares of our capital stock.
Mr. Lenz is our former Chairman of the Board and an owner of approximately 9.7%
of our common stock. Nevertheless, Terex cannot prevent an ownership change from
occurring. In addition, we may decide in the future that it is necessary or in
our interest to take certain actions which result in an ownership change. If an
ownership change occurs, our future after-tax earnings per share and cash flow
will be reduced.
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Reliance on Key Management
The success of Terex's business is dependent upon the management and
leadership skills of Ronald M. DeFeo, Chairman of the Board, President and Chief
Executive Officer. Mr. DeFeo is not bound by an employment agreement with Terex.
The loss of Mr. DeFeo could have a significant, negative impact upon Terex.
Foreign Currencies; International Operations
Terex's products are sold in over 50 countries around the world. Thus, our
revenues are generated in foreign currencies, including the British Pound
Sterling, French Franc, Deutsche Mark, Italian Lira, Dutch Gilder and Australian
Dollar, while costs incurred to generate those revenues are only partly incurred
in the same currencies. Since Terex's financial statements are denominated in
U.S. dollars, changes in currency exchange rates between the U.S. dollar and
other currencies have had, and will continue to have, an impact on Terex's
earnings. To date, this impact has not been material on the earnings of Terex.
To reduce this currency exchange risk, Terex may buy protecting or offsetting
positions (known as "hedges") in certain currencies to reduce the risk of an
adverse currency exchange movement. Terex has not engaged in any speculative or
profit motivated hedging activities. Although Terex partially hedges its
revenues and costs, currency fluctuations will impact Terex's financial
performance in the future.
Terex's international operations are also subject to a number of potential
risks. Such risks include, among others, currency exchange controls, labor
unrest, regional economic uncertainty, political instability, restrictions on
the transfer of funds into or out of a country, export duties and quotas,
domestic and foreign customs and tariffs, current and changing regulatory
environments, difficulty in obtaining distribution support and potentially
adverse tax consequences. These factors may have an adverse effect on Terex or
its international operations in the future.
Environmental and Related Matters
Terex generates hazardous and nonhazardous wastes in the normal course of
its manufacturing operations. As a result, Terex is subject to a wide range of
federal, state, local and foreign environmental laws and regulations. These laws
and regulations govern actions that may have adverse environmental effects and
also require compliance with certain practices when handling and disposing of
hazardous and nonhazardous wastes. These laws and regulations also impose
liability for the costs of, and damages resulting from, cleaning up sites, past
spills, disposals and other releases of hazardous substances.
Compliance with these laws and regulations has, and will continue to
require, Terex to make expenditures. Terex does not expect that these
expenditures will have a material adverse effect on its business or
profitability.
Possible Inability to Purchase Notes on Change of Control
Upon the occurrence of certain change of control events, each holder of the
Notes and the currently outstanding $150 million 8-7/8% Senior Subordinated
Notes due 2008 may require us to repurchase all or any portion of the Notes or
the currently outstanding senior subordinated notes, as applicable, at a
purchase price of 101% of their principal amount plus accrued and unpaid
interest. The source of funds for any such purchase would be our available cash
or cash generated from other sources, including borrowings, sales of assets,
sales of equity or funds provided by a new controlling person. The occurrence of
a change of control event likely would trigger an event of default under Terex's
bank credit facility and we may be required to repay the amounts owed by us
under such bank credit facility. In such event, we likely would attempt to
refinance our indebtedness outstanding under the bank credit facility, the Notes
and the currently outstanding senior subordinated notes. We cannot assure you
that sufficient funds will be available at the time of any change of control
event to make any required purchases of the Notes and the currently outstanding
senior subordinated notes tendered and to repay amounts outstanding under the
bank credit facility. The term "change of control" is defined in the
"Description of the Notes-Change of Control" section.
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You Cannot Be Sure That an Active Trading Market Will Develop for the New Notes
The New Notes are being offered to the holders of the Old Notes. The Old
Notes were issued on March 9, 1999 to a small number of institutional investors
and overseas investors and are eligible for trading in the Private Offering,
Resale and Trading through Automated Linkages (PORTAL) Market, the National
Association of Securities Dealers' screenbased, automated market for trading of
securities eligible for resale under Rule 144A. To the extent that Old Notes are
tendered and accepted in the Exchange Offer, the trading market for the
remaining untendered Old Notes could be adversely affected. There is no existing
trading market for the New Notes. We do not intend to apply for listing or
quotation of the New Notes on any exchange. Therefore, we do not know the extent
to which investor interest will lead to the development of a trading market or
how liquid that market might be, nor can we make any assurances regarding the
ability of New Note holders to sell their New Notes or the price at which the
New Notes might be sold. Although the Initial Purchasers have informed us that
they currently intend to make a market in the New Notes, they are not obligated
to do so, and any such market-making may be discontinued at any time without
notice. As a result, the market price of the New Notes could be adversely
affected. Historically, the market for non-investment grade debt, such as the
New Notes, has been subject to disruptions that have caused substantial
volatility in the prices of such securities. Any such disruptions may have an
adverse effect on holders of the New Notes.
THE COMPANY
Terex is a global manufacturer of a broad range of construction and mining
related capital equipment. Terex strives to manufacture high quality machines
which are low cost, simple to use and easy to maintain. Terex's principal
products include telescopic mobile cranes, tower cranes, lattice boom cranes,
aerial work platforms, utility aerial devices, telescopic material handlers,
truck mounted mobile cranes, rigid and articulated off-highway trucks and high
capacity surface mining trucks, large hydraulic mining shovels and related
components and replacement parts. Terex's products are manufactured at 21 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.
Terex's operations began in 1983 with the purchase of Northwest Engineering
Company, Terex's original business and name. Since 1983, we have expanded and
changed Terex'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,
Terex's operations were divided into three principal segments: Material
Handling, Heavy Equipment and Mobile Cranes. On November 27, 1996, Terex
completed the sale of its worldwide material handling segment, which was
originally acquired in July 1992. Currently Terex operates in two business
segments: Terex Lifting and Terex Earthmoving.
Terex Lifting
Terex Lifting manufactures and sells telescopic mobile cranes (including
rough terrain, truck and all terrain mobile cranes), tower cranes, lattice boom
cranes, aerial work platforms (including scissor, articulated boom and straight
telescoping boom aerial work platforms), utility aerial devices (including
digger derricks and articulated aerial devices), telescopic material handlers
(including container stackers, scrap handlers and telescopic rough terrain boom
forklifts), truck mounted cranes (boom trucks) and related components and
replacement parts. These products are primarily used by construction and
industrial customers and utility companies. Terex Lifting is comprised of a
number of divisions and subsidiaries.
Terex Lifting was established as a separate business segment as a result of
the acquisition (the "PPM Acquisition") in May 1995 of substantially all of the
shares of P.P.M. S.A. and certain of its subsidiaries, including P.P.M. SpA,
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Brimont Agraire S.A., a specialized trailer manufacturer in France, PPM Krane
GmbH, a sales organization in Germany, and Baulift Baumaschinen Und Krane
Handels GmbH, a parts distributor in Germany (collectively, "PPM Europe"), from
Potain S.A., and all of the capital stock of Legris Industries, Inc., which
owned 92.4% of the capital stock of PPM Cranes, Inc. ("Terex Lifting--Conway
Operations;" PPM Europe and Terex Lifting--Conway Operations are collectively
referred to herein as "PPM") from Legris Industries, S.A. Concurrently with the
completion of the PPM Acquisition, Terex contributed the assets (subject to
liabilities) of its Koehring Cranes and Excavators and Mark Industries division
to Terex Cranes, Inc., a wholly-owned subsidiary of Terex. The former division
now operates as Koehring Cranes, Inc., a wholly-owned subsidiary of Terex
Cranes, Inc.
During 1997, Terex completed two acquisitions to augment its Terex Lifting
segment. On April 7, 1997, Terex completed the acquisition of substantially all
of the capital stock of certain of the former subsidiaries of Simon Engineering
plc (the "Simon Access Companies") for $90 million (subject to adjustment under
certain circumstances). The Simon Access Companies consist principally of
business units in the United States and Europe engaged in the manufacture, sale
and worldwide distribution of access equipment designed to position people and
materials to work at heights. The Simon Access Companies' products include
utility aerial devices, aerial work platforms and truck mounted cranes (boom
trucks) which are sold to customers in the industrial and construction markets,
as well as utility companies. Specifically, Terex 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
Corporation ("Terex RO"), (iii) Sim-Tech Management Limited, a private limited
company incorporated under the laws of Hong Kong, (iv) Simon Cella, S.r.1., a
company incorporated under the laws of Italy, and (v) Simon Aerials Limited (now
named Terex Aerials Limited), a company incorporated under the laws of Ireland;
and 60% of the outstanding common stock of Simon-Tomen Engineering Company
Limited, a limited liability stock company organized under the laws of Japan. On
April 14, 1997, Terex completed the acquisition of all of the capital stock of
Baraga Products, Inc. and M&M Enterprises of Baraga, Inc. (together, the "Square
Shooter Business"), which manufacture the Square Shooter, a rough terrain
telescopic lift truck designed to lift materials to heights where they are used
in construction.
During 1998, Terex completed five additional acquisitions to augment its
Terex Lifting segment. On May 4, 1998, Terex purchased all of the outstanding
shares of Holland Lift International B.V. ("Holland Lift") for a purchase price
of approximately $4.4 million. Holland Lift, which is headquartered just outside
Amsterdam, The Netherlands, manufactures and sells self-propelled scissor lifts
(commonly referred to as aerial work platforms). On August 4, 1998, Terex
purchased all of the outstanding shares of American Crane Corporation ("American
Crane") for a purchase price of $18 million. American Crane, which is based in
Wilmington, North Carolina, manufactures and sells lattice boom cranes. On
November 3, 1998, Terex purchased all of the outstanding shares of Italmacchine,
SpA ("Italmacchine"). Italmacchine, which is based near Perugia, Italy,
manufactures and sells telescopic material handlers. On November 13, 1998, Terex
purchased from Noell Service und Maschinentechnik GmbH the assets of its
division, Peiner HTS ("Peiner"). Peiner, which is based in Trier, Germany,
manufactures and sells tower cranes. On December 18, 1998, Terex purchased all
of the outstanding shares of Gru Comedil SpA ("Comedil"). Comedil, based in
Fontanafredda, Italy, manufactures and sells tower cranes.
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. On January 5, 1998, Terex also
acquired Payhauler Corp. ("Payhauler"), which manufactures and markets 30 and 50
ton all wheel drive rigid frame trucks designed to move material in more severe
operating conditions than a standard rear wheel drive rigid frame truck. On
March 31, 1998, Terex purchased all of the outstanding shares of O&K Mining GmbH
from Orenstein & Koppel AG for net aggregate consideration of approximately $168
million, subject to certain post-closing adjustments. O&K Mining is engaged in
the manufacture, sale and worldwide distribution of heavy duty hydraulic
excavators primarily used to load coal, copper ore, iron ore, other
mineral-bearing materials or rocks into trucks. These products are used by
mining equipment contractors, mining and quarrying companies and large
construction companies involved in infrastructure projects worldwide. Terex
Earthmoving is comprised of Terex Equipment Limited ("TEL"), located in
Motherwell, Scotland, Unit Rig ("Unit Rig") and Payhauler, located in Tulsa,
Oklahoma, and O&K Mining, located in Dortmund, Germany.
15
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Other
On April 1, 1999, Terex completed the acquisition of Amida Industries, Inc.
("Amida"). Amida, located in Rock Hill, South Carolina, manufactures light
construction equipment, principally mobile light towers, concrete screeds,
motorized front dumpers and directional arrow boards.
THE EXCHANGE OFFER
Purpose and Effect of the Exchange Offer
The Old Notes were sold by Terex on March 9, 1999 to the Initial Purchasers
with further distribution permitted only to (i) Qualified Institutional Buyers
(as defined in Rule 144A under the Securities Act) and (ii) persons in offshore
transactions in reliance on Regulation S under the Securities Act. In connection
with the sale of the Old Notes, Terex and the Initial Purchasers entered into
the Registration Rights Agreement which requires Terex to file with the
Commission the registration statement of which this Prospectus is a part within
60 days of the date of the issuance of the Old Notes (the "Issuance Date") with
respect to a registered offer to exchange the Old Notes for New Notes, identical
in all material respects to the Old Notes, and to use its best efforts to cause
such registration statement to become effective under the Securities Act within
150 days of the Issuance Date. Terex will keep the Exchange Offer open for not
less than 30 days after the date notice of the Exchange Offer is mailed to the
holders. A copy of the Registration Rights Agreement has been filed as an
exhibit to the Registration Statement of which this Prospectus is a part. The
Exchange Offer is being made pursuant to the Registration Rights Agreement to
satisfy Terex's obligations thereunder.
Resale of New Notes
Based on an interpretation by the staff of the Commission set forth in
no-action letters issued to third parties, including "K-III Communications
Corporation" (available May 14, 1993), "Shearman & Sterling" (available July 2,
1993), "Exxon Capital Holdings Corporation" (available May 13, 1988), "Morgan
Stanley & Co. Incorporated" (available June 5, 1991), "Mary Kay Cosmetics, Inc."
(available June 5, 1991) and "Warnaco, Inc." (available October 11, 1991), Terex
believes that, except as described below, the New Notes issued pursuant to the
Exchange Offer in exchange for Old Notes may be offered for resale, resold and
otherwise transferred by any holder of the Notes (other than any holder which is
a broker-dealer or an "affiliate" of Terex within the meaning of Rule 405 under
the Securities Act) without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that, (i) such New Notes are
acquired in the ordinary course of the holder's business, (ii) the holder has no
arrangement or understanding with any person to participate in the distribution
of such New Notes, and (iii) holder is not engaged in, and does not intend to
engage in, a distribution of such New Notes. Terex does not intend to request
the Commission to consider, and the Commission has not considered, the Exchange
Offer in the context of a no-action letter and there can be no assurance that
the staff of the Commission would make a similar determination with respect to
the Exchange Offer as it has in such other circumstances. By tendering Old Notes
for New Notes, each holder will represent to Terex, that (i) the New Notes
acquired pursuant to the Exchange Offer are being acquired in the ordinary
course of business of the person receive such New Notes, whether or not such
person is the holder, (ii) neither the holder nor any such other person is
engaging in or intends to engage in a distribution of such New Notes, (iii) if
the holder is not a broker-dealer, neither the holder nor any such other person
has an arrangement or understanding with any person to participate in the
distribution of such New Notes within the meaning of the Securities Act, and
(iv) neither the holder nor any such other person is an affiliate of Terex. In
the event that any holder of Old Notes cannot make the requisite representations
to Terex, such holder cannot rely on such interpretation by the staff of the
Commission and must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale
transaction. Unless an exemption from registration is otherwise available, any
such resale transaction should be covered by an effective registration statement
containing the selling security holders information required by Item 507 of
Regulation S-K under the Securities Act. This Prospectus may be used for an
offer to resell, resale or other retransfer of New Notes only as specifically
set forth herein.
16
<PAGE>
Each broker-dealer that receives New Notes for its own account in exchange
for Old Notes, where such Old Notes were acquired by such broker-dealer as a
result of market-making activities or other trading activities, must acknowledge
that it will deliver a prospectus in connection with any resale of such New
Notes, and that it has not entered into any arrangement or understanding with
Terex or any affiliate of Terex to distribute New Notes in connection with any
resale of such New Notes. See "Plan of Distribution."
Terms of the Exchange Offer
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, Terex will accept for exchange any and all Old
Notes properly tendered and not withdrawn prior to 5:00 p.m., New York City
time, on the Expiration Date. Terex will issue $1,000 principal amount of New
Notes in exchange for each $1,000 principal amount of outstanding Old Notes
surrendered pursuant to the Exchange Offer. Old Notes may be tendered only in
integral multiples of $1,000.
The form and terms of the New Notes will be the same as the form and terms
of the Old Notes except the New Notes will be registered under the Securities
Act and hence will not bear legends restricting the transfer thereof. The New
Notes will evidence the same debt as the Old Notes. The New Notes will be issued
under and entitled to the benefits of the Indenture, which also authorized the
issuance of the Old Notes, such that both series will be treated as a single
class of debt securities under the Indenture.
As of the date of this Prospectus, $100 million aggregate principal amount
of the Old Notes are outstanding. This Prospectus, together with the Letter of
Transmittal, is being sent to all registered holders of Old Notes. There will be
no fixed record date for determining registered holders of Old Notes entitled to
participate in the Exchange Offer. The Exchange Offer is not conditioned with
any minimum principal amount of Old Notes being tendered for exchange. However,
the obligation to accept Old Notes for exchange pursuant to the Exchange Offer
is subject to certain conditions, as described under "-- Conditions".
Terex intends to conduct the Exchange Offer in accordance with the
provisions of the Registration Rights Agreement and the applicable requirements
of the Exchange Act, and the rules and regulations of the Commission thereunder.
Old Notes which are not tendered for exchange in the Exchange Offer will remain
outstanding and continue to accrue interest and will be entitled to the rights
and benefits such holders have under the Indenture and the Registration Rights
Agreement.
Terex will be deemed to have accepted for exchange properly tendered Old
Notes when, as and if Terex has given oral or written notice thereof to the
Exchange Agent and complied with the provisions of the Indenture. The Exchange
Agent will act as agent for the tendering holders for the purposes of receiving
the New Notes from Terex.
Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the Letter
of Transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the Exchange Offer. Terex will pay all charges and expenses, other
than certain applicable taxes described below, in connection with the Exchange
Offer. See " -- Fees and Expenses."
Expiration Date; Extensions; Amendments
The term "Expiration Date" shall mean 5:00 p.m., New York City time on
____________, 1999, unless Terex, in its sole discretion, extends the Exchange
Offer, in which case the term "Expiration Date" shall mean the latest date to
which the Exchange Offer is extended. If the Exchange Offer is not completed by
__________, 1999, the interest rate on the Old Notes shall be increased by
one-half of one percent (0.5%) per year until the Exchange Offer is completed.
In order to extend the Exchange Offer, Terex will notify the Exchange Agent
of any extension by oral or written notice and will mail to the holders an
announcement thereof, prior to 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date.
17
<PAGE>
Terex reserves the right, in its sole discretion, (i) to delay accepting
any Old Notes, to extend the Exchange Offer or to terminate the Exchange Offer
and not permit acceptance of Old Notes not previously accepted, if any of the
conditions set forth below under " -- Conditions" have not been satisfied, by
giving oral or written notice of the delay, extension or termination to the
Exchange Agent or (ii) to amend the terms of the Exchange Offer in any manner
which, in its good faith judgment, is advantageous to the holders of the Old
Notes, whether before or after any tender of the Notes. Any delay in acceptance,
extension, termination or amendment will be followed as promptly as practicable
by oral or written notice thereof to the holders. If the Exchange Offer is
amended in a manner determined by Terex to constitute a material change, Terex
will promptly notify holders of the amendment by means of a prospectus
supplement that will be distributed to the registered holders, if required by
law, and Terex will extend the Exchange Offer for a period of five to ten
business days, depending upon the significance of the amendment and the manner
of disclosure to the registered holders, if the Exchange Offer would otherwise
expire during such five to ten business day period.
Without limiting the manner in which Terex may choose to make a public
announcement of any delay, extension, termination or amendment of the Exchange
Offer, Terex will have no obligation to publish, advertise, or otherwise
communicate any such public announcement, other than by making a timely release
to the Dow Jones news service.
Interest on the New Notes
The New Notes will bear interest at 8-7/8% per annum from the date of
original issue. Interest on the New Notes will be payable semi-annually, in
arrears, on April 1 and October 1 of each year, commencing on October 1, 1999.
Holders of New Notes will receive interest on October 1, 1999 from the date of
initial issuance of the New Notes, plus an amount equal to the accrued interest
on the Old Notes from the most recent date to which interest has been paid to
the date of exchange for New Notes. Interest on the Old Notes accepted for
exchange will cease to accrue upon issuance of the New Notes.
Conditions
Terex will not be required to accept for exchange, or exchange any New
Notes for, any Old Notes, and may terminate the Exchange Offer before the
acceptance of any Old Notes for exchange, if:
(a) any action or proceeding is instituted or threatened in any court or by
or before any governmental agency with respect to the Exchange Offer which, in
Terex's sole judgment, might materially impair the ability of Terex to proceed
with the Exchange Offer, or
(b) any law, statute, rule or regulation is proposed, adopted or enacted,
or any existing law, statute, rule or regulation is interpreted by the staff of
the Commission, which, in Terex's sole judgment, might materially impair the
ability of Terex to proceed with the Exchange Offer, or
(c) any governmental approval has not been obtained, which approval Terex
shall, in its sole discretion, deem necessary for the consummation of the
Exchange Offer as contemplated hereby.
If Terex determines in its sole discretion that any of these conditions are
not satisfied, Terex may (i) refuse to accept any Old Notes and return all
tendered Old Notes to the tendering holders, (ii) extend the Exchange Offer and
retain all Old Notes tendered prior to the expiration of the Exchange Offer,
subject, however, to the rights of holders who tendered such Old Notes to
withdraw their tendered Old Notes, or (iii) waive such unsatisfied conditions
with respect to the Exchange Offer and accept all properly tendered Old Notes
which have not been withdrawn.
The foregoing conditions are for the sole benefit of Terex and may be
asserted by Terex regardless of the circumstances giving rise to any such
condition or may be waived by Terex in whole or in part at any time and from
time to time in its sole discretion. The failure by Terex at any time to
exercise any of our rights shall not be deemed a waiver of any such right, and
each such right, will be deemed an ongoing right which may be asserted at any
time and from time to time.
18
<PAGE>
Procedures for Tendering
Only a holder of Old Notes may tender such Old Notes in the Exchange Offer.
To tender in the Exchange Offer, a holder must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal, and mail or otherwise
deliver the Letter of Transmittal or such facsimile, together with the Old Notes
and any other required documents, to the Exchange Agent prior to 5:00 p.m., New
York City time, on the Expiration Date. In addition, either (i) Old Notes must
be received by the Exchange Agent along with the Letter of Transmittal, or (ii)
a timely confirmation of book-entry transfer (a "Book-Entry Confirmation") of
such Old Notes, if such procedure is available, into the Exchange Agent's
account at the Depository Trust Company (the "Book-Entry Transfer Facility")
pursuant to the procedure for book-entry transfer described below must be
received by the Exchange Agent prior to the Expiration Date, or (iii) the holder
must comply with the guaranteed delivery procedures described below. To be
tendered effectively, the Old Notes, Letter of Transmittal and other required
documents must be received by the Exchange Agent at the address set forth below
under " -- Exchange Agent".
The tender by a holder which is not withdrawn prior to the Expiration Date
will constitute an agreement between such holder and Terex in accordance with
the terms and subject to the conditions set forth herein and in the Letter of
Transmittal.
The method of delivery of Old Notes, the letter of transmittal and all
other required documents to the Exchange Agent is at the election and risk of
the holders. If such delivery is by mail, it is recommended that registered
mail, properly insured, with return receipt requested, be used. In all cases,
sufficient time should be allowed to assure delivery to the Exchange Agent
before the expiration date. No letter of transmittal or Old Notes should be sent
to Terex. Holders may request their respective brokers, dealers, commercial
banks, trust companies or nominees to effect the above transactions for and on
behalf of such holders.
Any beneficial owner whose Old Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender such Old Notes should contact the registered holder promptly and
instruct such holder to tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on its own behalf, such owner must, prior to
completing and executing the Letter of Transmittal and delivering its Old Notes,
either make appropriate arrangements to register ownership of the Old Notes in
its name or obtain a properly completed bond power from the registered holder.
The transfer of registered ownership may take considerable time and may not be
able to be completed prior to the Expiration Date.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by any Eligible Institution (as defined below)
unless the Old Notes tendered pursuant thereto are tendered (i) by a holder who
has not completed the box entitled "Special Issuance Instructions" or "Special
Delivery Instructions" on the Letter of Transmittal or (ii) for the account of
an Eligible Institution. In the event that signatures on a Letter of Transmittal
or a notice of withdrawal, as the case may be, are required to be guaranteed,
such guarantor must be a member firm of a registered national securities
exchange or of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the United
States or an "eligible guarantor institution" within the meaning of Rule 17Ad-15
under the Exchange Act which is a member of one of the recognized signature
guarantee programs identified in the Letter of Transmittal (each, an "Eligible
Institution").
If the Letter of Transmittal is signed by a person other than the holder of
any Old Notes listed therein, the Old Notes must be endorsed or accompanied by a
properly completed bond power, in satisfactory form as determined by Terex in
its sole discretion, signed by the holder as the holder's name appears on the
Old Notes with the signature thereon guaranteed by an Eligible Institution.
If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, these
persons should so indicate when signing, and unless waived by Terex, evidence
satisfactory to Terex of their authority to so act must be submitted with the
Letter of Transmittal.
19
<PAGE>
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Old Notes and withdrawal of tendered Old Notes
will be determined by Terex in its sole discretion, which determination will be
final and binding. Terex reserves the absolute right to reject any and all Old
Notes not properly tendered or any Old Notes Terex's acceptance of which would,
in the opinion of counsel for Terex, be unlawful. Terex also reserves the right
to waive any defects, irregularities or conditions of tender as to particular
Old Notes. Terex's interpretation of the terms and conditions of the Exchange
Offer (including the instructions in the Letter of Transmittal) will be final
and binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Old Notes must be cured within such time as Terex
shall determine. Although Terex intends to notify holders of defects or
irregularities with respect to tenders of Old Notes, neither Terex, the Exchange
Agent nor any other person will incur any liability for failure to give such
notification. Tenders of Old Notes will not be deemed to have been made until
the defects or irregularities have been cured or waived. Any Old Notes received
by the Exchange Agent that are not properly tendered and as to which the defects
or irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering holders, unless otherwise provided in the Letter of
Transmittal, as soon as practicable following the Expiration Date.
While Terex has no present plan to acquire any Old Notes that are not
tendered in the Exchange Offer, Terex reserves the right in its sole discretion
to (i) purchase or make offers for any Old Notes that remain outstanding
subsequent to the Expiration Date, (ii) as set forth above under " --
Conditions," to terminate the Exchange Offer, or (iii) redeem the Old Notes as a
whole or in part at any time and from time to time, as set forth under
"Description of Notes--Optional Redemption," or (iv) to the extent permitted by
applicable law, purchase Old Notes in the open market, in privately negotiated
transactions or otherwise. The terms of any such purchases or offers could
differ from the terms of the Exchange Offer.
In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of certificates for such Old Notes or a timely Book-Entry
confirmation of such Old Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility, a properly completed and duly executed Letter of
Transmittal and all other required documents. If any tendered Old Notes are not
accepted for exchange for any reason set forth in the terms and conditions of
the Exchange Offer, or if Old Notes are submitted for a greater principal amount
than the holder desires to exchange, the unaccepted or non-exchanged Old Notes
will be returned without expense to the tendering holder thereof (or, in the
case of Old Notes tendered by book-entry transfer into the Exchange Agent's
account at the Book-Entry Transfer Facility pursuant to the book-entry transfer
procedures described below, the non-exchanged Old Notes will be credited to an
account maintained with such Book-Entry Transfer Facility) as promptly as
practicable after the expiration or termination of the Exchange Offer.
Book Entry Transfer
The Exchange Agent will make a request to establish an account with respect
to the Old Notes at the Book-Entry Transfer Facility for purposes of the
Exchange Offer within two business days after the date of this Prospectus, and
any financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of Old Notes by causing the
Book-Entry Transfer Facility to transfer such Old Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility in accordance with such
Book-Entry Transfer Facility's procedures for transfer. However, although
delivery of Old Notes may be effected through book-entry transfer at the
Book-Entry Transfer Facility, the Letter of Transmittal or facsimile thereof,
with any required signature guarantees and any other required documents, must,
in any case, be transmitted to and received by the Exchange Agent at the address
set forth below under "-- Exchange Agent" on or prior to the Expiration Date or,
if the guaranteed delivery procedures described below are to be complied with,
within the time period provided under such procedures. Delivery of documents to
the Book-Entry Transfer Facility does not constitute delivery to the Exchange
Agent.
