UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
|X| OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1998
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
|_| OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______.
Commission File Number 1-10702
TEREX CORPORATION
(Exact Name of Registrant as Specified in Charter)
Delaware 34-1531521
(State of incorporation) (I.R.S. Employer
Identification No.)
500 Post Road East, Suite 320, Westport, Connecticut 06880
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code:(203) 222-7170
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, $.01 par value
(Title of Class)
New York Stock Exchange
(Name of Exchange on which Registered)
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.
YES X NO____
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |_|
The aggregate market value of the voting and non-voting common equity stock held
by non-affiliates of the Registrant was approximately $484.9 million based on
the last sale price on March 25, 1999.
The number of shares of the Registrant's Common Stock outstanding was
20,854,142 as of March 25, 1999.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the 1999 Terex Corporation Proxy Statement to be filed with the
Securities and Exchange Commission within 120 days after the year covered by
this Form 10-K with respect to the 1999 Annual Meeting of Stockholders
are incorporated by reference into Part III here of
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TEREX CORPORATION AND SUBSIDIARIES
Index to Annual Report on Form 10-K
For the Year Ended December 31, 1998
Page
PART I
Item 1 Business............................................................. 3
Item 2 Properties...........................................................13
Item 3 Legal Proceedings....................................................14
Item 4 Submission of Matters to a Vote of Security Holders..................14
PART II
Item 5 Market for Registrant's Common Stock and Related Stockholder Matters.15
Item 6 Selected Financial Data..............................................16
Item 7 Management's Discussion and Analysis of Financial Condition and Results
of Operations.......................................................17
Item 8 Financial Statements and Supplementary Data..........................27
Item 9 Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures...............................................27
PART III
Item 10 Directors and Executive Officers of the Registrant....................*
Item 11 Executive Compensation................................................*
Item 12 Security Ownership of Certain Beneficial Owners and Management........*
Item 13 Certain Relationships and Related Transactions........................*
PART IV
Item 14 Exhibits, Financial Statement Schedule and Reports on Form 8-K.......28
* Incorporated by reference from Terex Corporation Proxy Statement.
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As used in this Annual Report on Form 10-K, unless otherwise indicated, Terex
Corporation, together with its consolidated subsidiaries, is hereinafter
referred to as "Terex," the "Registrant," or the "Company."
PART I
ITEM 1. BUSINESS
General
Terex is a global manufacturer of a broad range of construction and mining
related capital equipment. The Company strives to manufacture high quality
machines which are low cost, simple to use and easy to maintain. The Company's
principal products include telescopic mobile cranes, lattice boom cranes, tower
cranes, aerial work platforms, utility aerial devices, telescopic material
handlers, truck mounted mobile cranes, large hydraulic excavators (i.e., mining
shovels), rigid and articulated off-highway trucks, high capacity surface mining
trucks, and related components and replacement parts. The Company'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.
The Company currently operates in two business segments: Terex Lifting and
Terex Earthmoving.
Terex Lifting manufactures and sells telescopic mobile cranes (including rough
terrain, truck and all terrain mobile cranes), lattice boom cranes, tower
cranes, aerial work platforms (including scissor, articulated boom and straight
telescoping boom aerial work platforms), utility aerial devices (including
digger derricks and articulated aerial devices), telescopic material handlers
(including container stackers and rough terrain lift trucks), truck mounted
cranes (boom trucks), and related components and replacement parts. These
products are used by construction and industrial customers, as well as utility
companies.
Terex Earthmoving manufactures and sells large hydraulic excavators, 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.
Over the past several years, Terex has implemented a series of interrelated
strategic initiatives designed to improve manufacturing efficiency and to offer
its products at a lower cost than competitors, thereby increasing sales,
earnings and market share. These include: (i) focusing the Company's business on
its core lifting and earthmoving businesses; (ii) focusing product lines on
products which it can manufacture for low cost relative to its competitors by
rationalizing product lines and simplifying its product designs; (iii) growing
in the size and scope of operations through both acquisitions and new product
development; and (iv) increasing profitability through cost reductions and
improved manufacturing efficiency. The Company has also implemented a strategy
to improve its financial flexibility, strengthen its capital structure and
enhance its liquidity to execute its growth initiatives. In addition, the
Company has made, and continues to seek out, acquisitions which complement its
core operations and provide cost reduction opportunities, distribution and
purchasing synergies and product diversification.