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Guaranteed Delivery Procedures
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available or (ii) who cannot deliver their Old Notes, the Letter of
Transmittal or any other required documents to the Exchange Agent prior to the
Expiration Date, may effect a tender if:
(a) The tender is made through an Eligible Institution;
(b) Prior to the Expiration Date, the Exchange Agent receives from an
Eligible Institution a properly completed and duly signed Letter of Transmittal
and the Notice of Guaranteed Delivery, substantially in the form provided by
Terex (by facsimile transmission, mail or hand delivery) setting forth the name
and address of the holder, the registered number(s) of the Old Notes and the
principal amount of Old Notes tendered, stating that the tender is being made by
guaranteed delivery and guaranteeing that, within three New York Stock Exchange
trading days after the Expiration Date, the Letter of Transmittal (or facsimile
thereof) together with the Old Notes or a Book-Entry Confirmation, as the case
may be, and any other documents required by the Letter of Transmittal will be
deposited by the Eligible Institution with the Exchange Agent; and
(c) Properly completed and signed Letter of Transmittal (or facsimile
thereof), as well as all tendered Old Notes in proper form for transfer or a
Book-Entry Confirmation, and all other documents required by the Letter of
Transmittal, are received by the Exchange Agent within five New York Stock
Exchange trading days after the Expiration Date.Upon request of the Exchange
Agent, a Notice of Guaranteed Delivery will be sent to holders who wish to
tender their Old Notes according to the guaranteed delivery procedures set forth
above.
Withdrawal of Tender
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the Expiration Date.
To withdraw a tender of Old Notes in the Exchange Offer, a written or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth herein prior to 5:00 p.m., New York City time, on
the Expiration Date. Any such notice of withdrawal must (i) specify the name of
the person having deposited the Old Notes to be withdrawn (the "Depositor"),
(ii) identify the Old Notes to be withdrawn (including the principal amount of
the Old Notes and, in the case certificates representing the Old Notes have been
tendered, registered number or numbers and or, in the case of Old Notes
transferred by book-entry transfer, the name and number of the account at the
Book-Entry Transfer Facility to be credited), (iii) be signed by the holder in
the same manner as the original signature on the Letter of Transmittal by which
the Old Notes were tendered (including any required signature guarantees) or be
accompanied by documents of transfer sufficient to have United States Trust
Company of New York, the trustee with respect to the Old Notes, register the
transfer of such Old Notes into the name of the person withdrawing the tender
and (iv) specify the name in which any such Old Notes are to be registered, if
different from that of the Depositor. All questions as to the validity, form and
eligibility (including time of receipt) of such notices will be determined by
Terex, whose determination will be final and binding on all parties. Any Old
Notes so withdrawn will be deemed not to have been validly tendered for purposes
of the Exchange Offer and no New Notes will be issued with respect thereto
unless the Old Notes so withdrawn are validly re-tendered. Any Old Notes which
have been tendered but which are not accepted for payment will be returned to
the holder thereof without cost to the holder (or, is the case of Old Notes
tendered by book-entry transfer into the Exchange Agent's account at the
Book-Entry Transfer Facility pursuant to the book-entry transfer procedures
described above, such Old Notes will be credited to an account maintained with
such Book-Entry Transfer Facility) as soon as practicable after withdrawal,
rejection of tender or termination of the Exchange Offer. Properly withdrawn Old
Notes may be retendered by following one of the procedures described above under
"-- Procedures for Tendering" and "--Book-Entry Transfer" at any time prior to
the Expiration Date.
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Exchange Agent
United States Trust Company of New York has been appointed as Exchange
Agent of the Exchange Offer. Questions and requests for assistance, requests for
additional copies of this Prospectus or of the Letter of Transmittal and
requests for Notices of Guaranteed Delivery should be directed to the Exchange
Agent addressed as follows:
By Registered or Certified Mail: By Overnight Courier or By Hand,
After 4:30pm:
United States Trust Company of New York United States Trust Company
P.O. Box 844, Cooper Station of New York
New York, New York 10276-0844 770 Broadway, 13th floor
Attention: Corporate Trust Services New York, New York 10003
Attention:Corporate Trust Services
By Hand Prior to 4:30 pm: By Facsimile:
United States Trust Company of New York (212) 780-0592
111 Broadway, Lower Level Attention: Corporate Trust Services
New York, New York 10006
Attention: Corporate Trust Services Confirm by telephone:
(800) 548-6565
Fees and Expenses
The expenses of soliciting tenders will be paid by Terex. The principal
solicitation is being made by mail; however, additional solicitation may be made
by telegraph, telephone, facsimile, or in person by officers and regular
employees of Terex and its affiliates.
Terex has not retained any dealer-manager in connection with the Exchange
Offer and will not make any payments to brokers, dealers or others soliciting
acceptances of the Exchange Offer. Terex, however, will pay the Exchange Agent
reasonable and customary fees for its services and will reimburse it for its
reasonable out-of-pocket expenses in connection therewith. Terex may also pay
brokerage houses and other custodians, nominees and fiduciaries the reasonable
out-of-pocket expenses incurred by them in forwarding copies of the Prospectus
and related documents to the beneficial owners of the Old Notes and in handling
or forwarding tenders for exchange.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by Terex and are estimated in the aggregate to be approximately $50,000.
Such expenses include fees and expenses of the Exchange Agent and Trustee,
accounting and legal fees and printing costs, among others.
Terex will pay all transfer taxes, if any, applicable to the exchange of
Old Notes pursuant to the Exchange Offer. If, however, New Notes or Old Notes
for principal amounts not tendered or accepted for exchange are to be delivered
to, or are to be issued in the name of, any person other than the holder of the
Old Notes tendered, or if tendered Old Notes are registered in the name of any
person other than the person signing the Letter of Transmittal, or if a transfer
tax is imposed for any reason other than the exchange of Old Notes pursuant to
the Exchange Offer, then the amount of any transfer taxes (whether imposed on
the holder or any other persons) will be payable by the tendering holder. If
satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the Letter of Transmittal, the amount of such transfer taxes will
be billed directly to such tendering holder.
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<PAGE>
Consequences of Failure to Exchange
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legend on the Old Notes and in
the Indenture as a result of the issuance of the Old Notes pursuant to
exemptions from, or in transactions not subject to, the registration
requirements of the Securities Act and applicable state securities law.
Accordingly, the Old Notes may be resold only (i) to Terex (upon redemption
thereof or otherwise), (ii) pursuant to an effective registration statement
under the Securities Act, (iii) so long as the Old Notes are eligible for resale
pursuant to Rule 144A, to a qualified institutional buyer within the meaning of
Rule 144A under the Securities Act in a transaction meeting the requirements of
Rule 144A, or (iv) pursuant to another available exemption from the registration
requirements of the Securities Act, in each case in accordance with any
applicable securities laws of any state of the United States. Terex does not
currently anticipate that it will register under the Securities Act the resale
of any Old Notes that remain outstanding after consummation of the Exchange
Offer. However, generally, (i) if any Initial Purchaser so requests with respect
to Old Notes not eligible to be exchanged for Exchange Notes in the Exchange
Offer and held by it following consummation of the Exchange Offer or (ii) if any
holder of Old Notes is not eligible to participate in the Exchange Offer or, in
the case of any holder of Old Notes that participates in the Exchange Offer,
does not receive freely tradeable Exchange Notes in exchange for Old Notes,
Terex is obligated to file a registration statement on the appropriate form
under the Securities Act relating to the Old Notes held by such persons.
Accounting Treatment
The New Notes will be recorded at the same carrying value as the Old Notes
as reflected in Terex's accounting records on the date of the exchange.
Accordingly, no gain or loss for accounting purposes will be recognized by
Terex. The expenses of the Exchange Offer will be amortized over the term of the
New Notes.
USE OF PROCEEDS
Terex will not receive any cash proceeds from the issuance of the New Notes
offered hereby. In consideration for issuing the New Notes as contemplated in
this Prospectus, Terex will receive in exchange Old Notes in like principal
amount, the forms and terms of which are identical, in all material respects, to
the New Notes. The Old Notes surrendered in exchange for New Notes will be
retired and canceled and cannot be reissued. Accordingly, issuance of the New
Notes will not result in any increase in the indebtedness of Terex. Proceeds
from the sale of the privately placed Old Notes were used to repay indebtedness
and finance a portion of the purchase price for the acquisition of Amida
Industries, Inc.
23
<PAGE>
CAPITALIZATION
The following table shows the consolidated capitalization of Terex as of
March 31, 1999. This table should be read together with the historical
consolidated financial statements and related notes incorporated by reference in
this Prospectus.
As of March 31, 1999
(dollars in millions)
Cash and cash equivalents........................... $ 22.0
=======
Debt:
Bank credit facility............................. $377.7
8-7/8% Senior Subordinated Notes due 2008........ 149.4
The Notes ....................................... 95.0
Other indebtedness............................... 56.4
--------
Total debt................................. 678.5
--------
Stockholders' equity:
Warrants to purchase common stock................ 0.8
Equity rights.................................... 3.1
Common stock, $0.01 par value--authorized
150 million shares; 20.8 million shares
issued and outstanding........................ 0.2
Additional paid-in capital....................... 179.1
Accumulated deficit.............................. (54.9)
Accumulated other comprehensive income........... (17.1)
-------
Total stockholders' equity................. 111.1
-------
Total capitalization....................... $ 789.7
========
24
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in millions, except per share amounts)
The selected historical consolidated financial data of Terex shown below as
of and for the five years ended December 31, 1998 have been derived from the
audited historical consolidated financial statements of Terex and the related
notes incorporated by reference in this Prospectus. The selected historical
consolidated financial data as of and for the three month periods ended March
31, 1999 and 1998 have been derived from the unaudited interim financial
statements of Terex and the related notes incorporated by reference in this
Prospectus. The following data should be read together with the historical
financial statements of Terex and the related notes incorporated by reference in
this Prospectus.
<TABLE>
<CAPTION>
As of or for
As of or for the the Three Months
Year Ended December 31, Ended March 31,
--------------------------------------------------- ---------------------
1998 1997 1996 1995 1994 1999 1998
---------- --------- ---------- --------- --------- ---------- ----------
Summary of Operations
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales..............................................$ 1,233.2 $ 842.3 $ 678.5 $ 501.4 $ 314.1 $423.3 $ 260.6
Operating income from continuing operations............ 122.0 71.1 5.1 12.8 10.4 40.5 23.8
Income (loss) from continuing operations before
extraordinary items.................................. 72.8 30.3 (54.3) (32.1) 4.9 26.0 14.4
Income (loss) from discontinued operations............. --- --- 102.0 4.4 (3.7) --- ---
Income (loss) before extraordinary items............... 72.8 30.3 47.7 (27.7) 1.2 26.0 14.4
Net income (loss)...................................... 34.5 15.5 47.7 (35.2) 0.5 26.0 (23.9)
Income (loss) applicable to common stock............... 34.5 10.7 24.8 (42.5) (5.5) 26.0 (23.9)
Per Common Share:
Basic
Income (loss) from continuing operations...........$ 3.52 $ 1.57 $ (6.54) $ (3.79) $ (0.10) $ 1.25 $ 0.70
Income (loss) from discontinued operations......... --- --- 8.64 0.42 (0.36) --- ---
Income (loss) before extraordinary items........... 3.52 1.57 2.10 (3.37) (0.46) 1.25 0.70
Net income (loss).................................. 1.67 0.66 2.10 (4.09) (0.53) 1.25 (1.16)
Diluted
Income (loss) from continuing operations...........$ 3.25 $ 1.44 $ (5.81) $ (3.79) $ (0.10) $ 1.16 $ 0.65
Income (loss) from discontinued operations......... --- --- 7.67 0.42 (0.36) 1.16 ---
Income (loss) before extraordinary items........... 3.25 1.44 1.86 (3.37) (0.46) 1.16 0.65
Net income (loss).................................. 1.54 0.60 1.86 (4.09) (0.53) 1.16 (1.08)
Ratio of earnings to fixed charges (1)............... 2.4x 1.6x (1) (1) 1.1x 2.8X 2.5x
Working Capital
Current assets.........................................$ 771.6 $ 426.5 $ 390.2 $ 312.0 $ 278.1 $872.2 $675.6
Current liabilities.................................... 425.4 236.1 195.0 196.3 221.6 436.8 325.5
Working capital........................................ 346.2 190.4 195.2 115.7 56.5 435.4 350.1
Property, Plant and Equipment
Net property, plant and equipment......................$ 99.5 $ 47.8 $ 31.7 $ 40.1 $ 86.2 $ 95.6 $ 76.7
Capital expenditures................................... 13.1 9.9 8.1 5.2 12.7 4.4 2.5
Depreciation........................................... 10.1 8.2 7.0 7.4 13.7 3.2 2.4
Total Assets.............................................$ 1,151.2 $ 588.5 $ 471.2 $ 478.9 $ 401.6 $1,251.2 $ 932.1
Capitalization
Long-term debt and notes payable, including current
maturities.........................................$ 631.3 $ 300.1 $ 281.3 $ 329.9 $ 190.9 $678.5 $573.5
Minority interest, including redeemable preferred
stock of a subsidiary.............................. 0.6 0.6 10.0 9.4 --- 0.6 0.6
Redeemable convertible preferred stock................. --- --- 46.2 24.6 17.3 --- ---
Stockholders' equity (deficit)......................... 98.1 59.6 (71.7) (96.9) (55.7) 111.2 28.0
</TABLE>
(1) In calculating the ratio of earnings to fixed charges, earnings consist of
income (loss) from continuing operations before income taxes and
extraordinary items plus fixed charges. Fixed charges consist of interest
expense, preferred stock accretion, amortization of debt issuance costs,
and rental expense representative of the interest factor. Earnings were
insufficient to cover fixed charges by $42.2 million and $32.1 million
during the years ended December 31, 1996 and 1995, respectively.
The Selected Financial Data include the results of operations of Payhauler,
O&K Mining, Holland Lift, American Crane, Italmacchine, Peiner, Comedil, the
Simon Access Companies, Square Shooter and PPM from January 5, 1998, March 31,
1998, May 4, 1998, July 31, 1998, November 3, 1998, November 13, 1998, December
18, 1998, April 7, 1997, April 14, 1997 and May 9, 1995, respectively, the dates
of their acquisitions. The Selected Financial Data for the years ended December
31, 1994, 1995 and 1996 include the results of operations of our former Clark
Material Handling business as discontinued operations.
25
<PAGE>
INDUSTRY OVERVIEW AND OUTLOOK FOR PRINCIPAL PRODUCTS
Telescopic Mobile Cranes
Mobile cranes with telescoping booms were developed in the 1950s as
advanced hydraulics became available. Telescopic mobile cranes are generally
used only for a limited period during the later stages of a construction
project. As each project may require differing boom lengths and lifting
capacities, contractors tend to rent specific machines as needed rather than own
a fleet of machines of varying capabilities. As a result, according to industry
sources, approximately 85% of all new telescopic mobile crane sales in North
America are made to rental fleets. Because of the market's rental orientation
and the fact that cranes are used in the later stages of construction projects,
the demand for new telescopic mobile cranes typically lags behind the demand for
other construction equipment by between 12 and 24 months during a cyclical
economic recovery. Initially in an economic recovery, rising end-user demand is
first reflected in rising rental fleet utilization rates rather than in new
crane orders. As rental fleet utilization reaches a practical maximum level,
generally new orders for telescopic mobile cranes increase. New telescopic
mobile crane orders also result from fleet replacement demand, which is affected
by the aging of the telescopic mobile crane population. From 1974 through 1981,
the North American telescopic mobile crane market consumed an average of over
3,500 machines per year. During the recession which began in 1982, North
American telescopic mobile crane consumption declined to a low of 600 machines
and many competitors exited the industry. During the period from 1990 through
1997, the North American telescopic mobile crane market consumed an average of
approximately 1,300 machines per year, with a high of over 2,200 machines in
1990 and a low of approximately 1,000 machines in 1992 and 1993.
We believe that the North American telescopic mobile crane industry is
entering a period of growth due to three principal factors: one, there is
currently a strong and sustained period of construction activity in North
America; two, the increasing importance of rental fleet operators; and three,
the fact that the unusually large number of telescopic mobile cranes that were
built in the late 1970s are beginning to reach the end of their useful lives
(which Terex estimates to be approximately 20 years). These factors have
contributed to a 24% increase in telescopic mobile crane shipments in 1996, as
compared with 1995, and a 15% increase in telescopic mobile crane shipments in
1997, as compared with 1996. Terex believes that it is well positioned to
capitalize on the continued growth of the North American telescopic mobile crane
market. The increasing importance of rental fleet operators and their desire to
maximize returns on product investment has led Terex Lifting to focus on a best
value strategy. This strategy seeks to improve customer productivity by
providing high quality products which are low cost, simple to use and easy to
maintain. By pursuing a strategy oriented toward improving customers'
productivity and investment returns, Terex Lifting has increased its market
share. Terex believes that such a strategy will lead to further market share
gains as growth continues in the North American market.
The European telescopic mobile crane market, which is approximately the
same size as the North American market (ranging between 1,000 and 2,000 unit
shipments per year), has not had an increase in demand to the extent experienced
in North America. Excluding Germany and Spain, construction activity has
remained at recessionary levels for the last four years. We believe that this
was due initially to a cyclical downturn and more recently to fiscal tightening
as European countries attempted to meet the budget deficit targets established
by the Maastricht Treaty. Terex's principal markets in Europe are in France and
Italy, where we believe we have the largest market shares. The French and
Italian markets are less dominated by rental fleets than the North American
market; we believe that approximately 55% of new telescopic mobile crane sales
in France and Italy are to rental fleet operators with the balance to end users.
An increase in construction activity in those countries, therefore, would tend
to have a more immediate impact on new telescopic mobile crane sales than would
a similar increase in North America. We believe that we are well positioned to
participate in any cyclical increase in demand in France and Italy due to our
local manufacturing, strong local distribution and low cost relative to our
major European competitors.
26
<PAGE>
Terex also manufactures truck mounted cranes (boom trucks), which are
telescopic cranes mounted on production truck chassis. Over the past 20 years,
boom trucks have replaced truck mobile cranes in the market for under 30 ton
lifting devices. Conditions in the North American market for boom trucks remain
positive due to overall construction activity in North America.
Aerial Work Platforms
The aerial work platform industry in North America has developed over the
past 20 years as an efficient alternative to scaffolding and ladders. The
industry has also been supported by regulations mandating minimum safety
standards for people working at heights. Aerial work platforms are used for
indoor or outdoor applications in a variety of construction, industrial and
commercial settings which require workers to be lifted to heights to perform
their jobs. Terex believes that approximately 90% of all aerial work platform
sales in North America are to rental fleets. The aerial work platform market has
developed into a rental market because (i) contractors require workers to be
elevated only for limited times during a given job, and different jobs require
different platform heights making ownership of a single specification unit
impractical, and (ii) industrial customers are increasingly outsourcing their
equipment requirements to rental providers. Recently, the equipment rental
industry has been undergoing a process of consolidation. As a result, the larger
aerial work platform rental fleet operators are increasingly demanding products
that are low cost, simple to use and easy to maintain. To meet the objectives of
the equipment rental industry, Terex has designed its aerial work platforms to
incorporate these characteristics.
Utility Aerial Devices
Terex also manufactures utility aerial devices which are used to set
telephone poles and move transformers and other material to work areas at the
top of poles (digger derricks), and to elevate workers to work areas at the top
of poles or in trees. Customers include electric utilities, local telephone
companies, private utility repair contractors and tree trimmers. We believe that
utilities are increasingly outsourcing maintenance to private contractors in an
effort to reduce costs. We believe that we are well positioned to capitalize on
this trend due to our strategy to manufacture simplified products at lower cost,
our existing dealer relationships and our direct relationships with major
private contractors.
Telescopic Container Stackers
Telescopic container stackers were developed in the early 1980s to
manipulate shipping containers efficiently in port storage areas and inland
terminals. 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. Terex
believes that because of the efficiency of telescopic container stackers, demand
has steadily grown, primarily outside the United States in port areas where
storage capacity is constrained. Demand has been particularly strong in South
America and Europe. Terex believes that the United States market offers growth
potential as the benefits of this product are better recognized.
Tower Cranes
Tower cranes were developed in Europe in the 1950s to lift construction
material to various heights and to accurately place the material at the point
where it is being used. Tower cranes are used worldwide for infrastructures such
as ports and dams, but especially in public and commercial projects where large,
multi-story superstructures are built. On such projects tower cranes lift and
place material faster and with greater accuracy than alternative lifting
methods. Tower cranes are most prevalent in Europe, where they are used on both
larger and smaller projects, including some residential construction. Tower
crane usage in the United States has been historically low, and there is
currently no domestic manufacturer. Terex believes that this market represents a
growth opportunity as the cost effectiveness of tower cranes in a variety of
construction applications becomes more widely known and accepted.
27
<PAGE>
Lattice Boom Cranes
Lattice boom cranes are principally used in infrastructure development and
heavy construction applications. Lattice boom cranes are more difficult to
transport and erect than mobile telescopic cranes, but are still generally the
most economical lifting tool for capacity requirements of over 100 tons. The
lattice boom crane industry has shown strong growth in North America over the
past three years as construction activity has continued to increase. We believe
that we can participate in that growth by reducing the cost of our cranes to
rental operators and end users while at the same time continuing to improve
crane design and performance.
Off-Highway Trucks
Off-highway trucks, which include articulated trucks and rigid frame
trucks, are generally sold to construction companies, to fleet contractors who
provide trucks to large construction companies, and to dealer rental fleets.
According to industry sources, North America and Europe account for a majority
of the global market. These markets are dependent on large private construction
project activity and public infrastructure development, both of which have been
soft in Europe in recent years and strong in the United States. Terex believes
that it is well positioned to capitalize on any demand that may arise from such
activity or development. Terex believes that fleet operators and large
construction companies generally prefer products that are low cost, simple to
use and easy to maintain, and that its products have these characteristics.
Terex also believes that it is well positioned to capitalize on future growth in
Europe as a result of its acquisition in March 1998 of O&K Mining GmbH, a
manufacturer of large hydraulic mining shovels, and in China through an existing
joint venture relationship.
High Capacity Surface Mining Trucks
High capacity surface mining trucks are designed to haul coal or ore. They
range in capacities from 120 to 300 tons, and are used in larger surface mines
around the world. The trucks are typically operated around the clock, seven days
a week, often running several weeks between maintenance stops. Accordingly, of
critical concern to mine operators are (i) reliability--that the truck is
operating in excess of 90% of the time and (ii) hauling efficiency--the
operating cost per ton hauled, including fuel consumption, tire wear and
maintenance. There are two types of trucks offered: electric and mechanical
drive. We offer electric drive trucks in which a diesel engine drives an
alternator which powers two wheel motors, one in each rear wheel. We believe
that electric drive vehicles are more efficient than mechanical drive trucks. As
a result of the efficiency and reliability of its trucks, Terex has been able to
increase its market share slightly in recent years despite difficult competitive
conditions in the industry. We believe that we are the third largest
manufacturer of high capacity surface mining trucks. The recent Coal India
contract to supply 160 trucks is an example of Terex's recent success in this
market. To respond to the continuing demand of large mines to improve financial
returns through lower costs and higher hauling capacities, Terex is taking
several strategic actions including reducing the manufacturing cost of its
trucks through component outsourcing and modular assembly process
implementation, as well as development of a 320 ton capacity truck (as compared
to 260 tons, its current largest truck) with a new generation electric drive
system. We believe that the current demand levels will continue, with earnings
opportunities from the development of more cost efficient designs and
manufacturing processes.
Large Hydraulic Mining Shovels
The large hydraulic mining shovels are used primarily in surface mines
worldwide and in large scale infrastructure projects with needs for massive
earth moving, such as dams and highways. Growth in demand for coal, copper and
iron ore is a function of population growth and improvement in standards of
living worldwide. In particular, growth in energy consumption (particularly
coal) and metal consumption (particularly ore) caused by metal intensity in
industries like automotive, telecommunications and appliances leads to growth in
demand for coal, copper and iron ore. Most of this growth will come from regions
with large mineral resources, including Australia, South Africa, West Africa,
India, Indonesia, Brazil, China and Kazakhstan. Excavator sales are also
sensitive to the level of large scale private construction project activity and
public infrastructure development, both of which have been soft in Europe in
recent years and strong in the United States. While the market for new surface
mining equipment is somewhat cyclical, the after-market for parts and services
is more stable. This is because hydraulic excavators are typically kept in
continuous operation for 10 to 15 years and require regular maintenance and
repair throughout their productive lives.
28
<PAGE>
Historically, the leading technologies used in open cast mining have been
bucket wheel excavators and electric rope shovels. Both of these technologies
require substantially greater capital outlays than for hydraulic mining shovels,
and often are relatively inflexible. Hydraulic mining shovels exhibit high
maneuverability and higher output rates relative to comparably sized electric
rope shovel or bucket wheel excavators. An increasing trend toward smaller,
shorter lived mines and more selective mining practices has resulted in
increasing substitution of the hydraulic mining shovels for the two older
technologies. We believe that our leading technological position in these
products leaves us well placed to take advantage of this trend.
Light Construction Equipment
Light construction equipment produced by Terex consists of light towers,
concrete products and traffic safety devices.
Light towers are used in road construction, commercial construction,
surface mining, and in miscellaneous commercial applications. Light tower demand
has grown over the past five years as construction activity has increased, and
is expected to benefit from increased road construction over the next four to
five years, particularly given that government mandates may force an increasing
portion of that construction to be performed at night to minimize traffic
congestion. Light towers are primarily rented, and Terex believes that its
success in penetrating rental customers with cost effective products, including
telescopic handlers and aerial work platforms, will help to increase its
penetration of the light tower market.
Concrete products include vibratory screeds and power buggies which are
used to move and flatten concrete. Vibratory screeds are cut-to-length
triangular lattices made of aluminum or steel which have a flat, vibrating edge
that is pulled across freshly poured concrete. The combination of screed weight
and vibration expel air pockets from the concrete and leave a smooth, stable
surface prior to curing. Power buggies are small motorized dumpers, either
ride-on or walk behind, that serve primarily to move concrete from the mixer to
the pouring site. They are also used to move demolition debris and in a variety
of landscaping and commercial applications. Vibratory screeds are typically sold
through dealers to end users, and power buggies are primarily rental products.
Traffic safety devices include directional arrowboards, which are used in
road construction to provide direction for temporary lane changes around
construction sites. Arrowboards are sold through dealers to construction
contractors, although they are increasingly becoming a rental product. In
addition to construction contractors, arrowboards are also sold to barricade
houses to which contractors often sub-contract traffic management activity in
connection with road construction work.
BUSINESS
General
Terex is a global manufacturer of a broad range of construction and mining
related capital equipment. Terex strives to manufacture machines which are low
cost, simple to use and easy to maintain. Terex operates in two business
segments: Terex Lifting and Terex Earthmoving. Terex's products are manufactured
at 21 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. Terex believes that it is benefiting
from several industry trends, including the growing importance of rental fleet
operators with respect to Terex Lifting and an increasing level of global
infrastructure development with respect to Terex Earthmoving.
29
<PAGE>
Products
Telescopic Mobile Cranes
Telescopic mobile cranes are used primarily for industrial applications, in
commercial and public works construction and in maintenance applications, to
lift equipment or material to heights in excess of 50 feet. Terex Lifting
manufactures the following types of telescopic mobile cranes:
Rough Terrain Cranes -- are designed to lift
materials and equipment on rough or uneven
terrain. Rough terrain cranes 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 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.