For financial information about the Company's industry and geographic segments,
see Note O --- "Business Segment Information" in the Notes to the Consolidated
Financial Statements and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
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. Throughout the world market, mobile cranes are
principally sold to rental companies and dealers with rental fleets. Terex
Lifting's mobile crane market share varies dramatically by geographical area;
however, the Company believes it is the leading manufacturer of mobile cranes in
France and Italy and is the second largest manufacturer in the United States.
The Company also believes that it is the second largest manufacturer in the
United States of utility aerial devices and the third largest manufacturer of
tower cranes worldwide.
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Terex Lifting was established as a separate business segment as a result of an
acquisition (the "PPM Acquisition") in May 1995 of substantially all of the
shares of PPM S.A. and certain of its subsidiaries, including PPM SpA, Brimont
Agraire S.A., a specialized trailer manufacturer in France, PPM Krane GmbH, a
sales organization in Germany, and Baulift Baumaschinen Und Krane Handels GmbH,
a parts distributor in Germany (collectively, "PPM Europe") from Potain S.A.,
and all of the capital stock of Legris Industries, Inc., which owned 92.4% of
the capital of PPM Cranes, Inc., ("PPM North America" and PPM Europe and PPM
North America are collectively referred to herein as "PPM") from Legris
Industries, S.A. Concurrently with the completion of the PPM Acquisition, the
Company contributed the assets (subject to liabilities) of its Koehring Cranes
and Excavators and Mark Industries division to Terex Cranes, Inc. The former
division now operates as Koehring Cranes, Inc. ("Koehring"), a wholly owned
subsidiary of Terex Cranes, Inc.
Koehring and PPM are part of the Terex Lifting segment.
In 1997, the Company completed two acquisitions to augment its Terex Lifting
segment. On April 7, 1997, the Company completed the acquisition of
substantially all of the capital stock of certain of the former subsidiaries of
Simon Engineering plc (collectively referred to herein as the "Simon Access
Companies"). The Simon Access Companies consist principally of business units in
the United States and Europe engaged in the manufacture, sale and worldwide
distribution of access equipment designed to position people and materials to
work at heights. The Simon Access Companies' products include utility aerial
devices, aerial work platforms and truck-mounted cranes (boom trucks) which are
sold to customers in the industrial and construction markets, as well as utility
companies. Specifically, the Company acquired 100% of the outstanding common
stock of (i) Simon Telelect, Inc. (now named Terex Telelect Inc.), a Delaware
corporation, (ii) Simon Aerials, Inc. (now named Terex Aerials, Inc.), a
Wisconsin corporation and parent company of Simon RO Corporation (now named
Terex RO Corporation), (iii) Sim-Tech Management Limited, a private limited
company incorporated under the laws of Hong Kong, (iv) Simon Cella, S.r.l. (now
named Terex Italia S.r.l.), a company incorporated under the laws of Italy, and
(v) Simon Aerials Limited (now named Terex Aerials Limited), a company
incorporated under the laws of Ireland; and 60% of the outstanding common stock
of Simon-Tomen Engineering Co. Ltd., a limited liability stock company organized
under the laws of Japan. On April 14, 1997, the Company completed the
acquisition of all of the capital stock of Baraga Products, Inc. and M&M
Enterprises of Baraga, Inc. ("Square Shooter"). The Square Shooter business (now
merged into Terex Corporation) manufactures the Square Shooter, a rough terrain
telescopic lift truck designed to lift materials to heights where they are used
in construction.
During 1998, the Company completed five acquisitions to further augment its
Terex Lifting segment. On May 4, 1998, the Company completed the purchase of
Holland Lift International B.V. ("Holland Lift"). Holland Lift manufactures
aerial work platforms at its facility in the Netherlands. On July 31, 1998, the
Company completed the acquisition of all of the capital stock of The American
Crane Corporation ("American Crane"). American Crane manufactures lattice boom
cranes at its facility in Wilmington, North Carolina. On November 3, 1998, the
Company completed the acquisition of Italmacchine SpA ("Italmacchine").