30
<PAGE>
Tower Cranes
Tower cranes lift construction material to heights and place the material
at the point where it is being used. They include a stationary vertical tower
near the top of which is a horizontal jib with a counterweight. On the jib is a
trolley through which runs a load carrying cable and which moves the load along
the jib length. On larger cranes, the operator is located above the work site
where the tower and jib meet, providing superior visibility. The jib also
rotates 360 degrees, creating a large working area equal to twice the jib
length. Luffing jib tower cranes have an angled jib with no trolley, and operate
like a traditional lattice boom crane mounted on a tower. Luffing jib tower
cranes are often used in urban areas where space is constrained. Tower cranes
are currently produced by Terex under the PEINER and COMEDIL brand names. Terex
produces the following types of tower cranes:
Self-Erecting Tower Cranes -- are trailer
mounted and unfold from four sections (two
for the tower and two for the jib); certain
larger models have a telescopic tower and
folding jib. These cranes can be assembled
on site in a few hours. Applications include
residential and small commercial
construction. Crane heights range from 50-75
feet and jib lengths from 60-100 feet.
Hammerhead Tower Cranes -- have a tower and
a horizontal jib assembled from sections.
The tower extends above the jib to which
suspension cables supporting the jib are
attached. These cranes are assembled on-site
in one to three days depending on height,
and can increase in height with the project;
they have a maximum free-standing height of
200 feet and a maximum jib length of 240
feet.
Flat Top Tower Cranes -- have a tower and a
horizontal jib assembled from sections.
There is no tower extension above the jib,
which reduces cost and facilitates assembly;
the jib is self-supporting and consists of
reinforced jib sections. These cranes are
assembled on site in one to two days, and
can increase in height with the project;
they have a maximum free-standing height of
305 feet and a maximum jib length of 280
feet.
Luffing Jib Tower Cranes -- have a tower and
an angled jib assembled from sections. The
tower extends above the jib to which
suspension cables supporting the jib are
attached. Unlike other tower cranes, there
is no trolley to control lateral movement of
the load, which is accomplished by changing
the jib angle. These cranes are assembled on
site in two to three days, and can increase
in height with the project; they have a
maximum free-standing height of 185 feet and
a maximum jib length of 200 feet.
Lattice Boom Cranes
Terex Lifting produces crawler and truck mounted lattice boom cranes.
The crawler mounted cranes are designed to
lift material on rough terrain and can
maneuver while bearing a load. Truck mounted
lattice boom cranes are used on-road,
typically in urban areas. Both types consist
of a boom made of tubular steel sections
which are transported to and erected,
together with the base unit, at a
construction site. Terex Lifting
manufactures lattice boom crawler cranes at
its Wilmington, North Carolina facilities
under the AMERICAN brand name. These lattice
boom cranes have lifting capacities from 125
to 450 tons, and lattice boom truck cranes
with lifting capacities from 125 to 300
tons.
31
<PAGE>
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. Terex Lifting manufactures the following
types or aerial work platforms:
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, Milwaukee, Wisconsin
and Amsterdam, The Netherlands facilities
under the brand names TEREX, SIMON, MARK and
HOLLAND LIFT.
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, Cork, Ireland 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 names 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.
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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 Wilmington, North
Carolina and Montceau-les-Mines, France
facilities.
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 facilities
in Baraga, Michigan and Perugia, Italy under
the brand name SQUARE SHOOTER and
ITALMACCHINE.
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.
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. This enables all six tires to
maintain ground contact for improved
traction on rough terrain. This also 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 names TEREX and O&K.
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 and
O&K brand names and in Tulsa, Oklahoma,
under the PAYHAULER brand name.
High Capacity Surface Mining Trucks -- are
off road dump trucks with capacities in
excess of 120 tons used primarily for
surface mining. Terex Earthmoving's trucks
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 capabilities
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.
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Large Hydraulic Excavators
Terex Earthmoving sells hydraulic excavators which are shovels primarily
used to load coal, copper ore, iron ore, other mineral-bearing materials, or
rocks into trucks. These products are primarily utilized for quarrying
construction materials or digging in opencast mines. Additional applications
include large construction projects with difficult working conditions and large
amounts of solid material and rock to be moved.
Terex Earthmoving offers a complete range of
large hydraulic excavators, with operating
weights from 58 to 800 tons. 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.
This expansion of Terex Earthmoving's
product line enables it to compete with the
most popular electric rope shovel size class
and represents a significant growth
opportunity for Terex Earthmoving. Most
hydraulic excavators sold by Terex
Earthmoving are manufactured under the O&K
brand name by O&K Mining in Dortmund,
Germany.
Light Construction Equipment
Light construction equipment produced by Terex consists of light towers,
concrete products and traffic safety devices.
Light Towers - are used primarily to light
work areas for night construction activity.
They are towed to the work-site where the
telescopic tower is extended and outriggers
are deployed for stability. They are diesel
powered and provide adequate light for
construction activity for a radius of
approximately 300 feet from the tower.
Power Buggies - are used primarily to
transport concrete from the mixer to the
pouring site. Terex/Amida power buggies
include dump capacities from 10 to 21 cubic
feet with 3 walk-behind and 3 ride-on
models.
Directional Arrowboards - are used to direct
traffic around road construction sites. They
are primarily solar -powered , with solar
panels continuously recharging batteries,
which provide power during night hours.
Terex Amida arrowboards include 15 and 25
light configurations.
Backlog
Terex's backlog as of December 31, 1998 and 1997 and March 31, 1999 and 1998 was
as follows:
December 31, March 31,
----------------------- -----------------------
1998 1997 1999 1998
----------------------- -----------------------
(in millions) (in millions)
Terex Lifting...............$ 221.8 $ 186.5 $ 222.5 $ 224.0
Terex Earthmoving........... 196.4 30.3 162.6 48.5
--------- ---------- --------- ---------
Total..................$ 418.2 $ 216.8 $ 385.1 $ 272.5
========= ========== ========= ==========
Substantially all of Terex's backlog orders are expected to be filled
within one year, although there can be no assurance that all such backlog orders
will be filled within that time period. Terex's backlog orders represent
primarily new equipment orders. Parts orders are generally filled on an
as-ordered basis.
Terex Lifting backlog at December 31, 1998 increased $35.3 million to
$221.8 million as compared to $186.5 million at December 31, 1997. The increase
in backlog was due to the effect of the businesses acquired in 1998
(approximately $18.7 million in backlog) as well as an approximately 9% increase
in the businesses other than the 1998 acquisitions. The backlog at Terex
Earthmoving increased to $196.4 million at December 31, 1998 from $30.3 million
at December 31, 1997, principally because of the acquisition of O&K Mining and
the receipt of the $157 million order of Unit Rig trucks from Coal India in
October 1998.
Backlog at Terex Lifting at March 31, 1999 of $222.5 was relatively
unchanged from the March 31, 1998 and December 31, 1998 amounts. Terex
Earthmoving's backlog at March 31, 1999 increased from the March 31, 1998 level
principally due to the receipt of the Coal India order.
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Distribution
Terex Lifting distributes its products primarily through a global network
of dealers and national accounts in over 750 different locations. Terex
Lifting's telescopic mobile cranes are marketed in the great majority of the
United States under the TEREX brand name. Terex Lifting's European distribution
is carried out primarily under three brand names, TEREX, PPM and BENDINI,
through a distribution network comprised of both distributors and a direct sales
force. Terex Lifting sells its utility aerial devices under the TEREX TELELECT
brand name principally through a network of North American distributors. Terex
Lifting sells its aerial work platform products through a distribution network
throughout the world, but principally in North America and Europe. Terex
Lifting's aerial work platform products are sold under the brand names TEREX
AERIALS and HOLLAND LIFT. Terex Lifting sells its tower cranes through a
distribution network under the PEINER and COMEDIL brand names. Terex Lifting's
material and container handlers products are sold, through a distribution
network under the brand names of TEREX, PPM, P&H and ITALMACCHINE. Terex Lifting
sells its lattice boom cranes through a distribution network under the TEREX
AMERICAN brand name.
With respect to Terex Earthmoving products, 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 Terex's
products, each dealer generally carries only one manufacturer's "brand" of each
particular type of product. Terex 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. O&K Mining sells its hydraulic excavators and after-market
parts and services primarily through its export sales department in Dortmund,
Germany, through O&K Mining's global network of wholly-owned foreign
subsidiaries and through dealership networks.
Research and Development
Terex maintains engineering staffs at several of its locations who design
new products and improvements in existing product lines. Terex's engineering
expenses are primarily incurred in connection with the improvements of existing
products, efforts to reduce costs of existing products and, in certain cases,
the development of products which may have additional applications or represent
extensions of the existing product line. Such costs incurred in the development
of new products or significant improvements to existing products of continuing
operations amounted to $8.2, $6.2 and $6.1 million in 1998, 1997 and 1996,
respectively.
Materials
Principal materials used by Terex 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 Terex's
requirements and standards. Electric wheel motors and controls used in the Unit
Rig product line are currently supplied exclusively by General Electric Company.
Terex 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 Terex 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.
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Working Capital Items
Terex, 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. Terex believes that Terex Lifting
is the second largest domestic manufacturer. Terex believes that the number one
domestic manufacturer is Grove Worldwide, and the number three domestic
manufacturer is Link-Belt, a subsidiary of Sumitomo Corp. Terex's principal
markets in Europe are in France and Italy, where Terex believes it has the
largest market shares. In Europe, Terex Lifting's primary competitors are Grove
Cranes Ltd. (including the recently acquired Krupp Mobilkran), Liebherr and
Mannesmann Dematic.
Truck Mounted Cranes (Boom Trucks) -- The United States boom truck industry
is dominated by four manufacturers, of which Terex believes Terex RO is the
second largest behind Grove National.
Tower Cranes -- The tower crane industry includes two principal
competitors, Liebherr and Potain, who combined represent well over half of the
worldwide market. Terex and Wolf are the only other competitors with a
multi-national presence; other manufacturers are small and regional.
Lattice Boom Cranes -- The lattice boom crane industry includes Manitowoc,
Link-Belt, Mannesmann Dematic, Liebherr, and Hitachi. Manitowoc is the world
leader in lifting capacities over 125 tons, and represents over half of the
United States lattice boom crane market.
Aerial Work Platforms -- The aerial work platform industry in North America
is fragmented, with seven major competitors. Terex believes that it is the fifth
largest manufacturer of aerial work platforms in North America, behind JLG,
Genie, Grove Manlift and Snorkel. Terex believes that approximately 44,000
aerial platforms were sold in the United States during 1998, of which
approximately 70% were scissor lifts, 20% were articulated boom lifts, and 10%
were straight boom lifts. Terex 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. Terex believes that it is the second largest
manufacturer in the United States of utility aerial devices behind Altec.
Outside the United States, Terex is focusing primarily on the Mexican and
Caribbean markets.
Telescopic Container Stackers - Terex believes that three manufacturers
account for a majority of the global market for telescopic container stackers.
Terex believes 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.
Off-Highway Trucks -- North America and Europe account for a majority of
the global market. Four manufacturers dominate the global market. Terex believes
that it is the third largest of these manufacturers (behind Volvo and
Caterpillar).
High Capacity Surface Mining Trucks -- The high capacity surface mining
truck industry includes three principal manufacturers: Caterpillar,
Komatsu-Dresser and Terex. Terex believes that it is the third largest
manufacturer.
Large Hydraulic Excavator -- The large hydraulic excavator industry is
comprised of primarily seven manufacturers, the largest of which are Hitachi,
Komatsu-DeMag, Liebherr and Caterpillar. Terex believes it is the largest
manufacturer of hydraulic excavators having machine weights in excess of 200
tons. The largest hydraulic excavators also compete against electric mining
shovels (rope excavators) from competitors such as Harnischfeger Corporation and
Bucyrus International, Inc. and, for some applications, against bucket wheel
loaders from competitors such as Caterpillar, Volvo and Komatsu-Dresser.
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Light Towers, Concrete Products and Traffic Safety Devices - The principal
competitors are small, privately held companies such as Allmand Brothers and
Coleman Engineering in light towers, Allen Engineering and MBW in screeds, and
ADDCO and Protection Services in directional arrowboards.
Employees
As of March 31, 1999, Terex had approximately 4,182 employees. Terex
considers its relations with its personnel to be good. Approximately 25% of
Terex'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 Terex.
Patents, Licenses and Trademarks
Several of the trademarks and trade names of Terex, in particular the
TEREX, LORAIN, UNIT RIG, MARK, P&H, PPM, SIMON, TELELECT, SQUARE SHOOTER,
PAYHAULER, O&K, HOLLAND LIFT, AMERICAN, ITALMACCINE, PEINER, COMEDIL and AMIDA
trademarks, are important to the business of Terex. Terex 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. Terex 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 Terex 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, Terex 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. Terex also has the right to use the O&K and
Orenstein & Koppel names (which are registered trademarks of Orenstein & Koppel)
for most applications in the mining business for an unlimited period of time.
All other trademarks and tradenames referred to in this Annual Report are
registered trademarks of Terex Corporation or its subsidiaries.
Environmental Considerations
Terex generates hazardous and non-hazardous wastes in the normal course of
its operations. As a result, Terex 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 Terex on a
continuing basis. However, Terex has not incurred, and does not expect to incur
in the future, any material capital expenditures for environmental control
facilities.
Seasonal Factors
Terex markets a large portion of its products in North America and Europe,
and its sales of trucks 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 trucks and excavators to the mining
industry are generally less affected by such seasonal factors.
Legal Proceedings
In December 1994, Terex received an examination report from the IRS
proposing a substantial tax deficiency. This deficiency was based upon an
alleged inability of Terex to substantiate certain deductions taken by Terex
from 1987 to 1989 and Terex's utilization of certain NOLs. This matter is
currently pending in the Milwaukee audit division of the IRS. For a discussion
of this matter, see "Risk Factors--Tax Audit Issues."
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In March 1994, the Securities and Exchange Commission initiated a
private investigation, which included Terex and certain of its present and
former officers and affiliates, to determine whether violations of certain
aspects of the Federal securities laws had occurred. The inquiry of Terex has
primarily focused on the purchase accounting treatment and reporting matters
relating to various transactions which took place in the late 1980s and early
1990s. Without admitting or denying to the SEC's findings or any wrongdoings on
the part of Terex or its then officers or directors, on April 20, 1999 Terex
consented to the entry of an administrative cease and desist order prohibiting
future violations of the provisions of the Federal securities laws, specifically
the periodic reporting and record keeping provisions of Sections 13(a) and
13(b)(2)(A) of the Securities and Exchange act of 1934, and Rules 12b-20, 13a-1
and 13a-13 thereunder, and the proxy provisions of the Securities and Exchange
Act of 1934. There order does not provide for any monetary or other sanctions
against Terex. The resolution of this matter will not impact Terex's financials
statements of results of operations, and does not require a restatement of
Terex's financial statements.
Terex is involved in various other legal proceedings which have arisen in
the normal course of its operations. The outcome of these other legal
proceedings, if determined adversely to Terex, is unlikely to have a material
adverse effect on Terex.
Discontinued Operations
On November 27, 1996, Terex sold substantially all of the assets and
liabilities of the Clark Material Handling Segment for an aggregate cash
purchase price of approximately $140 million. Prior to the disposition, the
Clark Material Handling Segment consisted of Clark Material Handling Company and
certain affiliated companies which were acquired by Terex in July 1992 from
Clark Equipment Company. The Clark Material Handling Segment 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.
DESCRIPTION OF CERTAIN INDEBTEDNESS
Bank Credit Facility
On March 6, 1998, Terex entered into a bank credit facility (the "Bank
Credit Facility") with several financial institutions. Under the terms of the
Band Credit Facility, Terex and certain wholly owned foreign subsidiaries of
Terex (the "Subsidiary Borrowers," and together with Terex, the "Borrowers")
borrowed an aggregate of $375 million pursuant to the term loan portion (the
"Term Loan Facilities") of the Bank Credit Facility and have available an
aggregate of $125 million pursuant to the revolving credit portion (the
"Revolving Credit Facility") of the Bank Credit Facility. All obligations of the
Subsidiary Borrowers under the Bank Credit Facility are guaranteed by Terex. All
obligations of Terex under the Bank Credit Facility are guaranteed by Terex's
domestic subsidiaries. With limited exceptions, the obligations of the Borrowers
under the Bank Credit Facility are secured by (i) a pledge of all of the capital
stock of domestic subsidiaries of Terex, (ii) a pledge of 65% of the stock of
the foreign subsidiaries of Terex and (iii) a first priority security interest
in, and mortgages on, substantially all of the assets of Terex and its domestic
subsidiaries. The Bank Credit Facility contains covenants limiting the
Borrowers' 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 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.
Pursuant to the Term Loan Facilities, the Borrowers have borrowed (i) $175
million in aggregate principal amount pursuant to a Term Loan A due March 2004
(the "Term A Loan") and (ii) $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 currently bears interest, at the applicable Borrower's
option, at an all-in drawn cost of 2.00% 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 1.00% per annum in excess of the prime
rate. The outstanding principal amount of the Term B Loan currently bears
interest, at Terex's option, at a rate of 2.50% per annum in excess of the
adjusted eurodollar rate or, with respect to U.S. dollar denominated alternate
base rate loans, 1.50% 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 in certain circumstances and are
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).
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Pursuant to the Revolving Credit Facility, the Borrowers have available an
aggregate amount of up to $125 million. The outstanding principal amount of
loans under the Revolving Credit Facility bears interest, at the applicable
Borrower's option, at an all-in drawn cost of 2.00% 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 1.00% per annum in excess of the
prime rate. The Revolving Credit Facility will terminate on the sixth
anniversary thereof. The Revolving Credit Facility is used for working capital
and general corporate purposes.
If for any reason Terex is unable to comply with the terms of the Bank
Credit Facility, including the covenants included therein, noncompliance could
result in an event of default under the Bank Credit Facility and could result in
acceleration of the payment of the indebtedness outstanding under the Bank
Credit Facility.
Existing Notes
On March 31, 1998, we consummated the private placement of $150.0 million
in aggregate principal amount of 8-7/8% Senior Subordinated Notes due 2008 (the
"Existing Notes"). Subsequently, these notes were exchanged pursuant to a
registered exchange offer for the Existing Notes, which are registered notes
identical in all material respects to such notes (other than with respect to
transfer restrictions). The Existing Notes bear interest at an annual interest
rate of 8-7/8%, and interest payments are due semi-annually. The Existing Notes
will mature on April 1, 2008. The Existing Notes do not contain any sinking fund
provision.
Ranking
The Existing Notes are our general unsecured obligations, subordinate in
right of payment to all Senior Indebtedness (as defined in the indenture
governing the Existing Notes), whether outstanding on the date of the note
indenture or thereafter incurred, of Terex and senior in right of payment to or
pari passu with all of our other indebtedness. See "Capitalization." The
Existing Notes will rank equal to the Notes offered hereby.
Optional Redemption
Except as noted below, the Existing Notes are not redeemable at our option
before April 1, 2003. Thereafter, the Existing Notes will be subject to
redemption at any time at our option, in whole or in part, at specified
redemption prices plus accrued and unpaid interest, if any, thereon to the
applicable redemption date. In addition, at any time prior to April 1, 2001, we
may on any one or more occasions redeem up to 33.3% of the original aggregate
principal amount of the Existing Notes at a redemption price of 108.875% of the
principal amount thereof, plus accrued and unpaid interest, if any, thereon to
the date of redemption, with the net proceeds of one or more offerings of our
common equity. However, at least 65% of the original aggregate principal amount
of the Existing Notes must remain outstanding immediately after each occurrence
of redemption.
Certain Covenants
The indenture governing the Existing Notes contains certain covenants that,
among other things, significantly limit the ability of Terex and its
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subsidiaries to (a) incur additional indebtedness, (b) issue preferred stock,
(c) pay dividends, (d) make certain other restricted payments, (e) create
certain liens, (f) enter into certain transactions with affiliates, (g) sell
assets of Terex or our subsidiaries, (h) issue or sell equity interests of the
subsidiaries or (i) enter into certain mergers and consolidations. In addition,
under certain circumstances, we will be required to offer to purchase the
Existing Notes at a price equal to 100.0% of the principal amount thereof, plus
accrued and unpaid interest, if any, to the date of purchase with the proceeds
of certain asset sales.
Change of Control
After the occurrence of a Change of Control (as defined in the Existing
Notes indenture), we will be required to make an offer to repurchase the
Existing Notes at a price equal to 101% of their principal amount, plus accrued
and unpaid interest, if any, to the date of purchase.
DESCRIPTION OF THE NOTES
We will issue the New Notes under an Indenture (the "Indenture") among us,
the Subsidiary Guarantors and United States Trust Company of New York, as
trustee (the "Trustee"). The terms of the Old Notes include, and of the New
Notes will include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (the "Trust Indenture
Act").
Defined terms used in this description are defined under the caption "-
Certain Definitions." In this description, the word "Terex" refers only to Terex
Corporation and not to any of its subsidiaries.
The following description is only a summary of the material provisions of
the Indenture. We urge you to read the Indenture because it, and not this
description, define your rights as holders of the Old Notes and the New Notes.
You may request copies of these agreements at our address set forth under
"Available Information."
Brief Description of the Notes and the Subsidiary Guarantees
The Notes
These Notes:
o are unsecured senior subordinated obligations of Terex;
o are subordinated in right of payment to all existing and future Senior
Indebtedness of Terex;
o are senior in right of payment to any future Subordinated Obligations
of Terex;
o are subject to registration rights pursuant to the Registration Rights
Agreement; and
o are unconditionally guaranteed on a senior subordinated basis by the
Subsidiary Guarantors.
Subsidiary Guarantees
The Notes are jointly and severally guaranteed (the "Subsidiary
Guarantees"), by all of Terex's existing domestic Subsidiaries (the "Subsidiary
Guarantors").
The Subsidiary Guarantees of these Notes:
o are general obligations of each Subsidiary Guarantor;
o are subordinated in right of payment to all existing and future Senior
Indebtedness of each Subsidiary Guarantor; and
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o are senior in right of payment to any future Subordinated Obligations
of each Subsidiary Guarantor.
As indicated above and as discussed in detail below under the subheading
"Subordination," payments on the Notes and under the Subsidiary Guarantees will
be subordinated to the payment of Senior Indebtedness. The Indenture will permit
us and the Subsidiary Guarantors to incur additional Senior Indebtedness.
As of the date of the Indenture, all of our subsidiaries will be
"Restricted Subsidiaries." However, under the circumstances described below
under the definition of Unrestricted Subsidiaries we will be permitted to
designate certain of our subsidiaries as "Unrestricted Subsidiaries."
Unrestricted Subsidiaries will not be subject to many of the restrictive
covenants in the Indenture. Unrestricted Subsidiaries will not guarantee these
Notes.
Not all of our "Restricted Subsidiaries" will guarantee the Notes. In the
event of a bankruptcy, liquidation or reorganization of any of these
non-guarantor subsidiaries, these non-guarantor subsidiaries will pay the
holders of their debt and their trade creditors before they will be able to
distribute any of their assets to us. The Subsidiary Guarantors generated 60% of
our consolidated revenues in the twelve-month period ended December 31, 1998 and
held 49% of our consolidated assets as of December 31, 1998. As of December 31,
1998, the non-guarantor subsidiaries had total outstanding liabilities of
approximately $43 million.
Principal, Maturity and Interest
The Notes will be issued initially for a maximum aggregate principal amount
of $100.0 million. Terex will issue the Notes in denominations of $1,000 and any
integral multiple of $1,000. The Notes will mature on March 31, 2008. Subject to
our compliance with the covenant described under the caption " -Certain
Covenants-Limitation on Indebtedness," we are permitted to issue more Notes
("Additional Notes") under the Indenture in an unlimited principal amount.
Interest on the Notes will accrue at the rate of 8-7/8% per annum and
will be payable semiannually in arrears on April 1 and October 1, commencing on
October 1, 1999. Terex will make each interest payment to the holders of record
of these Notes on the immediately preceding March 15 and September 15.
Interest on the Notes will accrue from the date of original issuance or,
if interest has already been paid, from the date it was most recently paid.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months.
Additional interest may accrue on the Notes in certain circumstances
pursuant to the Registration Rights Agreement.
Optional Redemption
Except as set forth below, we will not be entitled to redeem the Notes at
our option prior to April 1, 2003.
On and after April 1, 2003, we will be entitled at our option to redeem all
or a portion of these Notes upon not less than 30 nor more than 60 days' notice,
at the redemption prices (expressed as percentages of principal amount) set
forth below plus accrued and unpaid interest thereon, if any, to the applicable
redemption date, if redeemed during the 12-month period beginning on April 1 in
the years indicated below:
Year Percentage
2004...............................104.438%
2005...............................102.958%
2006...............................101.479%
2007 and thereafter................100.000%
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In addition, before April 1, 2001, we may at our option on one or more
occasions redeem up to 33.3% of the aggregate original principal amount of Notes
(including the original principal amount of any Additional Notes) at a
redemption price of 108.875% of the principal amount thereof, plus accrued and
unpaid interest to the redemption date, with the net cash proceeds from one or
more Public Equity Offerings following which there is a Public Market; provided
that at least 65% of the original aggregate principal amount of Notes (including
the original principal amount of any Additional Notes) remains outstanding
immediately after the occurrence of each such redemption (other than Notes held,
directly or indirectly, by Terex or its Affiliates.
Selection and Notice
If we are redeeming less than all the Notes at any time, the Trustee will
select Notes in accordance with the requirements of the principal national
securities exchange, if any, on which the Notes are listed, or if the Notes are
not so listed, a pro rata basis, by lot or by such other method as the Trustee
in its sole discretion shall deem to be fair and appropriate.
We will not redeem Notes of $1,000 or less in part. We will cause notices
of redemption to be mailed by first-class mail at least 30 but not more than 60
days before the redemption date to each holder of Notes to be redeemed at its
registered address.
If any Note is to be redeemed in part only, the notice of redemption that
relates to that Note shall state the portion of the principal amount thereof to
be redeemed. We will issue a new Note in principal amount equal to the
unredeemed portion of the original Note in the name of the holder thereof upon
cancellation of the original Note. Notes called for redemption become due on the
date fixed for redemption. On and after the redemption date, interest ceases to
accrue on Notes or portions of them called for redemption.
Subordination
The payment of the principal of, premium, if any, and interest on the Notes
will be subordinate in right of payment to the prior payment in full of all
Senior Indebtedness, including our obligations under the Bank Credit Facility.
The obligations of a Subsidiary Guarantor under its Subsidiary Guarantee
will be subordinate in right of payment to the prior payment in full of all
Senior Indebtedness of such Subsidiary Guarantor. The terms of the subordination
provisions described herein with respect to Terex's obligations under the Notes
apply equally to a Subsidiary Guarantor and the obligations of such Subsidiary
Guarantor under its Subsidiary Guarantee.
Only Indebtedness of Terex or the Subsidiary Guarantors that is Senior
Indebtedness will rank senior to the Notes and the relevant Subsidiary Guarantee
in accordance with the provisions of the Indenture. The Notes and the Subsidiary
Guarantees will in all respects rank pari passu with all other Senior
Subordinated Indebtedness of Terex and the Subsidiary Guarantors. Although the
Indenture contains limitations on the amount of additional Indebtedness that
Terex and the Subsidiary Guarantors may incur, under certain circumstances the
amount of such Indebtedness could be substantial and, in any case, such
Indebtedness may be Senior Indebtedness. See "-Certain Covenants- Limitation on
Indebtedness."