Italmacchine manufactures rough terrain telescopic material handlers, cement
mixers and concrete pumps at its facility near Perugia, Italy. On November 13,
1998, the Company completed the acquisition of all of the assets comprising the
business of Peiner HTS (now named Terex Peiner GmbH) ("Peiner"). Peiner
manufactures tower cranes at its facility at Trier, Germany. On December 18,
1998, the Company completed the acquisition of all of the capital stock of Gru
Comedil SpA ("Comedil"). Comedil manufactures tower cranes at its facility in
Fontanafredda, Italy.
Terex Lifting has 14 significant manufacturing operations: (i) PPM S.A. located
in Montceau-les-Mines, France, at which mobile cranes and container stackers
under the brand names TEREX and PPM are manufactured; (ii) PPM SpA, located in
Crespellano, Italy, at which mobile cranes are manufactured under the TEREX,
BENDINI and PPM brand names; (iii) Terex Lifting, located in Conway, South
Carolina, at which mobile cranes are manufactured under the P&H (a licensed
trademark of Harnischfeger Corporation) and TEREX brand names; (iv) Terex
Lifting - Waverly Operations, located in Waverly, Iowa, at which rough terrain
hydraulic telescoping mobile cranes and truck cranes are manufactured under the
brand names TEREX, KOEHRING and LORAIN, and aerial lift equipment is
manufactured under the brand names TEREX AERIALS, TEREX AND MARK; (v) Terex
Telelect, Inc., located in Watertown, South Dakota, at which utility aerial
devices and digger derricks are manufactured under the TELELECT and HI-RANGER
brand names, (vi) Terex Aerials, Inc., located in Milwaukee, Wisconsin, at which
aerial platforms are manufactured under the TEREX, SIMON, MARK and TEREX AERIALS
brand names; (vii) Terex Aerials Limited, located in Cork Ireland, at which
aerial platforms are manufactured under the TEREX brand name; (viii) Terex RO
Corporation, located in Olathe, Kansas, at which truck mounted cranes are
manufactured under the RO-STINGER brand name; (ix) Square Shooter is located in
Baraga, Michigan, at which rough terrain telescopic lift trucks are manufactured
under the SQUARE SHOOTER brand name.; (x) Holland Lift, located in Hoorn, the
Netherlands, at which aerial platforms are manufactured under the HOLLAND LIFT
brand name; (xi) American Crane located in Wilmington, North Carolina, at which
lattice boom cranes are manufactured under the AMERICAN brand name; (xii)
Italmacchine, located near Perugia, Italy, at which rough terrain telescopic
material handlers are manufactured under the ITALMACCHINE and TEREX brand names
and cement mixers and concrete pumps are manufactured under the ITALMACCHINE
brand name; (xiii) Peiner located in Trier, Germany at which tower cranes are
manufactured under the PEINER trade name; and (xiv) Comedil, located in
Fontanafredda, Italy at which tower cranes are manufactured under the COMEDIL
trade name.
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Terex Earthmoving
Terex Earthmoving currently manufactures and sells large hydraulic excavators,
articulated and rigid off-highway trucks, high capacity surface mining trucks,
and related components and replacement parts. These products are used primarily
by construction, mining and government customers. Terex Earthmoving consists of
Terex Equipment Limited ("TEL"), located in Motherwell, Scotland, Unit Rig
("Unit Rig") and Payhauler Corporation ("Payhauler"), located in Tulsa,
Oklahoma, and O&K Mining GmbH ("O&K Mining"), located in Dortmund, Germany. TEL
manufactures, sells and markets hauler trucks having capacities ranging from 25
to 100 tons, and scrapers that load, move and unload large quantities of soil
for site preparations, including roadbeds. TEL's products are sold under the
Company's TEREX brand name. Unit Rig, Payhauler and O & K Mining manufacture,
sell and market hauler trucks with payload capacities ranging from 50 to 260
tons, bottom dump haulers with capacities ranging from 180 to 270 tons and large
hydraulic excavators. These products are sold under the Company's TEREX, UNIT
RIG, LECTRA HAUL, O&K and PAYHAULER brand names. TEL's North, Central and South
American sales and distribution are managed by Terex Americas, a division of the
Company, located in Tulsa, Oklahoma. Terex Earthmoving believes that it has the
leading market share for large hydraulic excavator models having machine weights
in excess of 200 tons and that it is a significant competitor in the market for
large capacity off highway haulers and scrapers.