As of March 31, 1999, (i) the Senior Indebtedness of Terex and the
Subsidiary Guarantors was approximately $356, consisting primarily of
approximately $333 million of Indebtedness Incurred under the Bank Credit
Facility, (ii) the Senior Subordinated Indebtedness of Terex and the Subsidiary
Guarantors was approximately $244 million, and (iii) there are no obligations of
Terex ranking junior to the Notes and the Subsidiary Guarantees.
We have agreed in the Indenture that we will not Incur, directly or
indirectly, any Indebtedness that is contractually subordinate or junior in
right of payment to our Senior Indebtedness, unless such Indebtedness is Senior
Subordinated Indebtedness or is expressly subordinated in right of payment to
Senior Subordinated Indebtedness. The Indenture does not treat unsecured
Indebtedness as subordinated or junior to Secured Indebtedness merely because it
is unsecured.
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We are not permitted to pay principal of, premium, if any, or interest on
the Notes or make any deposit pursuant to the provisions described under "C
Defeasance" below and may not repurchase, redeem or otherwise retire any Notes
(collectively, "pay the Notes") if:
(1) any Designated Senior Indebtedness is not paid when due; or
(2) any other default on Designated Senior Indebtedness occurs and the
maturity of such Designated Senior Indebtedness is accelerated in
accordance with its terms;
unless, in either case, the default has been cured or waived and any such
acceleration has been rescinded or such Designated Senior Indebtedness has been
paid in full. Regardless of the foregoing, we are permitted to pay the Notes if
we and the Trustee receive written notice approving such payment from the
Representative of any Designated Senior Indebtedness with respect to which
either of the events set forth in clause (1) or (2) above has occurred and is
continuing.
During the continuance of any default (other than a default described in
clause (1) or (2) above) with respect to any Designated Senior Indebtedness
pursuant to which the maturity thereof may be accelerated either without further
notice (except such notice as may be required to effect such acceleration) or
after the expiration of any applicable grace periods, we are not permitted to
pay the Notes for a period (a "Payment Blockage Period") commencing after the
receipt by the Trustee (with a copy to us) of written notice (a "Blockage
Notice") of such default from the Representative of the holders of such
Designated Senior Indebtedness specifying an election to effect a Payment
Blockage Period and ending 179 days thereafter. The Payment Blockage Period will
end earlier if such Payment Blockage Period is terminated
(1) by written notice to the Trustee and us from the Person or Persons who
gave such Blockage Notice;
(2) because the default giving rise to such Blockage Notice is cured,
waived or otherwise no longer continuing; or
(3) because such Designated Senior Indebtedness has been discharged or
repaid in full.
Notwithstanding the provisions described above, unless the holders of such
Designated Senior Indebtedness or the Representative of such holders have
accelerated the maturity of such Designated Senior Indebtedness, we are
permitted to resume payments on the Notes after the end of such Payment Blockage
Period. The Notes shall not be subject to more than one Payment Blockage Period
in any consecutive 360-day period.
Upon any payment or distribution of the assets of either Terex or any
Subsidiary Guarantor upon a total or partial liquidation or dissolution or
reorganization of or similar proceeding relating to either Terex or any
Subsidiary Guarantor or its respective property:
(1) the holders of Senior Indebtedness will be entitled to receive payment
in full of such Senior Indebtedness before the holders of the Notes
are entitled to receive any payment;
(2) until the Senior Indebtedness is paid in full, any payment or
distribution to which holders of the Notes would be entitled but for
the subordination provisions of the Indenture will be made to holders
of such Senior Indebtedness as their interests may appear, except that
holders of Notes may receive certain Capital Stock and subordinated
debt obligations; and
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(3) if a distribution is made to holders of the Notes that, due to the
subordination provisions, should not have been made to them, such
holders of the Notes are required to hold it in trust for the holders
of Senior Indebtedness and pay it over to them as their interests may
appear.
If payment of the Notes is accelerated because of an Event of Default,
Terex or the Trustee shall promptly notify the holders of Designated Senior
Indebtedness or the Representative of such holders of the acceleration.
By reason of the subordination provisions contained in the Indenture, in
the event of a liquidation or insolvency proceeding, creditors of Terex or a
Subsidiary Guarantor who are holders of Senior Indebtedness of Terex or such
Subsidiary Guarantor may recover more, ratably, than the holders of the Notes.
The terms of the subordination provisions described above will not apply to
payments from money or the proceeds of U.S. Government Obligations held in trust
by the Trustee for the payment of principal of and interest on the Notes
pursuant to the provisions described under "-Defeasance."
Book-Entry, Delivery and Form
We will initially issue the Notes in the form of one or more global notes
(the "Global Note"). The Global Note will be deposited with, or on behalf of,
the Depositary and registered in the name of the Depositary or its nominee.
Except as set forth below, the Global Note may be transferred, in whole and not
in part, only to the Depositary or another nominee of the Depositary. You may
hold your beneficial interests in the Global Note directly through the
Depositary if you have an account with the Depositary or indirectly through
organizations which have accounts with the Depositary.
The Depositary has advised Terex as follows: the Depositary is a
limited-purpose trust company organized under the laws of the State of New York,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and "a clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. The
Depositary was created to hold securities of institutions that have accounts
with the Depositary ("participants") and to facilitate the clearance and
settlement of securities transactions among its participants in such securities
through electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. The
Depositary's participants include securities brokers and dealers (which may
include the Initial Purchasers), banks, trust companies, clearing corporations
and certain other organizations. Access to the Depositary's book-entry system is
also available to others such as banks, brokers, dealers and trust companies
(collectively, the "indirect participants") that clear through or maintain a
custodial relationship with a participant, whether directly or indirectly.
We expect that pursuant to procedures established by the Depositary, upon
the deposit of the Global Note with the Depositary, the Depositary will credit,
on its book-entry registration and transfer system, the principal amount of
Notes represented by such Global Note to the accounts of participants. The
accounts to be credited shall be designated by the Initial Purchasers. Ownership
of beneficial interests in the Global Note will be limited to participants or
persons that may hold interests through participants. Ownership of beneficial
interests in the Global Note will be shown on, and the transfer of those
ownership interests will be effected only through, records maintained by the
Depositary (with respect to participants' interests), the participants and the
indirect participants (with respect to the owners of beneficial interests in the
Global Note other than participants). The laws of some jurisdictions may require
that certain purchasers of securities take physical delivery of such securities
in definitive form. Such limits and laws may impair the ability to transfer or
pledge beneficial interests in the Global Note.
So long as the Depositary, or its nominee, is the registered holder and
owner of the Global Note, the Depositary or such nominee, as the case may be,
will be considered the sole legal owner and holder of any related Notes
evidenced by the Global Note for all purposes of such Notes and the Indenture.
Except as set forth below, as an owner of a beneficial interest in the Global
Note, you will not be entitled to have the Notes represented by the Global Note
registered in your name, will not receive or be entitled to receive physical
delivery of certificated Notes and will not be considered to be the owner or
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holder of any Notes under the Global Note. We understand that under existing
industry practice, in the event an owner of a beneficial interest in the Global
Note desires to take any action that the Depositary, as the holder of the Global
Note, is entitled to take, the Depositary would authorize the participants to
take such action, and the participants would authorize beneficial owners owning
through such participants to take such action or would otherwise act upon the
instructions of beneficial owners owning through them.
We will make payments of principal of, premium, if any, and interest on
Notes represented by the Global Note registered in the name of and held by the
Depositary or its nominee to the Depositary or its nominee, as the case may be,
as the registered owner and holder of the Global Note.
We expect that the Depositary or its nominee, upon receipt of any payment
of principal of, premium, if any, or interest on the Global Note will credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of the Global Note as
shown on the records of the Depositary or its nominee. We also expect that
payments by participants or indirect participants to owners of beneficial
interests in the Global Note held through such participants or indirect
participants will be governed by standing instructions and customary practices
and will be the responsibility of such participants or indirect participants. We
will not have any responsibility or liability for any aspect of the records
relating to, or payments made on account of, beneficial ownership interests in
the Global Note for any Note or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests or for any other aspect
of the relationship between the Depositary and its participants or indirect
participants or the relationship between such participants or indirect
participants and the owners of beneficial interests in the Global Note owning
through such participants.
Although the Depositary has agreed to the foregoing procedures in order to
facilitate transfers of interests in the Global Note among participants of the
Depositary, it is under no obligation to perform or continue to perform such
procedures, and such procedures may be discontinued at any time. Neither the
Trustee nor Terex will have any responsibility or liability for the performance
by the Depositary or its participants or indirect participants of their
respective obligations under the rules and procedures governing their
operations.
Certificated Notes
Subject to certain conditions, the Notes represented by the Global Note are
exchangeable for certificated Notes in definitive form of like tenor in
denominations of $1,000 and integral multiples thereof if
(1) the Depositary notifies us that it is unwilling or unable to continue
as Depositary for the Global Note and we are unable to locate a
qualified successor within 90 days or if at any time the Depositary
ceases to be a clearing agency registered under the Exchange Act;
(2) Terex in its discretion at any time determines not to have all the
Notes represented by the Global Note; or
(3) a default entitling the holders of the Notes to accelerate the
maturity thereof has occurred and is continuing.
Any Note that is exchangeable as above is exchangeable for certificated
Notes issuable in authorized denominations and registered in such names as the
Depositary shall direct. Subject to the foregoing, the Global Note is not
exchangeable, except for a Global Note of the same aggregate denomination to be
registered in the name of the Depositary or its nominee. In addition, such
certificates will bear the legend referred to under "Transfer Restrictions"
(unless we determine otherwise in accordance with applicable law), subject, with
respect to such certificated Notes, to the provisions of such legend.
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Same-Day Payment
The Indenture requires us to make payments in respect of Notes (including
principal, premium and interest) by wire transfer of immediately available funds
to the accounts specified by the holders thereof or, if no such account is
specified, by mailing a check to each such holder's registered address.
Change of Control
Upon the occurrence of any of the following events (each a "Change of
Control"), each holder shall have the right to require that Terex purchase all
or a portion of such holder's Notes at a purchase price in cash equal to 101% of
the principal amount thereof plus accrued and unpaid interest, if any, to the
date of purchase (subject to the right of holders of record on the relevant
record date to receive interest due on the relevant interest payment date):
(1) any "person" or "group" (as such terms are used in Sections 13(d) and
14(d) of the Exchange Act), other than one or more Permitted Holders,
is or becomes the beneficial owner (as defined in Rules 13d-3 and
13d-5 under the Exchange Act, except that such person shall be deemed
to have "beneficial ownership" of all shares that any such person has
the right to acquire, whether or not such right is exercisable
immediately), directly or indirectly, of more than 40% of the total
voting power of the Voting Stock of Terex;
(2) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors (together
with any new directors whose election by such Board of Directors or
whose nomination for election by the stockholders of Terex was
approved pursuant to the vote of 60% of the directors of Terex then
still in office who were either directors at the beginning of such
period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board
of Directors then in office; or
(3) the merger or consolidation of Terex with or into another Person
(other than a Permitted Holder) or the merger of another Person with
or into Terex (other than a Permitted Holder), or the sale of all or
substantially all the assets of Terex to another Person (other than a
Person controlled by the Permitted Holders), and, in the case of any
such merger or consolidation, either (x) immediately after such
transaction any Person or entity or group of Persons or entities
(other than a Permitted Holder) shall have become the beneficial owner
of securities of the surviving corporation of such merger or
consolidation representing a majority of the combined voting power of
the Voting Stock of the surviving corporation or (y) the securities of
Terex that are outstanding immediately prior to such transaction and
that represent 100% of the aggregate voting power of the Voting Stock
of Terex are changed into or exchanged for cash, securities or
property, unless pursuant to such transaction such securities are
changed into or exchanged for, in addition to any other consideration,
securities of the surviving Person that represent, immediately after
such transaction, at least a majority of the aggregate voting power of
the Voting Stock of the surviving corporation.
Within 15 days after any Change of Control, Terex will mail a notice to
each holder of Notes at its registered address, with a copy to the Trustee (the
"Change of Control Offer") stating:
(1) that a Change of Control has occurred and that such holder has the
right to require us to purchase all or a portion of such holder's
Notes at a purchase price in cash equal to 101% of the principal
amount thereof plus accrued and unpaid interest, if any, to the date
of purchase (subject to the right of holders of record on the relevant
record date to receive interest on the relevant interest payment
date);
(2) the circumstances and relevant facts regarding such Change of Control
(including information with respect to pro forma historical income,
cash flow and capitalization after giving effect to such Change of
Control);
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(3) the purchase date (which shall be no earlier than 30 days nor later
than 60 days from the date such notice is mailed); and
(4) the instructions determined by us, consistent with the covenant
described under this caption, that a holder must follow in order to
have its Notes purchased.
Terex will not be required to make a Change of Control Offer following a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the Indenture applicable to a Change of Control Offer made by Terex and
purchases all Notes validly tendered and not withdrawn under such Change of
Control Offer.
Terex shall comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
in connection with the purchase of Notes pursuant to the covenant described
under this caption. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of the covenant described under this
caption, we will comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations under the covenant
described under this caption by virtue thereof.
The Change of Control purchase feature of the Notes may in certain
circumstances make more difficult or discourage a sale or takeover of Terex and,
thus, the removal of incumbent management. The Change of Control purchase
feature is a result of negotiations between us and the Initial Purchasers and is
not the result of our knowledge of any specific effort to accumulate shares of
common stock of Terex or to obtain control of Terex by means of a merger, tender
offer, solicitation or otherwise, or part of a plan by management to adopt a
series of anti-takeover provisions. We have no present intention to engage in a
transaction involving a Change of Control, although it is possible that we could
decide to do so in the future. Subject to the limitations discussed below, we
could, in the future, enter into certain transactions, including acquisitions,
refinancings or other recapitalizations, that would not constitute a Change of
Control under the Indenture, but that could increase the amount of Indebtedness
outstanding at such time or otherwise affect our capital structure or credit
ratings. Restrictions on our ability to incur additional Indebtedness are
contained in the covenant described under the caption "--Certain Covenants--
Limitation on Indebtedness." Such restrictions can only be waived with the
consent of the holders of a majority in principal amount of the Notes then
outstanding. Except for the limitations contained in such covenant, however, the
Indenture will not contain any covenants or provisions that may afford holders
of the Notes protection in the event of a highly leveraged transaction.
The Bank Credit Facility will prohibit us from purchasing any Notes and
will also provide that the occurrence of certain Change of Control events with
respect to us would constitute a default thereunder. In the event a Change of
Control occurs at a time when we are prohibited from purchasing Notes, we may
seek the consent of our lenders to the purchase of Notes or could attempt to
refinance the borrowings that contain such prohibition. If we do not obtain such
a consent or repay such borrowings, we will remain prohibited from purchasing
Notes. In such case, our failure to purchase tendered Notes would constitute an
Event of Default under the Indenture which would, in turn, constitute a default
under the Bank Credit Facility. In such circumstances, the subordination
provisions in the Indenture would likely restrict payment to the holders of
Notes.
Future indebtedness that we may incur may contain prohibitions on the
occurrence of certain events that would constitute a Change of Control or
require us to repurchase such indebtedness upon a Change of Control. Moreover,
the exercise by the holders of their right to require Terex to purchase the
Notes could cause a default under such indebtedness, even if the Change of
Control itself does not, due to the financial effect of such purchase on us.
Finally, our ability to pay cash to the holders of Notes following the
occurrence of a Change of Control may be limited by our then existing financial
resources. There can be no assurance that sufficient funds will be available
when necessary to make any required repurchases. The provisions under the
Indenture relative to our obligation to make an offer to purchase the Notes as a
result of a Change of Control may be only waived or modified with the written
consent of each holder of Notes.
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Certain Covenants
The Indenture contains covenants including, among others, the following:
Limitation on Indebtedness
(a) Terex will not, and will not permit any Restricted Subsidiary to,
Incur, directly or indirectly, any Indebtedness; provided, however, that Terex
and the Subsidiary Guarantors may Incur Indebtedness if, on the date of such
Incurrence and after giving effect thereto on a pro forma basis, the
Consolidated Coverage Ratio exceeds 2.0 to 1.0.
(b) Notwithstanding the foregoing paragraph (a), Terex and the Restricted
Subsidiaries may Incur any or all of the following Indebtedness:
(1) Indebtedness Incurred by Terex or any Subsidiary Guarantor
pursuant to the Bank Credit Facility; provided, however, that
together with all Indebtedness outstanding and Incurred pursuant
to clause (i) of "--Limitation on Indebtedness and Preferred
Stock of Restricted Subsidiaries" such Indebtedness in not more
than the higher of $500 million and the sum of 80% of net
accounts receivable and 50% of inventory;
(2) Indebtedness owed to and held by Terex or any Wholly Owned
Subsidiary; provided, however, that (A) any subsequent issuance
or transfer of any Capital Stock which results in any such Wholly
Owned Subsidiary ceasing to be a Wholly Owned Subsidiary or any
subsequent transfer of such Indebtedness (other than to Terex or
a Wholly Owned Subsidiary) shall be deemed, in each case, to
constitute the Incurrence of such Indebtedness;
(3) the Notes and the Exchange Notes (in each case, other than
Additional Notes), and the Subsidiary Guarantees thereof;
(4) Indebtedness (other than the Indebtedness described in clauses
(1), (2) or (3) above) outstanding on the March 31, 1998
(including the Existing Notes);
(5) Indebtedness of a Subsidiary Guarantor Incurred and outstanding
on or prior to the date on which such Subsidiary Guarantor was
acquired by Terex (other than Indebtedness Incurred in
anticipation of or in connection with, or to provide all or any
portion of the funds or credit support utilized to consummate,
the transaction or series of related transactions pursuant to
which such Restricted Subsidiary became a Restricted Subsidiary);
provided, however, that on the date of such acquisition and after
giving effect thereto, Terex would have been able to Incur at
least $1.00 of additional Indebtedness pursuant to paragraph (a)
of this covenant;
(6) Refinancing Indebtedness in respect of Indebtedness Incurred
pursuant to paragraph (a) above or pursuant to clause (3), (4) or
(5), or this clause (6); provided, however, that if such
Refinancing Indebtedness directly or indirectly Refinances
Indebtedness of a Restricted Subsidiary which is not a Subsidiary
Guarantor Incurred pursuant to clause (5), such Refinancing
Indebtedness shall be Incurred only by such Restricted
Subsidiary;
(7) Hedging Obligations directly related to Indebtedness permitted to
be Incurred by Terex pursuant to the Indenture;
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(8) Indebtedness, including purchase money Indebtedness and capital
lease obligations, Incurred by Terex or a Subsidiary Guarantor to
finance the acquisition of tangible assets or other capital
expenditures, and Indebtedness Incurred by Terex or a Subsidiary
Guarantor to Refinance such purchase money Indebtedness, in an
aggregate outstanding principal amount which, when added together
with the amount of Indebtedness Incurred pursuant to this clause
(8) and then outstanding, does not to exceed $15.0 million at any
time;
(9) Indebtedness in respect of Floor Plan Guarantees;
(10) Indebtedness Incurred with respect to Terex's outstanding Common
Stock Appreciation Rights;
(11) Indebtedness of Terex in an aggregate principal amount which,
together with all other Indebtedness of Terex outstanding on the
date of such Incurrence (other than Indebtedness permitted by
clauses (1) through (8) above or paragraph (a)), does not exceed
$5.0 million.
(c) Notwithstanding the foregoing, Terex will not, and will not permit any
Restricted Subsidiary to, Incur any Indebtedness if the proceeds thereof are
used, directly or indirectly, to refinance any Subordinated Obligations, unless
such Indebtedness shall be subordinated to the Notes or the relevant Subsidiary
Guarantee to at least the same extent as such Subordinated Obligations.
(d) For purposes of determining compliance with the foregoing covenant, (1)
in the event that an item of Indebtedness meets the criteria of more than one of
the types of Indebtedness described above, Terex, in its sole discretion, will
classify such item of Indebtedness and only be required to include the amount
and type of such Indebtedness in one of the above clauses and (2) an item of
Indebtedness may be divided and classified under more than one of the types of
Indebtedness described above.
(e) Notwithstanding paragraphs (a) and (b) above, Terex shall not Incur any
Indebtedness if such Indebtedness is contractually subordinate or junior in
right of payment in any respect to any Senior Indebtedness, unless such
Indebtedness is Senior Subordinated Indebtedness or is expressly subordinated in
right of payment to Senior Subordinated Indebtedness.
(f) Notwithstanding paragraphs (a) and (b) above, no Subsidiary Guarantor
shall Incur any Indebtedness if such Indebtedness is contractually subordinate
or junior in right of payment in any respect to any Senior Indebtedness, unless
such Indebtedness is Senior Subordinated Indebtedness or is expressly
subordinated in right of payment to Senior Subordinated Indebtedness.
(g) Indebtedness of any Person which is outstanding at the time such Person
becomes a Restricted Subsidiary of Terex (including upon designation of any
subsidiary or other person as a Restricted Subsidiary) or is merged with or into
or consolidated with Terex or a Restricted Subsidiary of Terex shall be deemed
to have been Incurred at the time such Person becomes such a Restricted
Subsidiary of Terex or merged with or into or consolidated with Terex or a
Restricted Subsidiary of Terex, as applicable.
Limitation on Restricted Payments
Terex will not, and will not permit any Restricted Subsidiary, directly or
indirectly, to make a Restricted Payment if at the time Terex or such Restricted
Subsidiary makes such Restricted Payment:
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(1) a Default shall have occurred and be continuing (or would
result therefrom);
(2) Terex is not able to Incur an additional $1.00 of
Indebtedness pursuant to paragraph (a) of the covenant
described under the caption "--Limitation on Indebtedness"
after giving pro forma effect to such Restricted Payment; or
(3) the aggregate amount of such Restricted Payment and all other
Restricted Payments made since the Issue Date would exceed the
sum of (without duplication):
(A) 50% of the Consolidated Net Income accrued during the period
(treated as one accounting period) from the beginning of the
fiscal quarter commencing after March 31, 1998 to the end of
the most recent fiscal quarter for which financial
statements are available (or, in case such Consolidated Net
Income is a deficit, less 100% of such deficit); plus
(B) 100% of the aggregate Net Cash Proceeds received by Terex
from the issuance or sale of its Capital Stock (other than
Disqualified Stock) subsequent to March 31, 1998 (other than
an issuance or sale to a Subsidiary of Terex or an issuance
or sale to an employee stock ownership plan or to a trust
established by Terex or any of its Subsidiaries for the
benefit of their employees); plus
(C) 100% of the Net Cash Proceeds received by Terex from the
issuance or sale after March 31, 1998 of Disqualified Stock
or debt securities that have been converted or exchanged
(other than by a Subsidiary of Terex) to the extent that the
proceeds are not used to redeem, repurchase, retire or
otherwise acquire Capital Stock or any Indebtedness of Terex
or any Restricted Subsidiary or to make any Investment
pursuant to clause (7) of the definition of "Permitted
Investment."
(b) The preceding provisions will not prohibit:
(1) any acquisition or redemption of any Capital Stock of Terex
made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Capital Stock of Terex
(other than Disqualified Stock and other than Capital Stock
issued or sold to a Subsidiary of Terex or an employee stock
ownership plan) or options, warrants or other rights to
purchase such Capital Stock; provided, however, that (A)
such acquisition shall be excluded in the calculation of the
amount of Restricted Payments and (B) the Net Cash Proceeds
from such sale shall be excluded from clause (3)(B) of
paragraph (a) above;
(2) any purchase, repurchase, redemption, defeasance or
acquisition or retirement of Subordinated Obligations made
by exchange for, or out of the proceeds of the substantially
concurrent sale of, Capital Stock of Terex (other than
Disqualified Stock and other than Capital Stock issued or
sold to a Subsidiary of Terex or an employee stock ownership
plan) or options, warrants or other rights to purchase such
Capital Stock; provided, however, that (A) such purchase,
repurchase, redemption, defeasance, acquisition or
retirement shall be excluded in the calculation of the
amount of Restricted Payments and (B) the Net Cash Proceeds
from such sale shall be excluded from clause (3) (B) of
paragraph (a) above;
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(3) any purchase, repurchase, redemption, defeasance or
acquisition or retirement of Subordinated Obligations made
by exchange for, or out of the proceeds of the substantially
concurrent sale of, Refinancing Indebtedness of Terex which
is permitted to be Incurred pursuant to clause (b)(6) of the
covenant described under the caption "C Limitation on
Indebtedness"; provided, however, that such Indebtedness (A)
shall have a Stated Maturity later than the Stated Maturity
of the Notes and (B) shall have an Average Life greater than
the remaining Average Life of the Notes; provided further,
however, that such purchase, repurchase, redemption,
defeasance, acquisition or retirement for value shall be
excluded in the calculation of the amount of Restricted
Payments;
(4) dividends paid within 60 days after the date of declaration
thereof if at such date of declaration such dividend would
have complied with this covenant; provided, however, that
the declaration, but not the payment, of such dividend shall
be included in the calculation of the amount of Restricted
Payments;
(5) payments with respect to employee or director stock options,
stock incentive plans or restricted stock plans of Terex,
including any redemption, repurchase, acquisition,
cancellation or other retirement for value of shares of
Capital Stock of Terex, restricted stock, options on any
such shares or similar securities held by directors,
officers or employees or former directors, officers or
employees or by any Plan upon death, disability, retirement
or termination of employment of any such person pursuant to
the terms of such Plan or agreement under which such shares
or related rights were issued or acquired; provided,
however, that the amount of any such payment shall not
exceed $500,000 for any year or $3.5 million in total on or
after March 31, 1998;
(6) so long as no Default shall have occurred or be continuing
at the time of such payment or after giving effect to such
payment, 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; provided, however, that
the aggregate amount of any purchases shall not exceed
$500,000 per year or $3.5 million in total after March 31,
1998;
(7) the redemption, purchase, retirement or other payoff of any
Subordinated Obligations with the proceeds of any
Refinancing Indebtedness permitted to be incurred; or
(8) so long as no Default shall have occurred and be continuing
(or result therefrom), Restricted Payments in an aggregate
amount not to exceed $10.0 million; provided, however, that
the amount of such Restricted Payments shall be included in
the calculation of Restricted Payments.
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Limitation on Restrictions on Distributions from Restricted Subsidiaries
Terex shall not, and shall not permit any Restricted Subsidiary to, create
or otherwise cause or permit to exist or become effective any consensual
encumbrance or restriction on the ability of any Restricted Subsidiary to (a)
pay dividends or make any other distributions on its Capital Stock to Terex or a
Restricted Subsidiary or pay any Indebtedness or other obligation owed to Terex
or a Restricted Subsidiary, (b) make any loans or advances to Terex or any
Restricted Subsidiary or (c) transfer any of its property or assets to Terex or
any Restricted Subsidiary (collectively, "Payment Restrictions"), except:
(1) any Payment Restriction imposed by or pursuant to the Bank
Credit Facility, the Indenture, or any agreement in effect at
or entered into on the Issue Date, in each case as in effect
on the Issue Date;
(2) any Payment Restriction with respect to a Restricted
Subsidiary pursuant to an agreement relating to any
Indebtedness Incurred by such Restricted Subsidiary on or
prior to the date on which such Restricted Subsidiary was
acquired by Terex (other than Indebtedness Incurred in
anticipation of or in connection with, or to provide all or
any portion of the funds or credit support utilized to
consummate, the transaction or series of related transactions
pursuant to which such Subsidiary became a Subsidiary of, or
was acquired by, Terex) and outstanding on such date;
provided, however, that (A) such Payment Restriction is not
applicable to any Person, or the properties or assets of any
Person, other than such Restricted Subsidiary, and (B) the
consolidated net income of such Restricted Subsidiary for any
period prior to such acquisition shall not be taken into
account in determining whether such acquisition was permitted
by the terms of the Indenture;
(3) any Payment Restriction pursuant to an agreement effecting a
Refinancing of Indebtedness Incurred pursuant to an agreement
referred to in clause (1) or (2) of this covenant or this
clause (3) or contained in any amendment to an agreement
referred to in clause (1) or (2) of this covenant or this
clause (3); provided, however, that the Payment Restrictions
with respect to such Restricted Subsidiary contained in any
such refinancing agreement or amendment are no less favorable
to the holders of the Notes than those with respect to such
Restricted Subsidiary contained in such predecessor
agreements;
(4) any Payment Restrictions imposed by purchase money
Indebtedness for property acquired in the ordinary course of
business that only impose limitations on the property
acquired;
(5) in the case of clause (c) above, any encumbrance or
restriction consisting of customary non-assignment provisions
in leases governing leasehold interests to the extent such
provisions restrict the transfer of the lease or the property
leased thereunder; and
(6) any Payment Restriction with respect to a Restricted
Subsidiary imposed pursuant to an agreement entered into for
the sale or disposition of all or substantially all the
Capital Stock or assets of such Restricted Subsidiary pending
the closing of such sale or disposition; provided, however,
that such Payment Restriction is only applicable to such
Restricted Subsidiary or assets, as applicable, and such sale
or disposition otherwise is permitted under "C Limitation on
Asset Dispositions" below; provided, further, however, that
such Payment Restriction shall be effective only for a period
from the execution and delivery of such agreement through a
termination date not later than 270 days after such execution
and deliver.
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Limitation on Asset Dispositions
(a) Terex will not, and will not permit any Restricted Subsidiary to, make
any Asset Disposition unless:
(1) Terex or such Restricted Subsidiary receives consideration
at the time of such Asset Disposition at least equal to the
fair market value (including as to the value of all non-cash
consideration), as determined in good faith by the Board of
Directors (if the total proceeds of such sale is greater
than $1.0 million), the determination of which shall be
evidenced by a Board Resolution (including as to the value
of all non-cash consideration), of the shares and assets
subject to such Asset Disposition;
(2) at least 75% of the consideration therefor received by Terex
or such Restricted Subsidiary is in the form of cash; and
(3) an amount equal to 100% of the Net Available Cash from such
Asset Disposition is applied by Terex (or such Restricted
Subsidiary, as the case may be)
(A) first, to the extent Terex or such Restricted
Subsidiary elects (or is required by the terms of any
Senior Indebtedness), to prepay, repay or purchase
Senior Indebtedness of Terex or of any Subsidiary
Guarantor (in each case other than Indebtedness owed to
Terex or an Affiliate of Terex) within 360 days from
the later of the date of such Asset Disposition or the
receipt of such Net Available Cash;
(B) second, to the extent of the balance of such Net
Available Cash after application in accordance with
clause (A), to the extent Terex or such Restricted
Subsidiary elects, to acquire Additional Assets within
360 days from the later of such Asset Disposition or
the receipt of such Net Available Cash;
(C) third, to the extent of the balance of such Net
Available Cash after application in accordance with
clauses (A) and (B), to make a pro rata offer to the
holders of the Notes (and to the extent required by the
instrument governing such Indebtedness, to holders of
other Senior Subordinated Indebtedness designated by
Terex at a price no greater than par) to purchase Notes
(and such other Senior Subordinated Indebtedness)
pursuant to and subject to the conditions contained in
the Indenture; and
(D) fourth, to the extent of the balance of such Net
Available Cash after application in accordance with
clauses (A), (B) and (C), for general corporate
purposes not prohibited by the terms of the Indenture;
provided, however, that in connection with any prepayment, repayment or
purchase of Indebtedness pursuant to clause (A) or (C) above, Terex or such
Subsidiary shall retire such Indebtedness and cause the related loan commitment
(if any) to be permanently reduced in an amount equal to the principal amount so
prepaid, repaid or purchased.
For the purposes of the covenant described under this caption, the
following shall be deemed to be cash: (x) the assumption of Indebtedness of
Terex (other than Preferred Stock, Disqualified Stock or Subordinated
Obligations of Terex) or any Restricted Subsidiary (other than Subordinated
Obligations and other than Preferred Stock or Disqualified Stock of a Subsidiary
Guarantor) and the release of Terex or such Restricted Subsidiary from all
liability with respect to such Indebtedness in connection with such Asset
Disposition, provided, that the amount of such Indebtedness shall not be deemed
to be cash for the purpose of the term "Net Available Cash"; and (y) securities
received by Terex or any Restricted Subsidiary from the transferee that are
promptly converted by Terex or such Restricted Subsidiary into cash.
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(b) In the event of an Asset Disposition that requires the purchase of the
Notes (and other Senior Subordinated Indebtedness) pursuant to clause (a)(3)(C)
above, Terex shall purchase Notes tendered pursuant to an offer by Terex for the
Notes (and other Senior Subordinated Indebtedness) at a purchase price of 100%
of their principal amount (without premium) plus accrued but unpaid interest
(or, in respect of such other Senior Subordinated Indebtedness, such lesser
price, if any, as may be provided for by the terms of such Senior Subordinated
Indebtedness) in accordance with the procedures (including prorating in the
event of over subscription) to be set forth in the Indenture. If the aggregate
purchase price of Notes (and, to the extent required, any other Senior
Subordinated Indebtedness) tendered pursuant to such offer is less than the Net
Available Cash allotted to the purchase thereof, Terex will be entitled to apply
the remaining Net Available Cash in accordance with clause (a)(3)(D) above.
Terex shall not be required to make such an offer to purchase Notes (and, to the
extent required, other Senior Subordinated Indebtedness) pursuant to the
covenant described under this caption if the Net Available Cash available
therefor (after application of Net Available Cash in accordance with clauses (A)
and (B) of paragraph (a) above) is less than $5.0 million (which lesser amount
shall be carried forward for purposes of determining whether such an offer is
required with respect to any subsequent Asset Disposition).
(c) Terex will comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
in connection with the purchase of the Notes pursuant to this covenant. To the
extent that the provisions of any securities laws or regulations conflict with
provisions of this covenant, Terex will comply with the applicable securities
laws and regulations under this clause by virtue thereof.
Limitation on Affiliate Transactions
(a) Terex will not, and will not permit any Restricted Subsidiary to enter
into or permit to exist any transaction (including the purchase, sale, lease or
exchange of any property, employee compensation arrangements or the rendering of
any service) with any Affiliate of Terex (an "Affiliate Transaction") unless:
(1) the Affiliate Transaction is (A) set forth in writing, (B) on
terms which are as favorable to Terex or such Restricted
Subsidiary as terms that would be obtainable at the time for a
comparable transaction or series of similar transactions in arms'
length dealings with an unrelated third Person and (C) approved
by a majority of the directors of Terex disinterested with
respect to such Affiliate Transactions who, by resolution, have
determined in good faith that the criteria set forth in clause
(1)(B) are satisfied;
(2) if such Affiliate Transaction involves an amount in excess of
$10.0 million, the Board of Directors shall also have received a
written opinion from an independent investment banking firm,
independent investment adviser, accounting firm or other
qualified appraiser, in each case, of national standing or with a
national reputation and that is not an Affiliate of Terex, to the
effect that such Affiliate Transaction is fair from a financial
point of view, to Terex and its Restricted Subsidiaries.
(b) The provisions of the foregoing paragraph (a) shall not prohibit
(1) any Permitted Investment and any Restricted Payment permitted to
be paid pursuant to the covenant described under the caption "--
Limitation on Restricted Payments";
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(2) any issuance of securities, or other payments, awards, or grants
in cash, securities or otherwise pursuant to, or the funding of,
employment arrangements, stock options and stock ownership plans
approved by the disinterested members of the Board of Directors;
(3) the payment of reasonable fees to directors of Terex and its
Restricted Subsidiaries;
(4) the grant of stock options or similar rights to employees and
directors of Terex pursuant to plans approved by the
disinterested members of the Board of Directors;
(5) transactions in the ordinary course of business (including
expense advances and reimbursements) between Terex or any of its
Restricted Subsidiaries, on the one hand, and any employee
thereof, on the other hand;
(6) the granting and performance of registration rights for shares of
Capital Stock of Terex under a written registration rights
agreement approved by a majority of directors of Terex that are
disinterested with respect to such transactions;
(8) any Affiliate Transaction between Terex and a Subsidiary
Guarantor, between Subsidiary Guarantors, or between Restricted
Subsidiaries (neither of which is a subsidiary Guarantor);
(9) indemnification or insurance provided to directors or officers of
Terex or any Subsidiary approved in good faith by the Board of
Directors; or
(10) the purchase of or the payment of Indebtedness of or monies owed
by Terex or any of its Restricted Subsidiaries for goods or
materials purchased, or services received, in the ordinary course
of business.
Limitation on the Sale or Issuance of Capital Stock of Restricted
Subsidiaries
Terex will not sell or otherwise dispose of any shares of Capital Stock of
a Restricted Subsidiary, and will not permit any Restricted Subsidiary, directly
or indirectly, to issue or sell or otherwise dispose of any shares of its
Capital Stock except
(1) to Terex or a Wholly Owned Subsidiary that is a Subsidiary Guarantor;
(2) directors' qualifying shares;
(3) if, immediately after giving effect to such issuance, sale or other
disposition, neither Terex nor any of its Subsidiaries own any Capital
Stock of such Restricted Subsidiary; or
(4) Preferred Stock of a Subsidiary Guarantor.
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Limitation on Liens Securing Subordinated Indebtedness
Terex will not, and will not permit any Restricted Subsidiary to, create,
Incur, assume or suffer to exist any Liens of any kind (other than Permitted
Liens) upon any of their respective assets or properties now owned or acquired
after the date of the Indenture or any income or profits therefrom securing (i)
any Indebtedness of Terex or a Restricted Subsidiary which is expressly by its
terms subordinate or junior in right of payment to any other Indebtedness of
Terex or such Restricted Subsidiary, as the case may be, unless the Notes or the
relevant Subsidiary Guarantee, as the case may be, are equally and ratably
secured for so long as such Indebtedness is so secured; provided that, if such
Indebtedness which is expressly by its terms subordinate or junior in right of
payment to any other Indebtedness of Terex or a Restricted Subsidiary is
expressly subordinate or junior to the Notes or the relevant Subsidiary
Guarantee, as the case may be, then the Lien securing such subordinated or
junior Indebtedness shall be subordinate and junior to the Lien securing the
Notes or the relevant Subsidiary Guarantee, as the case may be, with the same
relative priority as such subordinated or junior Indebtedness shall have with
respect to the Notes or the relevant Subsidiary Guarantee, as the case may be,
or (ii) any assumption, Guarantee or other liability of Terex or any Restricted
Subsidiary in respect of any Indebtedness of Terex or a Restricted Subsidiary
which is expressly by its terms subordinate or junior in right of payment to any
other Indebtedness of Terex or such Restricted Subsidiary, unless the Notes or
the relevant Subsidiary Guarantee, as the case may be, is equally and ratably
secured for so long as such assumption, Guarantee or other liability is so
secured; provided that, if such Indebtedness which is expressly by its terms
subordinate or junior in right of payment to any other Indebtedness of Terex or
a Restricted Subsidiary is expressly by its terms subordinate or junior to the
Notes or the relevant Subsidiary Guarantee, as the case may be, then the Lien
securing the assumption, guarantee or other liability of such Subsidiary shall
be subordinate and junior to the Lien securing the Notes or the relevant
Subsidiary Guarantee, as the case may be, with the same relative priority as
such subordinated or junior Indebtedness shall have with respect to the Notes or
the relevant Subsidiary Guarantee, as the case may be.
Limitation on Other Senior Subordinated Indebtedness
Terex will not, and will not permit any Restricted Subsidiary to, create,
Incur, assume, guarantee or in any other manner become liable with respect to
any Indebtedness that is subordinate in right of payment to any Senior
Indebtedness of Terex or any such Restricted Subsidiary, unless such
Indebtedness (i) has a maturity date subsequent to the Stated Maturity of the
Notes and an Average Life longer than that of the Notes and (ii) is also pari
passu with, or subordinate in right of payment to, the Notes or the relevant
Subsidiary Guarantee.
Merger and Consolidation
Terex will not, in one transaction or a series of transactions, consolidate
with or merge with or into, or convey, transfer or lease all or substantially
all its assets to, any other Person or group of affiliated Persons, unless
(1) the resulting, surviving or transferee Person, if other than Terex
(the "Successor Company"), shall be a corporation organized and
existing under the laws of the United States of America, any State
thereof or the District of Columbia and shall expressly assume, by an
indenture supplemental to the Indenture, executed and delivered to the
Trustee, in form satisfactory to the Trustee, all the obligations of
Terex under the Notes and the Indenture (and the Subsidiary Guarantees
shall be confirmed as applying to such Person's obligations);
(2) at the time of and immediately after giving effect to such transaction
(and treating any Indebtedness which becomes an obligation of Terex or
the Successor Company, as applicable, or any Subsidiary as a result of
such transaction as having been Incurred by Terex or the Successor
Company or such Subsidiary at the time of such transaction), no
Default shall have occurred and be continuing;
(3) immediately after giving effect to such transaction, Terex or the
Successor Company, as applicable, would be able to Incur an additional
$1.00 of Indebtedness pursuant to paragraph (a) of the covenant
described under the caption "-- Limitation on Indebtedness;"
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(4) immediately after giving effect to such transaction, Terex or the
Successor Company, as applicable, shall have Consolidated Net Worth in
an amount that is not less than the Consolidated Net Worth of Terex
immediately prior to such transaction; and
(5) Terex shall have delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that such consolidation, merger or
transfer and such supplemental indenture (if any) comply with the
Indenture.
Nothing contained in the foregoing shall prohibit any Subsidiary Guarantor
from consolidating with, merging with or into, or transferring all or part of
its properties and assets to, Terex or any other Subsidiary Guarantor.
For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise) of all or substantially all of the properties and assets of one or
more Subsidiaries, Terex's interest in which constitutes all or substantially
all of the properties and assets of Terex shall be deemed to be the transfer of
all or substantially all of the properties and assets of Terex.
The Successor Company shall be the successor to Terex and shall succeed to,
and be substituted for and may exercise every right and power of, Terex under
the Indenture, but the predecessor Company in the case of a conveyance, transfer
or lease shall not be released from the obligation to pay the principal of and
interest on the Notes.
Terex will not permit any Subsidiary Guarantor, in one transaction or a
series of transactions, to consolidate with or merge with or into, or convey,
transfer or lease all or substantially all of its assets to, any Person unless:
(1) the resulting, surviving or transferee Person (if not Terex or a
Subsidiary Guarantor ) shall be organized and existing under the laws
of the United States of America, or any State thereof or the District
of Columbia, and shall expressly assume, by executing a Subsidiary
Guarantee, all the obligations of such Subsidiary, if any, under its
Subsidiary Guarantee;
(2) at the time of and immediately after giving effect to such transaction
(and treating any Indebtedness which becomes an obligation of the
resulting, surviving or transferee Person as a result of such
transaction as having been issued by such Person at the time of such
transaction), no Default shall have occurred and be continuing;
(3) immediately after giving effect to such transaction, Terex would be
able to Incur at least an additional $1.00 of Indebtedness pursuant to
paragraph (a) of the covenant described under the caption "-Limitation
on Indebtedness"; and
(4) Terex delivers to the Trustee an Officers' Certificate and an Opinion
of Counsel, each stating that such consolidation, merger or transfer
and such Subsidiary Guarantee, if any, complies with the Indenture.
The provisions of clauses (1), (2) and (3) above shall not apply to any one
or more transactions which constitute an Asset Disposition if Terex has complied
with the applicable provisions of the covenant described under "C Limitation on
Asset Dispositions" above.
The phrase "all or substantially all" of the assets of Terex or a
Subsidiary Guarantor will likely be interpreted under applicable state law and
will be dependent upon particular facts and circumstances. As a result, there
may be a degree of uncertainty in ascertaining whether a sale or transfer of
"all or substantially all" of the assets of Terex has occurred.
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Future Guarantors
The Indenture will provide that Terex and each Subsidiary Guarantor shall
cause each Restricted Subsidiary of Terex organized or existing under the laws
of the United States, any state thereof or the District of Columbia of Terex
which, after the date of the Indenture (if not then a Subsidiary Guarantor),
becomes a Restricted Subsidiary to execute and deliver an indenture supplemental
to the Indenture and thereby become a Subsidiary Guarantor which shall be bound
by the Subsidiary Guarantee of the Notes in the form set forth in the Indenture
(without such future Subsidiary Guarantor being required to execute and deliver
the Subsidiary Guarantee endorsed on the Notes). In addition, the Indenture will
provide that Terex will not permit any Restricted Subsidiary that is not a
Subsidiary Guarantor to Guarantee any other Indebtedness or Terex or any
Subsidiary Guarantor unless such Restricted Subsidiary simultaneously executes a
supplemental indenture to the Indenture providing for the Guarantee of the
payment of the Notes by such Restricted Subsidiary, which Guarantee of the
payment of the Notes shall be subordinated to the Guarantee of such other
Indebtedness to the same extent as the Notes or the Subsidiary Guarantees, as
applicable, are subordinated to such other Indebtedness; provided, however, a
Restricted Subsidiary will not be required to guarantee the payment of the Notes
to the extent that such other Indebtedness is does not exceed $1 million
individually, or together with any other Indebtedness guaranteed by such
Restricted Subsidiary, $3 million in the aggregate. Such Restricted Subsidiary
shall be deemed released from its obligations under the Guarantee of the payment
of the Notes at any such time that such Restricted Subsidiary is released from
all of its obligations under its Guarantee of such other Indebtedness unless
such release results from the payment under such Guarantee of other
Indebtedness.
Limitation on Business Activities
Terex will not, and will not permit any Restricted Subsidiary to, engage in
any business other than Related Businesses.
Limitation on Designations of Unrestricted Subsidiaries
The Indenture provides that Terex may designate any of its Subsidiary
(other than a Subsidiary Guarantor) as an "Unrestricted Subsidiary" under the
Indenture (a "Designation") only if:
(1) no Default shall have occurred and be continuing at the time of or
after giving effect to such Designation; and
(2) either (x) Terex's Investment in such Subsidiary does not exceed
$1,000 or (y) Terex would be permitted under the Indenture to make an
Investment at the time of Designation (assuming the effectiveness of
such Designation) in an amount (the "Designation Amount") equal to the
fair market value of the Terex's Investment in such Subsidiary on such
date.
In the event of any such Designation, Terex shall be deemed to have made an
Investment constituting a Restricted Payment pursuant to the covenant described
under "--Limitation on Restricted Payments" for all purposes of the Indenture in
the Designation Amount. The Indenture will further provide that Terex shall not,
and shall not permit any Restricted Subsidiary to, at any time (a) provide
credit support for, or a guarantee of, any Indebtedness of any Unrestricted
Subsidiary (including any undertaking, agreement or instrument evidencing such
Indebtedness), (b) be directly or indirectly liable for any Indebtedness of any
Unrestricted Subsidiary, or (c) be directly or indirectly liable for any
Indebtedness which provides that the holder thereof may (upon notice, lapse of
time or both) declare a default thereon or cause the payment thereof to be
accelerated or payable prior to its final scheduled maturity upon the occurrence
of a default with respect to any Indebtedness of any Unrestricted Subsidiary
(including any right to take enforcement action against such Unrestricted
Subsidiary), except to the extent permitted under the covenant described under
"--Limitation on Restricted Payments."
The Indenture will further provide that Terex may revoke any Designation of
a Subsidiary as an Unrestricted Subsidiary (a "Revocation") if:
(1) no Default shall have occurred and be continuing at the time of and
after giving effect to such Revocation; and
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(2) all Liens and Indebtedness of such Unrestricted Subsidiary outstanding
immediately following such Revocation would, if Incurred at such time,
have been permitted to be Incurred for all purposes of the Indenture
and for all purposes of the Indenture shall be deemed to have been
Incurred at such time.
Notwithstanding the foregoing, no Subsidiary that was a Subsidiary
Guarantor on March 31, 1998 is permitted to become an Unrestricted Subsidiary.
SEC Reports
Whether or not subject to the reporting requirements of Section 13 or 15(d)
of the Exchange Act, Terex shall file with the SEC and provide within 15 days to
the Trustee and the holders of the Notes with such annual reports and such
information, documents and other reports as are specified in Sections 13 and
15(d) of the Exchange Act and applicable to a U.S. corporation subject to such
Sections.
In addition, whether or not required by the SEC, Terex will file a copy of
all of the information and reports referred to above with the SEC for public
availability within the time periods specified in the SEC's rules and
regulations (unless the SEC will not accept such a filing) and make such
information available to securities analysts and prospective investors upon
request.
Events of Default and Remedies
Each of the following is an Event of Default:
(1) a default for 30 days in the payment when due of interest on
the Notes, whether or not prohibited pursuant to the
subordination provisions of the Indenture;
(2) a default in payment when due of the principal of any Note at its
Stated Maturity, upon optional redemption, upon required repurchase,
upon declaration or otherwise, whether or not prohibited pursuant to
the subordination provisions of the Indenture;
(3) the failure by Terex to comply with its obligations described under
the caption "-Certain Covenants -Merger and Consolidation" above;
(4) the failure by Terex to comply for 30 days after notice with any of
its obligations in the covenants described above under the caption
"Change of Control" (other than a failure to purchase Notes) or under
the caption "-Certain Covenants" under "-Limitation on Indebtedness,"
"-Limitation on Restricted Payments," "-Limitation on Restrictions on
Distributions from Restricted Subsidiaries," "-Limitation on Asset
Dispositions" (other than a failure to purchase Notes), "-Limitation
on Affiliate Transactions," "-Limitation on the Sale or Issuance of
Capital Stock of Restricted Subsidiaries," "-Limitation on Liens
Securing Subordinated Indebtedness," "-Future Guarantors,"
"-Limitation on Business Activities" or "-SEC Reports";
(5) the failure by Terex to comply for 60 days after notice to comply with
any of the other agreements contained in the Indenture;
(6) Indebtedness of Terex or any Significant Subsidiary is not paid within
any applicable grace period after final maturity or is accelerated by
the holders thereof because of a default and the total amount of such
Indebtedness unpaid or accelerated exceeds $10.0 million (the "cross
acceleration provision");
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(7) certain events of bankruptcy, insolvency or reorganization of Terex,
any Subsidiary Guarantor or a Significant Subsidiary (the "bankruptcy
provisions");
(8) any judgment or decree for the payment of money the portion of which
is not covered by insurance is in excess of $10.0 million is entered
against Terex or a Restricted Subsidiary and either an enforcement
proceeding has been commenced by any creditor upon such judgment or
decree or such judgment or decree remains outstanding for a period of
60 days following such judgment and is not discharged, waived or
stayed (including pending appeal) (the "judgment default provision");
or
(9) any Subsidiary Guarantee by a Significant Subsidiary ceases to be in
full force and effect or becomes unenforceable or invalid or is
declared null and void (other than in accordance with the terms of the
Subsidiary Guarantee) or any Subsidiary Guarantor that is a
Significant Subsidiary denies or disaffirms its obligations under its
Subsidiary Guarantee.
However, a default under clauses (4), (5) or (8) will not constitute an
Event of Default until the Trustee or the holders of 25% in principal amount of
the outstanding Notes notify Terex of the default and Terex does not cure such
default within the time specified after receipt of such notice.
If an Event of Default (other than the bankruptcy provisions relating to
Terex or the Significant Subsidiaries) occurs and is continuing, the Trustee or
the holders of at least 25% in principal amount of the outstanding Notes may
declare the principal of and accrued but unpaid interest on all the Notes to be
due and payable. Upon such a declaration, such principal and interest shall be
due and payable immediately; provided, however, that for so long as the Bank
Credit Facility remains in effect, such declaration shall not become effective
until the earlier of (i) five Business Days following delivery of notice to the
Representative of such creditors of the intention to accelerate the Notes or
(ii) the acceleration of any Indebtedness under the Bank Credit Facility. If an
Event of Default relating to certain events of bankruptcy, insolvency or
reorganization of Terex or a Significant Subsidiary occurs and is continuing,
the principal of and interest on all the Notes will ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any holders of the Notes. Under certain circumstances, the
holders of a majority in principal amount of the outstanding Notes may rescind
any such acceleration with respect to the Notes and its consequences.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default occurs and is continuing, the Trustee will
be under no obligation to exercise any of the rights or powers under the
Indenture at the request or direction of any of the holders of the Notes unless
such holders have offered to the Trustee reasonable indemnity or security
against any loss, liability or expense. Except to enforce the right to receive
payment of principal, premium (if any) or interest when due, no holder of a Note
may pursue any remedy with respect to the Indenture or the Notes unless
(1) such holder has previously given the Trustee notice that an Event of
Default is continuing;
(2) holders of at least 25% in principal amount of the outstanding Notes
have requested the Trustee to pursue the remedy;
(3) such holders have offered the Trustee reasonable security or indemnity
against any loss, liability or expense;
(4) the Trustee has not complied with such request within 60 days after
the receipt thereof and the offer of security or indemnity; and
(5) the holders of a majority in principal amount of the outstanding Notes
have not given the Trustee a direction inconsistent with such request
within such 60-day period.
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Subject to certain restrictions, the holders of a majority in principal
amount of the outstanding Notes are given the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or of exercising any trust or power conferred on the Trustee. The Trustee,
however, may refuse to follow any direction that conflicts with law or the
Indenture or that the Trustee determines is unduly prejudicial to the rights of
any other holder of a Note or that would involve the Trustee in personal
liability.
The Indenture provides that if a Default occurs and is continuing and is
known to the Trustee, the Trustee must mail to each holder of the Notes notice
of the Default within 90 days after it occurs. Except in the case of a Default
in the payment of principal of or interest on any Note, the Trustee may withhold
notice if and so long as a committee of its trust officers determines that
withholding notice is not opposed to the interest of the holders of the Notes.
In addition, Terex is required to deliver to the Trustee, within 120 days after
the end of each fiscal year, a certificate indicating whether the signers
thereof know of any Default that occurred during the previous year. Terex also
is required to deliver to the Trustee, within 30 days after the occurrence
thereof, written notice of any event which would constitute certain Defaults,
their status and what action Terex is taking or proposes to take in respect
thereof.
Amendments and Waivers
Subject to certain exceptions, the Indenture may be amended with the
consent of the holders of a majority in principal amount of the Notes then
outstanding (including consents obtained in connection with a tender offer or
exchange for the Notes) and, subject to certain exceptions, any past default or
compliance with any provisions may also be waived with the consent of the
holders of a majority in principal amount of the Notes then outstanding.
Without the consent of each holder affected, an amendment or waiver may not
(with respect to any Notes held by a non-consenting holder):
(1) reduce the principal amount of Notes whose holders must consent to an
amendment or waiver;
(2) reduce the rate of or extend the time for payment of interest on any
Note;
(3) reduce the principal of or extend the Stated Maturity of any Note;
(4) reduce the amount payable upon the redemption of any Note or change
the time at which any Note may be redeemed as described under
"-Optional Redemption" or alter the provisions (including definitions)
set forth under "Change of Control;"
(5) make any Note payable in money other than that stated in the Notes;
(6) impair the right of any holder of the Notes to receive payment of
principal of and interest on such holder's Notes on or after the due
dates therefor or to institute suit for the enforcement of any payment
on or with respect to such holder's Notes;
(7) make any change in the amendment provisions which require each
holder's consent or in the waiver provisions;
(8) make any change to the subordination provisions of the Indenture that
would adversely affect the holders of Notes; or
(9) make any change in any Subsidiary Guarantee that would adversely
affect the holders.
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Notwithstanding the preceding, without the consent of any holder of Notes,
Terex and the Trustee may amend or supplement the Indenture or the Notes:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated Notes in addition to or in place of
certificated Notes (provided that the uncertificated Notes are issued
in registered form for purposes of Section 163(f) of the Code, or in a
manner such that the uncertificated Notes are described in Section
163(f)(2)(B) of the Code);
(3) to provide for the assumption by a successor corporation of the
obligations of Terex under the Indenture;
(4) to add guarantees with respect to the Notes or to secure the Notes;
(5) to add to the covenants of Terex for the benefit of the holders of the
Notes or to surrender any right or power conferred upon Terex;
(6) to make any change that does not adversely affect the rights under the
Indenture of any such holder; or
(7) to comply with requirements of the SEC in order to effect or maintain
the qualification of the Indenture under the Trustee Indenture Act.
However, no amendment may be made to the subordination provisions of the
Indenture that adversely affects the rights of any holder of Senior Indebtedness
of Terex or any Subsidiary Guarantor then outstanding unless the holders of such
Senior Indebtedness (or their Representative) consents to such change.
The consent of the holders of the Notes is not necessary under the
Indenture to approve the particular form of any proposed amendment. It is
sufficient if such consent approves the substance of the proposed amendment.
After an amendment under the Indenture becomes effective, Terex is required
to mail to holders of the Notes a notice briefly describing such amendment.
However, the failure to give such notice to all holders of the Notes, or any
defect therein, will not impair or affect the validity of the amendment.
Transfer
The Notes will be issued in registered form and will be transferable only
upon the surrender of the Notes being transferred for registration of transfer.
Terex may require payment of a sum sufficient to cover any tax, assessment or
other governmental charge payable in connection with certain transfers and
exchanges.
Defeasance
Terex at any time may terminate all its obligations under the Notes and the
Indenture ("legal defeasance"), except for certain obligations, including those
respecting the defeasance trust and obligations to register the transfer or
exchange of the Notes, to replace mutilated, destroyed, lost or stolen Notes and
to maintain a registrar and paying agent in respect of the Notes. Terex at any
time may terminate its obligations described under the caption "-Change of
Control" and under the covenants described under the caption "-Certain
Covenants" (other than the covenant described under the caption "Merger and
Consolidation"), the operation of the cross acceleration provision, and the
judgment default provision described under the caption "-Defaults" above and the
limitations contained in clauses (3) and (4) of the first paragraph and clause
(3) of the fourth paragraph of the covenant described under the caption
"-Certain Covenants -Merger and Consolidation" above ("covenant defeasance").
Terex may exercise its legal defeasance option notwithstanding its prior
exercise of its covenant defeasance option. If Terex exercises its legal
defeasance option, payment of the Notes may not be accelerated because of an
Event of Default with respect thereto.
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In order to exercise either defeasance option, Terex must irrevocably
deposit in trust (the "defeasance trust") with the Trustee money or U.S.
Government Obligations for the payment of principal and interest on the Notes to
redemption or maturity, as the case may be, and must comply with certain other
conditions, including delivery to the Trustee of an Opinion of Counsel to the
effect that holders of the Notes will not recognize income, gain or loss for
Federal income tax purposes as a result of such deposit and defeasance and will
be subject to Federal income tax on the same amount and in the same manner and
at the same times as would have been the case if such deposit and defeasance had
not occurred (and, in the case of legal defeasance only, such Opinion of Counsel
must be based on a ruling of the Internal Revenue Service or other change in
applicable Federal income tax law).
If the funds deposited with the Trustee to effect legal defeasance or
covenant defeasance are insufficient to pay the principal of, premium, if any,
and interest on the Notes when due, then the obligations of Terex and the
Subsidiary Guarantors under the Indenture will be revived and no such defeasance
will be deemed to have occurred.
Concerning the Trustee
United States Trust Company of New York is the Trustee under the Indenture
and has been appointed by Terex as Registrar and Paying Agent with regard to the
Notes.
The holders of a majority in principal amount of the then outstanding Notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
shall occur and be continuing, the Trustee will be required, in the exercise of
its power, to use the degree of care of a prudent man in the conduct of his own
affairs. Subject to such provisions, the Trustee will be under no obligation to
exercise any of its rights or powers under the Indenture at the request of any
holder of Notes, unless such holder shall have offered to the Trustee security
and indemnity satisfactory to it against any loss, liability or expense.
Governing Law
The Indenture provides that it, the Subsidiary Guarantees and the Notes
will be governed by, and construed in accordance with, the laws of the State of
New York without giving the effect to applicable principles of conflicts of law
to the extent that the application of the law of another jurisdiction would be
required thereby.
Certain Definitions
"Acquired Indebtedness" means Indebtedness of a Person or any of its
Subsidiaries (the "Acquired Person"):
(1) existing at the time such Person becomes a Restricted Subsidiary of
Terex or at the time it merges or consolidates with Terex or any of
its Restricted Subsidiaries or
(2) assumed in connection with the acquisition of assets from such Person.
"Affiliate" of any specified Person means
(1) any other Person, directly or indirectly, controlling or controlled by
or under direct or indirect common control with such specified Person;
or
(2) any other Person who is a director or officer (A) of such specified
Person, (B) of any Subsidiary of such specified Person or (C) of any
Person described in clause (1).
For the purposes of this definition, "control" when used with respect to
any Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise, and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
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"Asset Disposition" means any direct or indirect sale, lease, transfer,
conveyance or other disposition (or series of related sales, leases, transfers,
conveyances or dispositions) of shares of Capital Stock of a Restricted
Subsidiary (other than directors' qualifying shares), property or other assets
(each referred to for the purposes of this definition as a "disposition") by
Terex or any Restricted Subsidiary (including any disposition by means of a
merger, consolidation or similar transaction) other than
(1) a disposition by a Restricted Subsidiary to Terex, by Terex or a
Restricted Subsidiary to a Wholly Owned Subsidiary or between Wholly
Owned Subsidiaries;
(2) a sale of accounts receivables or inventory in the ordinary course of
business;
provided, however, that the consummation of any disposition or series of related
dispositions of assets or properties of Terex and the Restricted Subsidiaries by
Terex and any Restricted Subsidiaries having an aggregate fair market value of
less than $1.0 million in any fiscal year.
"Average Life" means, as of the date of determination, with respect to any
Indebtedness, the quotient obtained by dividing (x) the sum of the products of
the numbers of years from the date of determination to the date of each
successive scheduled principal payment of such Indebtedness or scheduled
redemption multiplied by the amount of such payment by (y) the sum of all such
payments.
"Bank Credit Facility" means a collective reference to any term loan and
revolving credit facilities (including, but not limited to, the credit agreement
to be entered into by and among Terex, certain of its subsidiaries and certain
financial institutions providing for an aggregate $500 million of term loan and
revolving credit facilities), including any related notes, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, as such credit facilities and/or related documents may be further
amended, restated, supplemented, renewed, replaced or otherwise modified from
time to time whether or not with the same agent, trustee, representative lenders
or holders and irrespective of any changes in the terms and conditions thereof.
Without limiting the generality of the foregoing, the term "Credit
Facility" shall include agreements in respect of reimbursement of letters of
credit issued pursuant to the Credit Facility and agreements in respect of
Hedging Obligations with lenders party to the Credit Facility and shall also
include any amendment, amendment and restatement, renewal, extension,
restructuring, supplement or modification to any Credit Facility and all
refunding, refinancings (in whole or in part) and replacements of any Credit
Facility, including any agreement
(1) extending the maturity of any Indebtedness incurred thereunder or
contemplated thereby; or
(2) adding or deleting borrowers or guarantors thereunder, so long as
borrowers and issuers include one or more of Terex and its Restricted
Subsidiaries and their respective successors and assigns.
"Bank Indebtedness" means
(1) the Indebtedness outstanding or arising under the Bank Credit Facility
up to a maximum principal amount of $500 million,
(2) all obligations and other amounts owing to the holders of such
Indebtedness or any agent or representative thereof outstanding or
arising under the Bank Credit Facility (including, but not limited to,
interest (including interest accruing on or after the filing of any
petition in bankruptcy, reorganization or similar proceeding relating
to Terex or any Restricted Subsidiary, whether or not a claim for such
interest is allowed in such proceeding), fees, charges, indemnities,
expense reimbursement obligations and other claims under the Bank
Credit Facility), and
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(3) all Hedging Obligations arising in connection therewith with any party
to the Bank Credit Facility.
"Board of Directors" means the Board of Directors of Terex or any committee
thereof duly authorized to act on behalf of such Board.
"Board Resolution" means a duly adopted resolution of the Board of
Directors in full force and effect at the time of determination and certified as
such by the Secretary or an Assistant Secretary of Terex.
"Business Day" means each day which is not a Legal Holiday.
"Capitalized Lease Obligation" means an obligation that is required to be
classified and accounted for as a capitalized lease for financial reporting
purposes in accordance with GAAP. The amount of Indebtedness represented by such
obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP. The Stated Maturity thereof shall be the date of the last
payment of rent or any other amount due under such lease prior to the first date
upon which such lease may be terminated by the lessee without payment of a
penalty.
"Capital Stock" of any Person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests (including partnership interests) in (however designated) equity of
such Person, including any Preferred Stock, but excluding any debt securities
convertible into or exchangeable for such equity.
"Cash Flow" for any period means the Consolidated Net Income for such
period, plus the following (but without duplication) to the extent deducted in
calculating such Consolidated Net Income for such period:
(1) income tax expense:
(2) Consolidated Interest Expense:
(4) that consolidated depreciation and amortization expense of a
Subsidiary that is not a Wholly Owned Subsidiary shall only be added
to the extent of the equity interest of the Company in such
Subsidiary; and
(5) all other non-cash charges (other than any recurring non-cash charges
to the extent such charges represent an accrual of or reserve for cash
expenditures in any future period).
Notwithstanding clause (4) above, there shall be deducted from Cash Flow in
any period any cash expended in such period that funds a non-recurring, non-cash
charge accrued or reserved in a prior period which was added back to Cash Flow
pursuant to clause (4) in such prior period.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock Appreciation Rights" means up to 1,000,000 common stock
appreciation rights issued on May 9, 1995 pursuant to a Common Stock
Appreciation Rights Agreement between Terex and United States Trust Company of
New York, as rights agent.
"Consolidated Cash Flow Coverage Ratio" as of any date of determination
means the ratio of the aggregate amount of Cash Flow for the period of the most
recent four consecutive fiscal quarters for which financial statements are
available to (ii) Consolidated Interest Expense for such four fiscal quarters;
provided, however, that
(1) if Terex or any Restricted Subsidiary has issued any Indebtedness
since the beginning of such period that remains outstanding or if the
transaction giving rise to the need to calculate the Consolidated Cash
Flow Coverage Ratio is an issuance of Indebtedness, or both, Cash Flow
and Consolidated Interest Expense for such period shall be calculated
after giving effect on a pro forma basis to such Indebtedness as if
such Indebtedness had been issued on the first day of such period and
the discharge of any other Indebtedness repaid, repurchased, defeased
or otherwise discharged with the proceeds of such new Indebtedness as
if such discharge had occurred on the first day of such period;
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(2) if since the beginning of such period Terex or any Restricted
Subsidiary shall have made any Asset Disposition, the Cash Flow for
such period shall be reduced by an amount equal to the Cash Flow (if
positive) directly attributable to the assets which are the subject of
such Asset Disposition for such period, or increased by an amount
equal to the EBITDA (if negative), directly attributable thereto for
such period, and Consolidated Interest Expense for such period shall
be reduced by an amount equal to the Consolidated Interest Expense
directly attributable to any Indebtedness of Terex or any Restricted
Subsidiary repaid, repurchased, defeased or otherwise discharged with
respect to Terex and its continuing Restricted Subsidiaries in
connection with such Asset Dispositions for such period (or, if the
Capital Stock of any Restricted Subsidiary is sold, the Consolidated
Interest Expense for such period directly attributable to the
Indebtedness of such Restricted Subsidiary to the extent Terex and its
continuing Restricted Subsidiaries are no longer liable for such
Indebtedness after such sale);
(3) if since the beginning of such period Terex or any Restricted
Subsidiary (by merger or otherwise) shall have made an Investment in
any Restricted Subsidiary (or any Person which becomes a Restricted
Subsidiary) or an acquisition of assets (including Capital Stock of a
Subsidiary), including any acquisition of assets occurring in
connection with a transaction causing a calculation to be made
hereunder, Cash Flow and Consolidated Interest Expense for such period
shall be calculated after giving pro forma effect thereto (including
the issuance of any Indebtedness) as if such Investment or acquisition
occurred on the first day of such period; and
(4) if since the beginning of such period any Person (that subsequently
became a Restricted Subsidiary or was merged with or into Terex or any
Restricted Subsidiary since the beginning of such period) shall have
made any Asset Disposition or any Investment that would have required
an adjustment pursuant to clause (2) or (3) above if made by Terex or
a Restricted Subsidiary during such period, Cash Flow and Consolidated
Interest Expense for such period shall be calculated after giving pro
forma effect thereto as if such Asset Disposition or Investment
occurred on the first day of such period.
For purposes of this definition, whenever pro forma effect is to be given
to an acquisition of assets, the amount of income or earnings relating thereto
and the amount of Consolidated Interest Expense associated with any Indebtedness
Incurred in connection therewith, the pro forma calculations shall be determined
in good faith by a responsible financial or accounting officer of Terex. If any
Indebtedness bears a floating rate of interest and is being given pro forma
effect, the interest expense on such Indebtedness shall be calculated as if the
rate in effect on the date of determination had been the applicable rate for the
entire period (taking into account any Interest Rate Protection Agreement
applicable to such Indebtedness if such Interest Rate Protection Agreement has a
remaining term as at the date of determination in excess of 12 months). For
purposes of this definition, whenever pro forma effect is to be given to any
Indebtedness Incurred pursuant to a revolving credit facility, the amount
outstanding under such Indebtedness shall be equal to the average of the amount
outstanding during the period commencing on the first day of the first of the
four most recent consecutive fiscal quarters and ending on the date of
determination.
"Consolidated Interest Expense" means, for any period, the sum of total
interest expense of Terex and its consolidated Restricted Subsidiaries,
including, to the extent not otherwise included in such interest expense, and to
the extent Incurred by Terex or its Restricted Subsidiaries:
(1) interest expense attributable to capital leases;
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(2) amortization of debt discount;
(3) capitalized interest;
(4) original issue debt discount;
(5) non-cash interest expense and accruals;
(6) commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers' acceptance financing;
(7) dividends in respect of all Disqualified Stock held by Person other
than Terex, a Subsidiary Guarantor or a Wholly-owned Subsidiary;
(8) interest incurred in connection with investments in discontinued
operations;
(9) net costs associated with Hedging Obligations (including amortization
of fees);
(10) the interest portion of any deferred payment obligation of
Indebtedness; and
(11) cash contributions to employee stock ownership plans or similar trusts
to the extent used by the plan or trust to pay interest or fees to any
Person (other than Terex) with respect to Indebtedness incurred by the
plan or trust.
For purposes of this definition, interest expense attributable to any
Indebtedness represented by a guarantee (other than (a) Guarantees permitted by
the terms of Indenture and (b) Guarantees by the Company of Indebtedness of a
consolidated Restricted Subsidiary or by a consolidated Restricted Subsidiary of
the Company or another consolidated Restricted Subsidiary) by such person or a
Subsidiary of such person of an obligation of another person will constitute
interest expense attributable to the Indebtedness guaranteed.
"Consolidated Net Income" means, for any period, the net income (loss) of
Terex, and its consolidated Subsidiaries, provided, however, that there shall
not be included in such Consolidated Net Income
(1) any net income (loss) of any Person if such Person is not a Restricted
Subsidiary, except that
(A) Terex's equity in the net income of any such Person for such
period shall be included in such Consolidated Net Income up to
the aggregate amount of cash actually distributed by such Person
during such period to Terex or a Restricted Subsidiary as a
dividend or other distribution (subject, in the case of a
dividend or other distribution to a Restricted Subsidiary, to the
limitations contained in clause (3) below); and
(B) Terex's equity in a net loss of any such Person for such period
shall be included in determining such Consolidated Net Income;
(2) any net income (loss) of any Person acquired by Terex or a Subsidiary
in a pooling of interests transaction for any period prior to the date
of such acquisition;
(3) any net income (loss) of any Restricted Subsidiary if such Restricted
Subsidiary is subject to restrictions, directly or indirectly, on the
payment of dividends or the making of distributions by such Restricted
Subsidiary, directly or indirectly, to Terex, except that
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(A) Terex's equity in the net income of any such Restricted
Subsidiary for such period shall be included in such Consolidated
Net Income up to the aggregate amount of cash that could have
been distributed by such Restricted Subsidiary during such period
to Terex or another Restricted Subsidiary as a dividend or other
distribution (subject, in the case of a dividend to another
Restricted Subsidiary, to the limitation contained in this
clause); and
(B) Terex's equity in a net loss of any such Restricted Subsidiary
for such period shall be included in determining such
Consolidated Net Income;
(4) any gain or loss realized upon the sale or other disposition of any
assets of Terex, its consolidated Subsidiaries or any other Person
which is not sold or otherwise disposed of in the ordinary course of
business and any gain (but not loss) realized upon the sale or other
disposition of any Capital Stock of any Person;
(5) any extraordinary, unusual or non-recurring gain or loss; and
(6) cumulative effect of a change in accounting principles.
"Currency Exchange Protection Agreement" means, in respect of any Person,
any foreign exchange contract, currency swap agreement, currency option or other
similar agreement or arrangement designed to protect such Person against
fluctuations in currency exchange rates.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Designated Senior Indebtedness" means
(1) the Bank Indebtedness for so long as it is outstanding; and
(2) any other Senior Indebtedness which, at the date of determination, has
an aggregate principal amount outstanding of, or under which, at the
date of determination, the holders thereof are committed to lend up
to, at least $20.0 million and is specifically designated by Terex in
the instrument evidencing or governing such Senior Indebtedness as
"Designated Senior Indebtedness" for purposes of the Indenture.
"Disqualified Stock" of a Person, with respect to any Person, any Capital
Stock which by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable at the option of the holder) or upon
the happening of any event
(1) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise;
(2) is convertible or exchangeable at the option of the holder for
Indebtedness or Disqualified Stock; or
(3) is mandatorily redeemable or must be purchased, upon the occurrence of
certain events or otherwise, in whole or in part in each case on or
prior to the first anniversary of the Stated Maturity of the Notes;
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provided, however, that any Capital Stock that would not constitute
Disqualified Stock but for provisions thereof giving holders thereof the right
to require such Person to purchase or redeem such Capital Stock upon the
occurrence of an "asset sale" or "change of control" occurring prior to the
first anniversary of the Stated Maturity of the Notes shall not constitute
Disqualified Stock if
(1) the "asset sale" or "change of control" provisions applicable to such
Capital Stock are not more favorable to the holders of such Capital
Stock than the terms applicable to the Notes and described under the
captions "-Certain Covenants -Limitation on Asset Dispositions" and
"-Change of Control"; and
(2) any such requirement only becomes operative after compliance with such
terms applicable to the Notes, including the purchase of any Notes
tendered pursuant thereto.
"EBITDA" for any period means the sum of Consolidated Net Income plus the
following to the extent deducted in calculating such Consolidated Net Income:
(1) all income tax expense of Terex and its consolidated Restricted
Subsidiaries;
(2) Consolidated Interest Expense;
(3) depreciation expense and amortization expense of Terex and its
consolidated Restricted Subsidiaries (excluding amortization expense
attributable to a prepaid cash item that was paid in a prior period);
and
(4) all other non-cash items of Terex and its consolidated Restricted
Subsidiaries (excluding any such non-cash charge to the extent that it
represents an accrual of or reserve for cash expenditures in any
future period reducing Consolidated Net Income, less all non-cash
items increasing Consolidated Net Income);
in each case for such period. Notwithstanding the foregoing, the provision for
taxes based on the income or profits of, and the depreciation and amortization
of, a Restricted Subsidiary of Terex shall be added to Consolidated Net Income
to compute EBITDA only to the extent (and in the same proportion) that the net
income of such Restricted Subsidiary was included in calculating Consolidated
Net Income and only if a corresponding amount would be permitted at the date of
determination to be dividended to Terex by such Restricted Subsidiary without
prior approval (that has not been obtained), pursuant to the terms of its
charter and all agreements, instruments, judgments, decrees, orders, statutes,
rules and governmental regulations applicable to such Restricted Subsidiary or
its stockholders.
"Existing Notes" means Terex's $150.0 million principal amount of 8-7/8%
Senior Subordinated Notes due 2008 issued under the Indenture, dated March 31,
1998, among Terex, the Subsidiary Guarantors and United States Trust Company of
New York, as trustee, as such may be amended or supplemented from time to time.
"Floor Plan Guarantees" means guarantees (including but not limited to
repurchase or remarketing obligations) by Terex or a Restricted Subsidiary
incurred in the ordinary course of business consistent with past practice of
Indebtedness incurred by a franchise dealer, or other purchaser or lessor, for
the purchase of inventory manufactured or sold by Terex or a Restricted
Subsidiary, the proceeds of which Indebtedness is used solely to pay the
purchase price of such inventory to such franchise dealer and any related
reasonable fees and expenses (including financing fees), provided, however, that
(1) to the extent commercially practicable, the Indebtedness so guaranteed
is secured by a perfected first priority Lien on such inventory in
favor of the holder of such Indebtedness; and
(2) if Terex or such Restricted Subsidiary is required to make payment
with respect to such guarantee, Terex or such Restricted Subsidiary
will have the right to receive either
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(A) title to the inventory,
(B) a valid assignment of a perfected first priority Lien in the
inventory, or
(C) the net proceeds of any resale of the inventory.
"GAAP" means generally accepted accounting principles as in effect on the
Issue Date set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as approved by a significant segment
of the accounting profession.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness or other obligation of any
other Person and any obligation, direct or indirect, contingent or otherwise, of
such Person
(1) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation of such other Person
(whether arising by virtue of partnership arrangements, or by
agreement to keep-well, to purchase assets, goods, securities or
services, to take-or-pay or to maintain financial statement conditions
or otherwise); or
(2) entered into for purposes of assuring in any other manner the obligee
of such Indebtedness or other obligation of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or in
part);
provided, however, that the term "Guarantee" shall not include
(1) endorsements for collection or deposit in the ordinary course of
business; or
(2) obligations, warranties and indemnities, not with respect to
Indebtedness of any Person, that have been or are undertaken or made
in the ordinary course of business or in connection with any Asset
Disposition permitted by the covenant described under the caption "C
Certain Covenants C Limitation on Asset Dispositions" and not for the
benefit of or in favor of an Affiliate of Terex or any of its
Subsidiaries.
The term "Guarantee" used as a verb has a corresponding meaning.
"Hedging Obligations" of any Person means the obligations of such Person
pursuant to any Interest Rate Protection Agreement or Currency Exchange
Protection Agreement or other similar agreement or arrangement involving
interest rates, currencies, commodities or otherwise.
"Incur" means issue, assume, Guarantee, incur or otherwise become liable
for, directly or indirectly, or otherwise become responsible for, contingently
or otherwise; provided, however, that any Indebtedness or Capital Stock of a
Person existing at the time such Person becomes a Restricted Subsidiary (whether
by merger, consolidation, acquisition or otherwise) shall be deemed to be
Incurred by such Restricted Subsidiary at the time it becomes a Restricted
Subsidiary; provided, further, that any amendment, modification or waiver of any
provision of any document pursuant to which Indebtedness was previously Incurred
shall not be deemed to be an Incurrence of Indebtedness as long as such
amendment, modification or waiver does not
(1) increase the principal or premium thereof or interest rate thereon;
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(2) change to an earlier date the Stated Maturity thereof or the date of
any scheduled or required principal payment thereon or the time or
circumstances under which such Indebtedness may or shall be redeemed;
or
(3) if such Indebtedness is contractually subordinated in right of payment
to the Notes, modify or affect, in any manner adverse to the holders,
such subordination.
The term "Incurrence" when used as a noun shall have a correlative meaning.
The accretion of principal of a non-interest bearing or other discount security
shall not be deemed the Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication) and whether or not contingent:
(1) the principal of and premium (if any such premium is then due and
owing) in respect of
(A) indebtedness of such Person for money borrowed; and
(B) indebtedness evidenced by notes, debentures, bonds or other
similar instruments for the payment of which such Person is
responsible or liable;
(2) all Capitalized Lease Obligations of such Person;
(3) all obligations of such Person issued or assumed as the deferred
purchase price of property, all conditional sale obligations of such
Person and all obligations of such Person under any title retention
agreement (but excluding trade accounts payable arising in the
ordinary course of business);
(4) all obligations of such Person for the reimbursement of any obligor on
any letter of credit, banker's acceptance or similar credit
transaction;
(5) the amount of all obligations of such Person with respect to the
redemption, repayment or other repurchase of any Disqualified Stock of
such Person (but excluding, in each case, any accrued dividends);
(6) all obligations of the type referred to in clauses (1) through (5) of
other Persons and all dividends of other Persons for the payment of
which, in either case, such Person is responsible or liable, directly
or indirectly, as obligor, guarantor or otherwise, including by means
of any Guarantee;
(7) all obligations of the type referred to in clauses (1) through (6) of
other Persons secured by any Lien on any property or asset of such
Person (whether or not such obligation is assumed by such Person), the
amount of such obligation being deemed to be the lesser of the value
of such property or assets or the amount of the obligation so secured;
and
(8) to the extent not otherwise included in this definition, Hedging
Obligations of such Person.
For purposes of this definition, the obligation of such person with respect
to the redemption, repayment or repurchase price of any Disqualified Stock that
does not have a fixed redemption, repayment or repurchase price shall be
calculated in accordance with the terms of such Disqualified Stock as if such
Disqualified Stock were redeemed, repaid or repurchased on any date on which
Indebtedness shall be required to be determined pursuant to the Indenture;
provided, however, that such accretion shall not be deemed an Incurrence of
Indebtedness.
"Interest Rate Protection Agreement" means, in respect of any Person, any
interest rate swap agreement, interest rate option agreement, interest rate cap
agreement, interest rate collar agreement, interest rate floor agreement or
other similar agreement or arrangement designed to protect such Person against
fluctuations in interest rates.
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"Investment" by any Person in any other Person means any direct or indirect
advance, loan (other than advances to customers or suppliers in the ordinary
course of business that are recorded as accounts receivable on the balance sheet
of such former Person) or other extension of credit (including by way of
Guarantee or similar arrangement) or capital contribution to (by means of any
transfer of cash or other property to others or any payment for property or
services for the account or use of others), or any purchase or acquisition of
Capital Stock, Indebtedness or other similar instruments issued by such latter
Person that are or would be classified as investments on a balance sheet of such
former Person prepared in accordance with GAAP. In determining the amount of any
Investment in respect of any property or assets other than cash, such property
or asset shall be valued at its fair market value at the time of such Investment
(unless otherwise specified in this definition), as determined in good faith by
the Board of Directors. For purposes of the definition of "Unrestricted
Subsidiary", the definition of "Restricted Payment" and the covenant described
under the caption "-Certain Covenants - Limitation on Restricted Payments,"
(1) "Investment" shall include the portion (proportionate to Terex's
equity interest in such Subsidiary) of the fair market value of the
net assets of any Subsidiary of Terex at the time that such Subsidiary
is designated an Unrestricted Subsidiary; provided, however, that upon
a redesignation of such Subsidiary as a Restricted Subsidiary, Terex
shall be deemed to continue to have a permanent "Investment" in an
Unrestricted Subsidiary equal to an amount (if positive) equal to (x)
Terex's "Investment" in such Subsidiary at the time of such
redesignation less (y) the portion (proportionate to Terex's equity
interest in such Subsidiary) of the fair market value of the net
assets of such Subsidiary at the time of such redesignation; and
(2) any property transferred to or from an Unrestricted Subsidiary shall
be valued at its fair market value at the time of such transfer, in
each case as determined in good faith by the Board of Directors.
Notwithstanding the foregoing, in no event shall any issuance of Capital
Stock (other than Preferred Stock or Disqualified Stock, or Capital Stock
exchangeable, exercisable or convertible for any of the foregoing) of the
Company in exchange for Capital Stock, property or assets of another Person
constitute an Investment by the Company in such Person.
"Lenders" has the meaning specified in the Bank Credit Facility.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"Net Available Cash" from an Asset Disposition means the aggregate amount
of cash received in respect of an Asset Disposition (including any cash payments
received by way of deferred payment of principal pursuant to a note or
installment receivable or otherwise, but only as and when received, but
excluding any other consideration received in the form of assumption by the
acquiring person of Indebtedness or other obligations relating to such
properties or assets or received in any other noncash form) therefrom, in each
case net of
(1) all legal, title and recording tax expenses, commissions and other
fees and expenses incurred, and all Federal, state, provincial,
foreign and local taxes required to be paid or accrued as a liability
under GAAP as a consequence of such Asset Disposition;
(2) all payments made on any Indebtedness which is secured by any assets
subject to such Asset Disposition, in accordance with the terms of any
Lien upon such assets, or which must by its terms, or in order to
obtain a necessary consent to such Asset Disposition, or by applicable
law, be repaid out of the proceeds from such Asset Disposition;
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(3) all distributions and other payments required to be made to minority
interest holders in Restricted Subsidiaries or joint ventures as a
result of such Asset Disposition;
(4) the deduction of reasonable amounts to be provided by the seller as a
reserve, in accordance with GAAP, against any liabilities associated
with the assets disposed of in such Asset Disposition and retained by
Terex or any Restricted Subsidiary after such Asset Disposition
including, without limitation, pension and other post-employment
benefit liabilities, liabilities related to environmental matters and
liabilities under any indemnification obligations associated with such
Asset Dispositions, all as determined in conformity with GAAP.
Further, with respect to an Asset Disposition by a Subsidiary which is not
a Wholly Owned Subsidiary, Net Available Cash shall be reduced pro rata for the
portion of the equity of such Subsidiary which is not owned by Terex.
"Net Cash Proceeds," with respect to any issuance or sale of Capital Stock,
means the cash proceeds of such issuance or sale plus, in the case of an
issuance of Capital Stock upon any exercise, exchange or conversion of
securities (including options, warrants, rights and convertible exchangeable
debt), of Terex that were issued for cash on or after March 31, 1998, the amount
of cash originally received by Terex upon the issuance of such securities
(including options, warrants, rights and convertible or exchangeable debt), net
of attorneys' fees, accountants' fees, printing costs, underwriters' or
placement agents' fees, discounts or commissions and brokerage stock exchange
listing fees, consultant and other fees actually incurred in connection with
such issuance or sale and net of taxes paid or payable as a result thereof.
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, the President or a Vice President, and by the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary, of Terex and delivered to
the Trustee.
"Opinion of Counsel" means a written opinion of counsel reasonably
acceptable to the Trustee, which may be an employee of or counsel for Terex.
"Permitted Investment" means an Investment in
(1) Terex or a Wholly Owned Subsidiary or a Person which will, upon the
making of such Investment, become a Wholly Owned Subsidiary; provided,
however, that the primary business of such Wholly Owned Subsidiary is
a Related Business;
(2) another Person, if as a result of such Investment such other Person is
merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, Terex or a Wholly Owned Subsidiary;
provided, however, that such Person's primary business is a Related
Business;
(3) cash equivalents;
(4) receivable owing to Terex or any Restricted Subsidiary if created or
acquired in the ordinary course of business;
(5) loans or advances to employees made in the ordinary course of business
consistent with past practices of Terex or such Restricted Subsidiary;
(6) stock, obligations or securities received in settlement of debts
created in the ordinary course of business and owing to Terex or any
Restricted Subsidiary or in satisfaction of judgments;
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(7) any Person to the extent such Investment represents the non-cash
portion of the consideration received for a permitted Asset
Disposition;
(8) so long as no Default has occurred and is continuing (or would result
therefrom), any Person made with the proceeds of a substantially
concurrent sale of Capital Stock (other than Disqualified Stock) of
the Company;
(9) in an aggregate amount not to exceed $3 million, in an Unrestricted
Subsidiary formed primarily for the purposes of financing purchases
and leases of inventory manufactured by Terex or any Restricted
Subsidiary; and
(10) Floor Plan Guarantees.
Notwithstanding the foregoing, the Company or any Restricted Subsidiary may
also make other Investments that do not exceed in the aggregate $10 million at
any one time outstanding.
"Permitted Liens" means, with respect to any Person,
(1) pledges or deposits by such Person under workmen's compensation laws,
unemployment insurance laws or similar legislation, or good faith
deposits in connection with bids, tenders, contracts (other than for
the payment of Indebtedness) or leases to which such Person is a
party, or deposits to secure public or statutory obligations of such
Person or deposits or cash or United States government bonds to secure
surety or appeal bonds to which such Person is a party, or deposits as
security for contested taxes or import duties or for the payment of
rent, in each case Incurred in the ordinary course of business;
(2) Liens imposed by law, including carriers', warehousemen's and
mechanics' Liens, in each case for sums not yet due or being contested
in good faith by appropriate proceedings, or other Liens arising out
of judgments or awards against such Person with respect to which such
Person shall then be proceeding with an appeal or other proceedings
for review;
(3) Liens for taxes, assessments or other governmental charges not yet
subject to penalties for non-payment or which are being contested in
good faith by appropriate proceedings provided appropriate reserves
have been taken on the books of Terex;
(4) Liens to secure the performance of statutory obligations or in favor
of issuers of surety bonds or letters of credit issued pursuant to the
request of and for the account of such Person in the ordinary course
of its business; provided, however, that such letters of credit do not
constitute Indebtedness;
(5) Liens securing Hedging Obligations so long as the related Indebtedness
is, and is permitted to be under the Indenture, secured by a Lien on
the same property securing the Interest Rate Protection Agreement;
(6) Liens for the purpose of securing the payment (or the refinancing of
the payment) of all or a part of any purchase money Indebtedness
relating to assets or property acquired or constructed in the ordinary
course of business; provided that (x) the aggregate principal amount
of Indebtedness secured by such Liens shall not exceed the cost of the
assets or property so acquired or constructed and (y) such Liens shall
not encumber any other assets or property of Terex or any Restricted
Subsidiary other than such Assets or property and assets affixed or
appurtenant thereto;
(7) Liens arising from precautionary Uniform Commercial Code financing
statement filings regarding operating leases entered into by Terex and
its Subsidiaries in the ordinary course of business;
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(8) Liens in favor of Terex and/or any of its Restricted Subsidiaries,
other than such a Lien with respect to intercompany indebtedness if
Terex or a Subsidiary Guarantor is not the beneficiary of such a Lien;
(9) Liens securing Indebtedness of a Person existing at the time that such
Person is acquired by, merged into or consolidated with Terex or any
Restricted Subsidiary; provided, however, that the Liens were not
incurred in connection with, or in contemplation of, such acquisition,
merger or consolidation, and do not extend to any property or assets
other than those of such Person;
(10) Liens on property or assets existing at the time of acquisition
thereof by Terex or any Restricted Subsidiary; provided, however, that
such Liens were not incurred in connection with, or in contemplation
of, such acquisition, and do not extend to any other property or
assets;
(11) Liens existing on March 31, 1998;
(12) Liens arising from the rendering of a final judgement or order against
the Company or any Restricted Subsidiary that does not give rise to a
Default;
(13) encumbrances consisting of zoning restrictions, surety exceptions,
utility easements, licenses, rights of way, easements of ingress or
egress over property of Terex or any Restricted Subsidiary, rights or
restrictions of record on the use of real property, minor defects in
title, landlords' and lessors' liens under leases on property located
on the rented premises, in each case not interfering in any material
respect with the ordinary conduct of the business of Terex and the
Restricted Subsidiaries;
(14) Liens securing Senior Indebtedness;
(15) Liens with respect to Floor Plan Guarantees; and
(16) any extension, renewal, refinancing, refunding or replacement of any
Permitted Lien, provided that the new Lien is limited to the property
or assets that secured (or under the arrangement under which the
original Permitted Lien, could secure) the obligations to which the
Liens relate.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof or any
other entity.
"Preferred Stock," as applied to the Capital Stock of any Person, means
Capital Stock of any class or classes (however designated) which is preferred as
to the payment of dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such Person, over shares
of Capital Stock of any other class of such Person.
"Public Equity Offering" means an underwritten primary public offering of
common stock (other than Disqualified Stock) of Terex pursuant to an effective
registration statement under the Securities Act and which results in gross
proceeds to Terex of at least $50 million.
"Refinance" means, in respect of any Indebtedness, to refinance, extend,
renew, refund, repay, prepay, redeem, defease or retire, or to issue other
Indebtedness in exchange or replacement for, the indebtedness. "Refinanced" and
"Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that refunds, refinances,
replaces, renews, repays or extends (including pursuant to any defeasance or
discharge mechanism) (collectively, "refinances," and "refinanced" shall have a
correlative meaning) any Indebtedness existing on the Issue Date or Incurred in
compliance with the Indenture (including Indebtedness of Terex that refinances
Indebtedness of any Restricted Subsidiary and Indebtedness of any Restricted
Subsidiary that refinances Indebtedness of another Subsidiary) including
Indebtedness that refinances Refinancing Indebtedness; provided, however, that
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(1) the Refinancing Indebtedness has Stated Maturity no earlier than any
Stated Maturity of the Indebtedness being refinanced;
(2) the Refinancing Indebtedness has an Average Life at the time such
Refinancing Indebtedness is Incurred that is equal to or greater than
the Average Life of the Indebtedness being refinanced; and
(3) such Refinancing Indebtedness has an aggregate principal amount (or if
issued with original issue discount, an aggregate issue price) that is
equal to or less than the sum of (x) the aggregate principal amount
(or if issued with original issue discount, the aggregate accreted
value) then outstanding or committed (plus unpaid interest) of the
Indebtedness being refinanced, plus fees and expenses incurred in
connection with the refinancing;
provided further, however, that (x) Refinancing Indebtedness shall not include
(1) Indebtedness of a Subsidiary that is not a Subsidiary Guarantor that
Refinances Indebtedness of Terex or (2) Indebtedness of Terex or a Restricted
Subsidiary that Refinances Indebtedness of an Unrestricted Subsidiary, (y) if
the Indebtedness being Refinanced is not Senior Indebtedness, then such
Refinancing Indebtedness shall rank no more senior than, and shall be at least
as subordinated in right of payment, to the Notes as the Indebtedness being
Refinanced, and (z) Refinancing Indebtedness shall be secured only by assets of
a similar type and in a similar amount to those that secured the Indebtedness so
refinanced.
"Registration Rights Agreement" means the Registration Rights Agreement
dated March 9, 1999, between Terex and Credit Suisse First Boston Corporation
and CIBC Oppenheimer Corp.
"Related Business" means any business in the manufacture or sale of capital
goods or parts or services, or otherwise reasonably related, ancillary or
complementary to the business of Terex and its Restricted Subsidiaries on March
31, 1998.
"Representative" means the trustee, agent or other representative (if any)
for an issue of Senior Indebtedness.
"Restricted Payment" with respect to any Person means
(1) the declaration or payment of any dividends or any other distributions
of any sort in respect of its Capital Stock (including any payment in
connection with any merger or consolidation involving such Person) or
similar payment to the direct or indirect holders of its Capital Stock
(other than dividends or distributions payable solely in its Capital
Stock (other than Disqualified Stock) and dividends or distributions
payable solely to Terex or a Wholly Owned Subsidiary);
(2) the purchase, redemption or other acquisition or retirement for value
of any Capital Stock of Terex, any Restricted Subsidiary or any
Affiliate of Terex;
(3) the purchase, repurchase, redemption, defeasance or other acquisition
or retirement for value, prior to scheduled maturity, scheduled
repayment or scheduled sinking fund payment of any Subordinated
Obligations; or
(4) the making of any Investment in any Person (other than Permitted
Investment).
"Secured Indebtedness" means any Indebtedness of Terex or any Subsidiary
Guarantor secured by a Lien.
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"Senior Indebtedness" means with respect to Terex or any Subsidiary
Guarantor
(1) all Bank Indebtedness; and
(2) any other Indebtedness of Terex and the Subsidiary Guarantors that by
the terms of the instrument creating or evidencing the Indebtedness is
expressly superior in right of payment to the Notes or the applicable
Subsidiary Guarantee;
provided, however, that Senior Indebtedness shall not include
(1) any liability for Federal, state, local or other taxes;
(2) any accounts payable or other liability to trade creditors arising in
the ordinary course of business (including guarantees thereof or
instruments evidencing such liabilities);
(3) any Indebtedness, Guarantee or obligation of Terex or a Subsidiary
Guarantor which is subordinate or junior in any respect to any other
Indebtedness, Guarantee or obligation of Terex or such Subsidiary
Guarantor;
(4) that portion of any Indebtedness which at the time of issuance is
issued in violation of the Indenture;
(5) Indebtedness represented by Disqualified Stock; and
(6) Capitalized Lease Obligations.
"Senior Subordinated Indebtedness" means the Notes and any other
Indebtedness of Terex or a Subsidiary Guarantor that specifically provides that
such Indebtedness is to rank pari passu with the Notes or the applicable
Subsidiary Guarantee in right of payment and is not subordinated by its terms in
right of payment to any Indebtedness or other obligation of Terex or such
Subsidiary Guarantor which is not Senior Indebtedness.
"Significant Subsidiary" means a Subsidiary of Terex that is a "significant
subsidiary" as defined in Rule 1-02 of Regulation S-X promulgated under the
Securities Act and the Exchange Act.
"Stated Maturity" means, with respect to any security, the date specified
in such security as the fixed date on which the payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency beyond the control of the issuer unless such contingency has
occurred).
"Subordinated Obligation" means any Indebtedness of Terex or a Subsidiary
Guarantor (whether outstanding on the Issue Date or thereafter incurred) that is
contractually subordinated or junior in right of payment to the Notes or the
applicable Subsidiary Guarantee pursuant to a written agreement.
"Subsidiary" of any Person means
(a) any corporation, association, partnership or other business entity of
which more than 50% of the total voting power of shares of Voting Stock is at
the time owned or controlled, directly or indirectly, by
(1) such Person,
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(2) such Person and one or more Subsidiaries of such Person, or
(3) one or more Subsidiaries of such Person; or
(b) any limited partnership of which Terex or any Subsidiary is a general
partner; or
(c) any other Person (other than a corporation or limited partnership) in
which Terex, or one or more other Subsidiaries, directly or
indirectly, has more than 50% of the outstanding partnership or
similar interests or has the power, by contract or otherwise, to
direct or cause the direction of the policies, management and affairs
thereof.
Unless the context requires otherwise, "Subsidiary" shall refer to a
Subsidiary of Terex.
"Subsidiary Guarantee" means a Guarantee by a Subsidiary Guarantor of
Terex's obligations with respect to the Notes.
"Subsidiary Guarantor" means any Subsidiary of Terex that Guarantees
Terex's obligations with respect to the Notes.
"Unrestricted Subsidiary" means (other than a Subsidiary Guarantor)
designated as such as described under "Limitation on Designations of
Unrestricted Subsidiaries." Any such designation may be revoked by a resolution
of the Board of Directors of the Company delivered to the Trustee, subject to
the provisions of such covenant.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable at the issuer's option.
"Voting Stock" of a Person means all classes of Capital Stock of such
Person of the class or classes pursuant to which the holders thereof have the
general voting power under ordinary circumstances to elect at least a majority
of the board of directors, managers or trustees of such Person (irrespective of
whether or not at the time stock of any other class or classes shall have or
might have voting power by reason of the happening of any contingency).
"Wholly Owned Subsidiary" means (i) a Restricted Subsidiary all the Capital
Stock of which (other than directors' qualifying shares and shares held by other
Persons to the extent such shares are required by applicable law to be held by a
Person other than Terex or a Restricted Subsidiary) is owned by Terex or one or
more Wholly Owned Subsidiaries and (ii) each of Terex Cranes, Inc., P.P.M.
Cranes, Inc., P.P.M. S.A., and any future wholly owned subsidiaries of any of
the foregoing, in each case so long as 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) March 31, 1998 or (b) the date such entity is incorporated or acquired by
Terex or one or more Wholly Owned Subsidiaries.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following summary describes the material United States federal income
tax consequences of the ownership and disposition of the New Notes by U.S.
Holders (as defined below) who acquire such securities in the Exchange Offer
(the "Initial U.S. Holders"). This summary is based on the Internal Revenue Code
of 1986, as amended to the date hereof (the "Code"), administrative
pronouncements, judicial decisions and existing and proposed Treasury
Regulations, changes to any of which subsequent to the date of this Prospectus
may affect the tax consequences described herein. This summary discusses only
Notes held as capital assets within the meaning of Section 1221 of the Code. It
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<PAGE>
does not discuss all of the tax consequences that may be relevant to a holder in
light of his particular circumstances or to holders subject to special rules,
such as persons who are not U.S. Holders (as defined below) or Initial U.S.
Holders, certain financial institutions, insurance companies, tax-exempt
entities, dealers in securities or foreign currency and holders who hold the
Notes as part of a straddle, hedging, conversion or other integrated
transaction. Holders of Notes should consult their tax advisors with regard to
the application of the United States federal income tax laws to their particular
situations as well as any tax consequences arising under the laws of any state,
local or foreign taxing jurisdiction.
As used herein, the term "U.S. Holder" means a beneficial owner of a Note
that, for United States federal income tax purposes, is (i) a citizen or
resident of the United States, (ii) a corporation, partnership or other entity
created or organized in or under the laws of the United States or of any
political subdivision thereof, (iii) an estate the income of which is subject to
United States federal income taxation regardless of its source, or (iv) a trust,
if a U.S. court is able to exercise primary supervision over the administration
of such trust and one or more U.S. fiduciaries have the authority to control all
substantial decisions of such trust.
Exchange Offer
The exchange of Old Notes for New Notes pursuant to the Exchange Offer will
not result in any federal income tax consequences to U.S. Holders. When a U.S.
Holder exchanges an Old Note for a New Note pursuant to the Exchange Offer, the
U.S. Holder will have the same adjusted basis and holding period in the New Note
as in the Old Note immediately before the exchange. There will be no federal
income tax consequences of the Exchange Offer to nonexchanging Holders.
Payment of Interest
Stated interest paid on a New Note will generally be taxable as ordinary
income at the time it accrues or is received in accordance with the U.S.
Holder's method of accounting for federal income tax purposes. In addition, a U.
S. Holder will be required to report, as interest income, "original issue
discount" on the New Notes, identical to the original issue discount on the Old
Notes.
Sale, Exchange or Redemption
Upon the sale, exchange or redemption of a New Note, a U.S. Holder will
recognize taxable gain or loss equal to the difference between the amount
realized on the sale, exchange or redemption (excluding amounts attributable to
accrued and unpaid interest, which amounts will be includible as ordinary
interest income) and such U.S. Holder's tax basis in the New Note. Gain or loss
realized on the sale, exchange or redemption or a New Note will be capital gain
or loss. Capital gains or losses recognized on New Notes held more than one year
(including the period of ownership of the Old Notes) will be treated as
long-term capital gains or losses. The deduction of capital losses is subject to
certain limitations. Investors should consult their tax advisors regarding the
treatment of capital gains and losses.
THE FOREGOING IS A SUMMARY OF THE PRINCIPAL FEDERAL INCOME TAX CONSEQUENCES
TO A U.S. HOLDER OF A NEW NOTE. EACH HOLDER OF AN OLD NOTE IS URGED TO CONSULT
ITS TAX ADVISOR TO DETERMINE THE SPECIFIC FEDERAL INCOME TAX CONSEQUENCES OF
ACCEPTING THE EXCHANGE OFFER, AS WELL AS THE EFFECT OF STATE, LOCAL AND FOREIGN
INCOME AND OTHER TAX LAWS.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired as a result of market-making activities or other
trading activities. Terex and the Subsidiary Guarantors have agreed that, for a
period of 180 days after the Expiration Date, it will make this Prospectus, as
amended or supplemented, available to any broker-dealer for use in connection
with any such resale.
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Terex will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Notes. Any broker-dealer
that resells New Notes that were received by it for its own account pursuant to
the Exchange Offer and any broker or dealer that participates in a distribution
of such New Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act, and any profit on any such resale of New Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 90 days after the Expiration Date, Terex will send
additional copies of this Prospectus and any amendment or supplement to this
Prospectus to any broker-dealer that requests such documents in the Letter of
Transmittal.
Terex and the Subsidiary Guarantors have agreed to pay all expenses
incident to this Exchange Offer other than commissions or concessions of any
brokers or dealers and will indemnify the holders of the New Notes (including
any broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
LEGAL MATTERS
Certain legal matters with respect to the Notes offered hereby will be
passed upon for Terex by Robinson Silverman Pearce Aronsohn & Berman LLP, 1290
Avenue of the Americas, New York, New York 10104.
EXPERTS
The consolidated financial statements of Terex Corporation and PPM Cranes,
Inc. as of and for each of the three years in the period ended Decmeber 31, 1998
incorporated in this Prospectus by reference to the Annual Report on Form 10-K
of Terex Corporation have been so incorporated in reliance on the reports of
PricewaterhouseCoopers LLP, independent accountants, given on authority of said
firm as experts in auditing and accounting.
AVAILABLE INFORMATION
Terex is subject to the informational requirements of the Exchange Act, and
in accordance therewith files reports, proxy statements and other information
with the Commission. Such reports, proxy statements and other information may be
inspected and copied at the public reference facilities maintained by the
Commission at its offices at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the regional offices of the Commission located at
Seven World Trade Center, 13th Floor, New York, New York 10048 and at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such materials may also be obtained by mail from the
Public Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. Additionally, the Commission
maintains a Web site containing reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission. The address for such Web site is http://www.sec.gov.
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In addition, the Common Stock is listed on the NYSE under the symbol "TEX"
and reports, proxy statements and other information concerning Terex may also be
inspected at the offices of the NYSE, 20 Broad Street, New York, New York 10005.
Terex and the Subsidiary Gurantors have filed with the Commission a
Registration Statement on Form S-4 (together with all amendments, exhibits,
schedules, and supplements thereto, the "Registration Statement") under the
Securities Act, with respect to the New Notes offered hereby. This Prospectus,
which constitutes a part of the Registration Statement, does not contain all of
the information set forth in the Registration Statement, as permitted by the
rules and regulations of the Commission. For further information with respect to
Terex and the New Notes offered hereby, reference is hereby made to the
Registration Statement, which may be inspected and copied at the Public
Reference Section of the Commission referred to above. Statements contained in
this Prospectus as to the contents of any contract or other document are not
necessarily complete, and in each instance reference is made to the full text of
such contract or document filed as an exhibit to the Registration Statement, or
otherwise filed with the Commission, each such statement being qualified in all
respects by such reference.
Terex furnishes stockholders with annual reports containing audited
financial statements. Terex also furnishes its common stockholders with proxy
material for its annual meetings complying with the proxy requirements of the
Exchange Act.
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents which have been filed by Terex with the SEC are
incorporated in this Prospectus by reference:
1. Terex's Annual Report on Form 10-K for the year ended December 31,
1998.
2. Terex's Notice of Annual Meeting of Stockholders and Proxy Statement
dated April 1, 1999.
3. Terex's Current Report on Form 8-K dated March 1, 1999 and filed on
March 1, 1999.
4. Terex's Current Report on Form 8-K dated March 9, 1999 and filed on
March 10, 1999.
5. Terex's Quarterly Report on Form 10-Q for the three months ended March
31, 1999.
All reports and other documents filed by Terex with the SEC pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after
the date of this Prospectus and prior to the termination of the offering of the
Notes made hereby shall be deemed to be incorporated herein by reference and to
be a part hereof on and from the date of filing such documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
in this Prospectus shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or incorporated
herein by reference or in any other subsequently filed document that also is or
is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
Terex will provide without charge to each person to whom this Prospectus is
delivered, upon the written or oral request of such person, a copy of any and
all documents incorporated by reference in this Prospectus (not including
exhibits to such information, unless such exhibits are specifically incorporated
by reference in such information). Such requests should be directed to Terex
Corporation, Attention: Secretary, 500 Post Road East, Westport, Connecticut
06880 (telephone (203) 222-7170).
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law ("DGCL") and Article IX
of Terex's Restated By-laws provide for the indemnification of Terex's directors
and officers in a variety of circumstances, which may include liabilities under
the Securities Act.
Article IX of Terex's Restated By-laws generally requires Terex to
indemnify its officers and directors against all liabilities (including
judgments, settlements, fines and penalties) and reasonable expenses incurred in
connection with the investigation, defense, settlement or appeal of certain
actions, whether instituted by a third party or a stockholder (either directly
or indirectly) and including specifically, but without limitation, actions
brought under the Securities Act, and/or the Exchange Act; except that no such
indemnification will be permitted if such director or officer was not successful
in defending against any such action and it is determined that the director or
officer breached or failed to perform his or her duties to Terex, and such
breach or failure constitutes (i) a willful breach of his or her "duty of
loyalty", (ii) acts or omissions not in good faith or involving intentional
misconduct or a knowing violation of the law, (iii) a violation of Section 174
of the Delaware General Corporation Law, relating to prohibited dividends or
distributions or the repurchase or redemption of stock or (iv) a transaction
where such individual derived an improper financial profit (unless it is deemed
that such profit is immaterial in light of all of the circumstances)
(collectively, "Breach of Duty"). Notwithstanding the foregoing, subject to
certain exceptions, the Restated By-laws provide that directors or officers
initiating an action, are not entitled to indemnification.
The Restated By-laws also establish certain procedures by which (i) a
director or officer may request an advance on his or her reasonable expenses,
prior to the final disposition of an action, (ii) Terex may withhold an
indemnification payment from a director or officer, (iii) a director or officer
may be entitled to partial indemnification and (iv) a director or officer may
challenge Terex's denial to furnish him or her with requested indemnification.
Additionally, the Restated By-laws provide that the adverse termination of an
action against an officer or director, is not in and of itself sufficient to
create a presumption that a director or officer engaged in conduct constituting
a Breach of Duty.
Finally, Terex's Restated Certificate of Incorporation, as amended,
contains a provision which eliminates the personal liability of a director to
Terex and its stockholders for certain breaches of his or her fiduciary duty of
care as a director. This provision does not, however, eliminate or limit the
personal liability of a director (i) for any breach of such director's "duty of
loyalty" (as further defined therein) to Terex or its stockholders, (ii) for
acts or omissions not in "good faith" (as further defined therein) or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the DGCL, relating in general to the willful or negligent payment
of an illegal dividend or the authorization of an unlawful stock repurchase or
redemption, or (iv) for any transaction from which the director derived an
improper personal profit to the extent of such profit. This provision of the
Restated Certificate of Incorporation offers persons who serve on the Board of
Directors of Terex protection against awards of monetary damages resulting from
negligent (except as indicated above) and "grossly" negligent actions taken in
the performance of their duty of care, including grossly negligent business
decisions made in connection with takeover proposals for Terex. As a result of
this provision, the ability of Terex or a stockholder thereof to successfully
prosecute an action against a director for a breach of his duty of care has been
limited. However, the provision does not affect the availability of equitable
remedies such as an injunction or rescission based upon a director's breach of
his duty of care. Although the validity and scope of Section 145 of the DGCL has
not been tested in court, the Commission has taken the position that the
provision will have no effect on claims arising under the Federal securities
laws.
Terex maintains a directors' and officers' insurance policy which insures
the officers and directors of Terex from any claim arising out of an alleged
wrongful act by such persons in their respective capacities as officers and
directors of Terex.
II - 1
<PAGE>
Item 21. Exhibits and Financial Statement Schedules
(a) 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 Certificate of Elimination with respect to the Series B Preferred Stock
(incorporated by reference to Exhibit 4.3 to the Form 10-K for the year
ended December 31, 1998 of Terex Corporation, Commission File No. 1-10702).
3.3 Certificate of Amendment to Certificate of Incorporation of Terex
Corporation dated June 5, 1998 (incorporated by reference to Exhibit 3.3 to
the Form 10-K for the year ended December 31, 1998 of Terex Corporation,
Commission File No. 1-10702).
3.4 Amended and Restated Bylaws of Terex Corporation (incorporated by reference
to Exhibit 3.2 to the Form 10-K for the year ended December 31, 1998 of
Terex Corporation, Commission File No. 1-10702).
4.1 Warrant Agreement dated as of December 20, 1993 between Terex Corporation
and Mellon Securities Trust Company, as Warrant Agent (incorporated by
reference to Exhibit 4.40 to the Form S-1 Registration Statement of Terex
Corporation, Registration No. 33-52297).
4.2 Form of Series A Warrant (incorporated by reference to Exhibit 4.41 to the
Form S-1 Registration Statement of Terex Corporation, Registration No.
33-52297).
4.3 Indenture dated as of March 31, 1998 among Terex Corporation, the
Guarantors named therein and United States Trust Company of New York, as
Trustee (incorporated by reference to Exhibit 4.6 of Amendment No. 1 to the
Form S-4 Registration Statement of Terex Corporation, Registration No.
333-53561).
4.4 First Supplemental Indenture dated as of September 23, 1998 among Terex
Corporation, the Guarantors named therein and United States Trust Company
of New York, as Trustee.*
4.5 Second Supplemental Indenture dated as of April 1, 1999 among Terex
Corporation, the Guarantors named therein and United states Trust Company
of New York, as Trustee.*
4.6 Indenture dated as of March 9, 1999 among Terex Corporation, the Guarantors
named therein and United States Trust Company of New York, as Trustee
(incorporated by reference to Exhibit 4.4 to the Form 10-K for the year
ended December 31, 1998 of Terex Corporation, Commission File No. 1-10702).
4.7 First Supplemental Indenture dated as of April 1, 1999 among Terex
Corporation, the Guarantors named therein and United States Trust Company
of New York, as Trustee.*
5.1 Opinion of Robinson Silverman Pearce Aronsohn & Berman LLP re: legality of
the Notes.**
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 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).
10.6 SAR Registration Rights Agreement dated as of May 9, 1995 among the Company
and the Purchasers, as defined therein (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).
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<PAGE>
10.7 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).
10.8 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 Form 8-K Current Report, Commission File No. 1-10702, dated and
filed with the Commission on December 11, 1996).
10.9 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).
10.10 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 (incorporated by reference to Exhibit
10.13 to the Form 10-K for the year ended December 31, 1998 of Terex
Corporation, Commission File No. 1-10702).
10.11 Guarantee Agreement dated as of March 6, 1998 of Terex Corporation and
Credit Suisse First Boston, as Collateral Agent (incorporated by
reference to Exhibit 10.14 to the Form 10-K for the year ended December
31, 1998 of Terex Corporation, Commission File No. 1-10702).
10.12 Guarantee Agreement dated as of March 6, 1999 of Terex Corporation,
each of the subsidiaries of Terex Corporation listed therein and Credit
Suisse First Boston, as Collateral Agent (incorporated by reference to
Exhibit 10.15 to the Form 10-K for the year ended December 31, 1998 of
Terex Corporation, Commission File No. 1-10702).
10.13 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 (incorporated by reference to
Exhibit 10.16 to the Form 10-K for the year ended December 31, 1998 of
Terex Corporation, Commission File No. 1-10702).
10.14 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 (incorporated by reference to
Exhibit 10.17 to the Form 10-K for the year ended December 31, 1998 of
Terex Corporation, Commission File No. 1-10702).
10.15 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 (incorporated by reference to
Exhibit 10.18 to the Form 10-K for the year ended December 31, 1998 of
Terex Corporation, Commission File No. 1-10702).
10.16 Share Purchase Agreement dated December 18, 1997 between O&K AG and
Terex Mining Equipment, Inc. (incorporated by reference to Exhibit
10.19 to the Form 10-K for the year ended December 31, 1998 of Terex
Corporation, Commission File No. 1-10702).
10.17 Amendment No. 1 to 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 and Collateral
Agent (incorporated by reference to Exhibit 10.17 to the Form 10-K for
the year ended December 31, 1998 of Terex Corporation, Commission File
No. 1-10702).
10.18 Amendment No. 2 to 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 and Collateral
Agent (incorporated by reference to Exhibit 10.18 to the Form 10-K for
the year ended December 31, 1998 of Terex Corporation, Commission File
No. 1-10702).
10.19 Amendment No 3 to 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 and Collateral
Agent (incorporated by reference to Exhibit 10.19 to the Form 10-K for
the year ended December 31, 1998 of Terex Corporation, Commission File
No. 1-10702).
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<PAGE>
10.20 Purchase Agreement dated as of March 9, 1999 among the Company and the
Initial Purchasers, as defined therein (incorporated by reference to
Exhibit 10.20 to the Form 10-K for the year ended December 31, 1998 of
Terex Corporation, Commission File No. 1-10702).
10.21 Registration Rights Agreement dated as of March 9, 1999 among the
Company and the Purchasers, as defined therein (incorporated by
reference to Exhibit 10.21 to the Form 10-K for the year ended December
31, 1998 of Terex Corporation, Commission File No. 1-10702).
12.1 Calculation of Ratio of Earnings to Fixed Charges.**
21.1 Subsidiaries of Terex Corporation.*
23.1 Independent Accountants' Consent of PricewaterhouseCoopers LLP,
Stamford, Connecticut.**
23.2 Consent of Robinson Silverman Pearce Aronsohn & Berman LLP (included as
part of Exhibit 5.1).
24.1 Power of Attorney. *
25.1 Statement of Eligibility of United States Trust Company of New York as
Trustee on Form T-1. **
99.1 Form of Letter of Transmittal.*
99.2 Form of Notice of Guaranteed Delivery.*
- ------------------
* Previously Filed.
** Filed herewith.
II - 4
<PAGE>
Terex Corporation
Report of PricewaterhouseCoopers LLP (included as part of Exhibit 23.1)
Schedule II -- Valuation and Qualifying Accounts and Reserves S-1
All other schedules are omitted as the required information is inapplicable
or the information is presented in the consolidated financial statements or
related notes.
Item 22. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement: (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) to
reflect in the prospectus any facts or events arising after the effective date
of the registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement; (iii) to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
Terex pursuant to the foregoing provisions, or otherwise, Terex has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by Terex of expenses incurred or paid
by a director, officer or controlling person of Terex in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, Terex
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
(c) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this Form,
within one business day of receipt of such requests, and to send the
incorporated documents by first-class mail or other equally prompt means. This
includes information contained in documents filed subsequent to the effective
date of the registration statement through the date of responding to the
request.
(d) To supply by means of a post-effective amendment all information
concerning a transaction, and Terex being acquired involved therein, that was
not the subject of and included in the registration statement when it became
effective.
The undersigned Registrant hereby further undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Westport, Connecticut,
on June 9, 1999.
TEREX CORPORATION
By: /s/Ronald M. DeFeo
----------------------
Name: Ronald M. DeFeo
Title: Chairman, President,
Chief Executive Officer
and Chief Operating Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
Name and Signature Title Date
/s/ Ronald M. DeFeo Chairman, Chief Executive June 9, 1999
- ----------------------- Officer and Director
Ronald M. DeFeo (Principal Executive Officer)
/s/ Joseph F. Apuzzo Vice President-Corporate Finance June 9, 1999
- ----------------------- (Principal Financial Officer)
Joseph F. Apuzzo
/s/ Kevin O'Reilly Controller June 9, 1999
- ----------------------- (Principal Accounting Officer)
Kevin M. O'Reilly
Director June 9, 1999
- -----------------------
G. Chris Andersen *
Director
- -----------------------
Don DeFosset
Director June 9, 1999
- -----------------------
William H. Fike *
Director June 9, 1999
- -----------------------
Donald P. Jacobs*
Director June 9, 1999
- -----------------------
Marvin B. Rosenberg *
Director June 9, 1999
- -----------------------
David A. Sachs *
* By: /s/ Eric I Cohen
-----------------
Eric I Cohen, As Attorney-in-Fact
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Westport, Connecticut,
on June 9, 1999.
TEREX CRANES, INC.
By: /s/Eric I Cohen
--- ---------------
Name: Eric I Cohen
Title: Vice President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Title Date
President June 9, 1999
- -------------------- (Principal Executive Officer)
Fil Filipov *
/s/ Joseph F. Apuzzo Vice President June 9, 1999
- -------------------- and Director
Joseph F. Apuzzo (Principal Financial
and Accounting Officer)
/s/ Eric I Cohen Vice President, Secretary June 9, 1999
- -------------------- and Director
Eric I Cohen
/s/ Ronald M. DeFeo Director June 9, 1999
- --------------------
Ronald M. DeFeo
* By: /s/ Eric I Cohen
-----------------
Eric I Cohen, As Attorney-in-Fact
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Westport, Connecticut,
on June 9, 1999.
PPM CRANES, INC.
By: /s/ Eric I Cohen
Name: Eric I Cohen
Title: Vice President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Title Date
President June 9, 1999
- -------------------- (Principal Executive Officer)
Fil Filipov*
/s/ Joseph F. Apuzzo Vice President, Treasurer June 9, 1999
- -------------------- and Director
Joseph F. Apuzzo (Principal Financial
and Accounting Officer)
/s/ Eric I Cohen Vice President, Secretary June 9, 1999
- -------------------- and Director
Eric I Cohen
/s/ Ronald M. DeFeo Director June 9, 1999
- --------------------
Ronald M. DeFeo
- -------------------- Director
Eric Fonstad
* By: /s/ Eric I Cohen
-----------------
Eric I Cohen, As Attorney-in-Fact
II - 8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Westport, Connecticut,
on June 9, 1999.
KOEHRING CRANES, INC.
By: /s/ Eric I Cohen
----------------
Name: Eric I Cohen
Title: Vice President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Title Date
President June 9, 1999
- -------------------- (Principal Executive Officer)
Fil Filipov *
/s/ Joseph F. Apuzzo Vice President, Treasurer
- -------------------- and Director June 9, 1999
Joseph F. Apuzzo (Principal Financial
and Accounting Officer)
/s/ Eric I Cohen Vice President, Secretary June 9, 1999
- -------------------- and Director
Eric I Cohen
/s/ Ronald M. DeFeo Director June 9, 1999
- --------------------
Ronald M. DeFeo
* By: /s/ Eric I Cohen
-----------------
Eric I Cohen, As Attorney-in-Fact
II - 9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Westport, Connecticut,
on June 9, 1999.
TEREX-TELELECT, INC.
By: /s/ Ronald M. DeFeo
----------------------
Name: Ronald M. DeFeo
Title: President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Title Date
/s/ Ronald M. DeFeo President and Director June 9, 1999
- ------------------- (Principal Executive Officer)
Ronald M. DeFeo
/s/ Joseph F. Apuzzo Vice President June 9, 1999
- -------------------- (Principal Financial and
Joseph F. Apuzzo Accounting Officer)
/s/ Eric I Cohen Vice President, Secretary June 9, 1999
- -------------------- and Director
Eric I Cohen
II - 10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Westport, Connecticut,
on June 9, 1999.
TEREX-RO CORPORATION
By: /s/ Ronald M. DeFeo
-------------------
Name: Ronald M. DeFeo
Title: President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Title Date
/s/ Ronald M. DeFeo President and Director June 9, 1999
- -------------------- (Principal Executive Officer)
Ronald M. DeFeo
/s/ Joseph F. Apuzzo Vice President and Director June 9, 1999
- -------------------- (Principal Financial and
Joseph F. Apuzzo Accounting Officer)
/s/ Eric I Cohen Vice President, Secretary June 9, 1999
- -------------------- and Director
Eric I Cohen
II - 11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Westport, Connecticut,
on June 9, 1999.
TEREX AERIALS, INC.
By: /s/ Ronald M. DeFeo
-----------------------
Name: Ronald M. DeFeo
Title: President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Title Date
/s/ Ronald M. DeFeo President and Director June 9, 1999
- -------------------- (Principal Executive Officer)
Ronald M. DeFeo
/s/ Joseph F. Apuzzo Vice President June 9, 1999
- --------------------- (Principal Financial and
Joseph F. Apuzzo Accounting Officer)
/s/ Eric I Cohen Vice President, Secretary June 9, 1999
- -------------------- and Director
Eric I Cohen
II - 12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Westport, Connecticut,
on June 9, 1999.
TEREX MINING EQUIPMENT, INC.
By: /s/ Ronald M. DeFeo
-----------------------
Name: Ronald M. DeFeo
Title: President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Title Date
/s/ Ronald M. DeFeo President and Director June 9, 1999
- -------------------- (Principal Executive Officer)
Ronald M. DeFeo
/s/ Joseph F. Apuzzo Vice President and Director June 9, 1999
- -------------------- (Principal Financial Officer)
Joseph F. Apuzzo
/s/ Eric I Cohen Vice President, Secretary June 9, 1999
- -------------------- and Director
Eric I Cohen
II - 13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Westport, Connecticut,
on June 9, 1999.
PAYHAULER CORP.
By: /s/ Ronald M. DeFeo
-----------------------
Name: Ronald M. DeFeo
Title: President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Title Date
/s/ Ronald M. DeFeo President June 9, 1999
- -------------------- (Principal Executive Officer)
Ronald M. DeFeo
/s/ Joseph F. Apuzzo Vice President June 9, 1999
- -------------------- (Principal Financial and
Joseph F. Apuzzo Accounting Officer)
/s/ Eric I Cohen Vice President, Secretary June 9, 1999
- -------------------- and Director
Eric I Cohen
II - 14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Westport, Connecticut,
on June 9, 1999.
O&K ORENSTEIN & KOPPEL, INC.
By: /s/ Ronald M. DeFeo
-----------------------
Name: Ronald M. DeFeo
Title: President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Title Date
/s/ Ronald M. DeFeo President and Director June 9, 1999
- -------------------- (Principal Executive Officer)
Ronald M. DeFeo
/s/ Joseph F. Apuzzo Vice President and Director June 9, 1999
- -------------------- (Principal Financial Officer)
Joseph F. Apuzzo
/s/ Eric I Cohen Vice President, Secretary June 9, 1999
- -------------------- and Director
Eric I Cohen
II - 15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Westport, Connecticut,
on June 9, 1999.
THE AMERICAN CRANE CORPORATION
By: /s/ Ronald M. DeFeo
-----------------------
Name: Ronald M. DeFeo
Title: President
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Title Date
/s/ Ronald M. DeFeo President and Director June 9, 1999
- -------------------- (Principal Executive Officer)
Ronald M. DeFeo
/s/ Joseph F. Apuzzo Vice President and Director June 9, 1999
- -------------------- (Principal Financial Officer)
Joseph F. Apuzzo
/s/ Eric I Cohen Vice President, Secretary June 9, 1999
- -------------------- and Director
Eric I Cohen
II - 16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Westport, Connecticut,
on June 9, 1999.
AMIDA INDUSTRIES, INC.
By: /s/ Eric I Cohen
----------------
Name: Eric I Cohen
Title: Vice President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Title Date
/s/ Ronald M. DeFeo President and Director June 9, 1999
- -------------------- (Principal Executive Officer)
Ronald M. DeFeo
/s/ Joseph F. Apuzzo Vice President and Director June 9, 1999
- -------------------- (Principal Financial Officer)
Joseph F. Apuzzo
/s/ Eric I Cohen Vice President, Secretary June 9, 1999
- -------------------- and Director
Eric I Cohen
II-17
<PAGE>
ROBINSON, SILVERMAN, PEARCE ARONSOHN & BERMAN LLP
1290 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10104
(212) 541-2000
FACSIMILE:(212)541-4630
June 4, 1999
Terex Corporation
500 Post Road East
Westport, Connecticut 06880
Re: Terex Corporation Registration Statement
on Form S-4 (Registration No. 333-77811)
Ladies and Gentlemen:
We are rendering this opinion in connection with the registration by Terex
Corporation (the "Company") pursuant to the above-captioned Registration
Statement (the "Registration Statement") under the Securities Act of 1933, as
amended, of $100,000,000 aggregate principal amount of the Company's 8-7/8%
Series D Senior Subordinated Notes due 2008 (the "Notes"), payment of principal
and interest of which is guaranteed by Terex Cranes, Inc., PPM Cranes, Inc.,
Koehring Cranes, Inc., Terex Telelect, Inc., Terex Aerials, Inc., Terex-RO
Corporation, Payhauler Corp., Terex Mining Equipment, Inc., The American Crane
Corporation, O&K Orenstein & Koppel, Inc. and Amida Industries, Inc.
We are familiar with the proceedings undertaken by the Company in
connection with the authorization and issuance of the Notes. We have also
examined the Company's Registration Statement. Additionally, we have examined
such questions of law and fact as we have considered necessary or appropriate
for purposes of this opinion.
Based on the foregoing, it is our opinion that each of the Notes has been
duly authorized by the Company and, when issued in accordance with the terms of
the governing Indenture, will constitute the valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
limited by bankruptcy, insolvency, reorganization, moratorium, marshalling and
other similar laws relating to creditors' rights generally or by general
principles of equity (whether considered in an action at law or in equity) and
to the discretion of the court before which any such proceeding may be brought.
<PAGE>
Terex Corporation
June 4, 1999
Page 2
Capitalized terms used and not defined herein shall have the respective
meanings ascribed thereto in the Registration Statement.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the caption "Legal
Matters" in the Prospectus.
Very truly yours,
ROBINSON, SILVERMAN, PEARCE ARONSOHN & BERMAN LLP
<TABLE>
<CAPTION>
EXHIBIT 12.1
TEREX CORPORATION
CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES
(amounts in millions)
Three Months Ended
Year Ended December 31, March 31,
------------------------------------------ -------------------
1998 1997 1996 1995 1994 1999 1998
-------- -------- -------- ------- ------- --------- ---------
Earnings
Income (loss) before taxes and minority
<S> <C> <C> <C> <C> <C> <C> <C>
interest................................$ 74.5 31.0 (42.2) $(32.1) $ 4.9 $ 26.8 $ 14.6
Adjustments:
Minority interest in losses of
consolidated subsidiaries............. --- --- --- --- --- --- ---
Undistributed (income) loss of less
than 50% owned investments............. --- --- --- --- --- --- ---
Distributions from less than 50% owned
investments........................... --- --- --- --- --- --- ---
Fixed charges........................... 52.4 49.0 72.2 50.4 39.8 9.8
------- -------- -------- ------ ------- --------- ---------
Earnings.................................. 126.9 80.0 30.0 18.3 44.7 41.5 24.4
------- -------- -------- ------ ------- --------- ---------
Combined fixed charges, including
preferred accretion
Interest expense, including debt discount
amortization............................ 47.2 39.4 45.2 39.5 30.5 13.3 8.8
Accretion of redeemable convertible
preferred stock........................ --- 4.8 22.9 7.3 6.0 --- ---
Amortization/writeoff of debt issuance
costs................................... 2.1 2.6 2.6 2.3 2.3 0.6 0.5
Portion of rental expense representative
of interest factor (assumed to be 33%).. 3.1 2.2 1.5 1.3 1.0 0.8
------- -------- -------- ------ ------- --------- ---------
Fixed charges.............................$ 52.4 49.0 72.2 $ 50.4 $39.8 $ 14.7 $
------- -------- -------- ------ ------- --------- ---------
Ratio of earnings to combined fixed charges.
2.4x 1.6x (1) (1) 1.1x 2.8X 2.5
======= ======== ======== ====== ======= ========= =========
Amount of earnings deficiency for coverage
of combined fixed charges................
$ --- $ --- $ 42.2 $ 32.1 $ --- $ --- $ ---
======= ======== ======== ====== ======= ========= =========
(1) Less than 1.0x
</TABLE>
Exhibit 23.1
Consent of Independent Accountants
We hereby consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement on Form S-4/A of Terex Corporation of our reports dated
March 1, 1999 appearing on pages F-2 and F-36 of Terex Corporation's Annual
Report on Form 10-K for the year ended December 31, 1998. We also consent to the
reference to us under the heading "Experts" in such Registration Statement.
PricewaterhouseCoopers LLP
Stamford, Connecticut
June 9, 1999
FORM T-1
==============================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
------------------
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
------------------
UNITED STATES TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-3818954
(Jurisdiction of incorporation (I.R.S. employer
if not a U.S. national bank) identification No.)
114 West 47th Street 10036-1532
New York, NY (Zip Code)
(Address of principal
executive offices)
------------------
Terex Corporation
(Exact name of obligor as specified in its charter)
Delaware 34-1531521
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
500 Post Road East
Westport CT 06880
(Address of principal executive offices) (Zip Code)
Terex Cranes, Inc.
(Exact name of obligor as specified in its charter)
Delaware 06-1423889
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
c/o Terex Corporation
500 Post Road East
Westport CT 06880
(Address of principal executive offices) (Zip Code)
PPM Cranes, Inc.
(Exact name of obligor as specified in its charter)
Delaware 39-1611683
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
Atlantic Center for Business and Industry
Highway 501 East
Conway, SC 29526
(Address of principal executive offices) (Zip Code)
Koehring Cranes, Inc.
(Exact name of obligor as specified in its charter)
Delaware 06-1423888
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
106 12th Street S.E.
Waverly, Iowa 50677
(Address of principal executive offices) (Zip Code)
Terex-Telelect, Inc.
(Exact name of obligor as specified in its charter)
Delaware 41-1603748
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
600 Oakwood Road
Watertown, SD 57201
(Address of principal executive offices) (Zip Code)
Terex-Ro Corporation
(Exact name of obligor as specified in its charter)
Kansas 44-0565380
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
550 Old Highway 56
Olathe, Kansas 66061
(Address of principal executive offices) (Zip Code)
Terex Aerials, Inc.
(Exact name of obligor as specified in its charter)
Wisconsin 39-1028686
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
10600 W. Brown Deer Road
Milwaukee, WI 53224
(Address of principal executive offices) (Zip Code)
Terex Mining Equipment, Inc.
(Exact name of obligor as specified in its charter)
Delaware 06-1503634
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
c/o Terex Corporation
500 Post Road East
Westport CT 06880
(Address of principal executive offices) (Zip Code)
O & K Orenstein & Koppel, Inc.
(Exact name of obligor as specified in its charter)
Delaware 58-2084520
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
5400 South 49th West Avenue
Tulsa, OK 74107
(Address of principal executive offices) (Zip Code)
Payhauler Corp.
(Exact name of obligor as specified in its charter)
Illinois 36-3195008
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
5400 South 49th West Avenue
Tulsa, OK 74107
(Address of principal executive offices) (Zip Code)
The American Crane Corporation
(Exact name of obligor as specified in its charter)
North Carolina 56-1570091
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
202 Raleigh Street
Wilmington, NC 28412
(Address of principal executive offices) (Zip Code)
Amida Industries, Inc.
(Exact name of obligor as specified in its charter)
South Carolina 57-0531930
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
590 Huey Road
Rock Hill, SC 29730
(Address of principal executive offices) (Zip Code)
8 7/8% Series D Senior Subordinated Notes due 2008
(Title of the indenture securities)
==============================================
<PAGE>
GENERAL
1. General Information
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Federal Reserve Bank of New York (2nd District), New York, New York
(Board of Governors of the Federal Reserve System)
Federal Deposit Insurance Corporation, Washington, DC
New York State Banking Department, Albany, New York
(b Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. Affiliations with the Obligor
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None
Items 3., 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15:
The Obligor currently is not in default under any of its outstanding
securities for which United States Trust Company of New York is Trustee.
Accordingly, responses to Items 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and
15 of Form T-1 are not required under General Instruction B.
16. List of Exhibits
T-1.1 -- Organization Certificate, as amended, issued by the State of
New York Banking Department to transact business as a Trust
Company, is incorporated by reference to Exhibit T-1.1 to Form
T-1 filed on September 15, 1995 with the Commission pursuant to
the Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990 (Registration No. 33-97056).
T-1.2 -- Included in Exhibit T-1.1 of this Statement of Eligibility.
T-1.3 -- Included in Exhibit T-1.1 of this Statement of Eligibility.
<PAGE>
16. List of Exhibits
(cont'd)
T-1.4 -- The By-Laws of United States Trust Company of New York, as
amended, is incorporated by reference to Exhibit T-1.4 to Form
T-1 filed on September 15, 1995 with the Commission pursuant to
the Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990 (Registration No. 33-97056).
T-1.6 -- The consent of the trustee required by Section 321(b) of the
Trust Indenture Act of 1939, as amended by the Trust Indenture
Reform Act of 1990.
T-1.7 -- A copy of the latest report of condition of the trustee
pursuant to law or the requirements of its supervising or
examining authority.
NOTE
As of June 1, 1999, the trustee had 2,999,020 shares of Common Stock
outstanding, all of which are owned by its parent company, U.S. Trust
Corporation. The term "trustee" in Item 2., refers to each of United States
Trust Company of New York and its parent company, U. S. Trust Corporation.
In answering Item 2. in this statement of eligibility as to matters peculiarly
within the knowledge of the obligor or its directors, the trustee has relied
upon information furnished to it by the obligor and will rely on information to
be furnished by the obligor and the trustee disclaims responsibility for the
accuracy or completeness of such information.
------------------
Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee,
United States Trust Company of New York, a corporation organized and existing
under the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York, and State of New York, on the 2nd day
of June, 1999
UNITED STATES TRUST COMPANY
OF NEW YORK, Trustee
By: /s/ John Guiliano
John Guiliano
Vice President
<PAGE>
Exhibit T-1.6
The consent of the trustee required by Section 321(b) of the Act.
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
January 7, 1997
Securities and Exchange Commission
450 5th Street, NW
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990, and subject to the
limitations set forth therein, United States Trust Company of New York ("U.S.
Trust") hereby consents that reports of examinations of U.S. Trust by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
/s/Gerard F. Ganey
By: Gerard F. Ganey
Senior Vice President
<PAGE>
EXHIBIT T-1.7
UNITED STATES TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
MARCH 31, 1999
($ IN THOUSANDS)
ASSETS
Cash and Due from Banks $ 139,755
Short-Term Investments 85,326
Securities, Available for Sale 528,160
Loans 2,081,103
Less: Allowance for Credit Losses 17,114
----------
Net Loans 2,063,989
Premises and Equipment 57,765
Other Assets 125,780
----------
Total Assets $3,000,775
==========
LIABILITIES
Deposits:
Non-Interest Bearing $ 623,046
Interest Bearing 1,875,364
----------
Total Deposits 2,498,410
Short-Term Credit Facilities 184,281
Accounts Payable and Accrued Liabilities 126,652
----------
Total Liabilities $2,809,343
==========
STOCKHOLDER'S EQUITY
Common Stock 14,995
Capital Surplus 53,041
Retained Earnings 121,759
Unrealized Gains on Securities
Available for Sale (Net of Taxes) 1,637
----------
Total Stockholder's Equity 191,432
Total Liabilities and ----------
Stockholder's Equity $3,000,775
==========
I, Richard E. Brinkmann, Managing Director & Comptroller of the named bank do
hereby declare that this Statement of Condition has been prepared in conformance
with the instructions issued by the appropriate regulatory authority and is true
to the best of my knowledge and belief.
Richard E. Brinkmann, Managing Director & Controller
May 18, 1999