During 1998, the Company completed two acquisitions to augment its Terex
Earthmoving segment. On January 5, 1998, the Company acquired 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. O&K Mining
is engaged in the manufacture, sale and worldwide distribution of a complete
range of large hydraulic excavators under the O&K trade name, serving the global
surface mining industry and the global construction and infrastructure
development markets. These products are used by mining equipment contractors,
mining and quarrying companies and large construction companies involved in
infrastructure projects worldwide to load coal, copper ore, iron ore, other
mineral-bearing materials or rocks into trucks. The use of O&K Mining's
excavators in around the clock intensive, harsh condition mining operations
requires significant higher margin after-market parts and service, which in the
case of the larger hydraulic excavators can generate revenues of up to 200% of
the original sale price over the expected life of the machines. In 1997, O&K
Mining introduced the RH 400, the world's largest hydraulic excavator with an
800 ton machine weight and 80 ton bucket capacity.
During 1998, Unit Rig received a $157 million order for the construction and
delivery of 160 rigid off-highway haul trucks from Coal India, the government
agency for coal management in India. This order was received as the result of a
tender offer which included participation of all major construction and mining
equipment manufacturers, and is believed to the largest single truck order of
its kind. The Company also expects that this order will add several million
dollars a year of higher-margin parts revenues for at least the next 10 years.
Terex Earthmoving currently has three significant manufacturing operations: (i)
TEL, located at Motherwell, Scotland, which manufactures and sells off-highway
rigid haulers and articulated haulers, ranging in capacity from 25 to 100 tons,
and scrapers, each sold under the TEREX brand name and to other truck
manufacturers on a private label basis; (ii) Unit Rig and Payhauler, located in
Tulsa, Oklahoma, manufacture and sell electric rear and bottom dump haulers
principally sold to the copper, gold and coal mining industry customers in North
and South America, Asia, Africa and Australia and all wheel drive rigid off
highway trucks; and (iii) O&K Mining, located in Dortmund, Germany, which
manufactures and sells large hydraulic excavators. In addition, Terex
Earthmoving has an interest in North Hauler Limited Liability Company, a
corporation incorporated under the laws of China, a joint venture with Second
Inner Mongolia Machinery Company for the production of haulers in China. North
Hauler Limited Liability Company, manufactures and sells heavy trucks,
principally used in mining, at a facility in Baotou, Inner Mongolia, People's
Republic of China.
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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:
[Graphic] 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.
[Graphic] 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.
[Graphic] 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:
[Graphic] 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.
[Graphic] 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.
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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:
[Graphic] 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.
[Graphic] 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.
[Graphic] 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.
[Graphic] 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.
[Graphic] 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
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:
[Graphic] 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.
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[Graphic] 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.
[Graphic] 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.
[Graphic] 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.
[Graphic] 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.
[Graphic] 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.
[Graphic] 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.
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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.
[Graphic] 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.
[Graphic] 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.
[Graphic] 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.
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.
[Graphic] 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.
9
<PAGE>
Backlog
The Company's backlog as of December 31, 1998 and 1997 was as follows:
December 31,
---------------------------
1998 1997
------------- -------------
(in millions)
Terex Lifting...................... $ 221.8 $ 186.5
Terex Earthmoving.................. 196.4 30.3
------------- -------------
Total......................... $ 418.2 $ 216.8
============= =============
Substantially all of the Company's backlog orders are expected to be filled
within one year, although there can be no assurance that all such backlog orders
will be filled within that time period. The Company's backlog orders represent
primarily new equipment orders. Parts orders are generally filled on an
as-ordered basis.
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.
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.
10
<PAGE>
Materials
Principal materials used by the Company in its various manufacturing processes
include steel, castings, engines, tires, hydraulic cylinders, electric controls
and motors, and a variety of other fabricated or manufactured items. In the
absence of labor strikes or other unusual circumstances, substantially all
materials are normally available from multiple suppliers. Current and potential
suppliers are evaluated on a regular basis on their ability to meet the
Company's requirements and standards. Electric wheel motors and controls used in
the Unit Rig product line are currently supplied exclusively by General Electric
Company. The Company is endeavoring to develop alternative sources and has
entered into a contract with General Atomics, a former defense contractor, to
develop electric wheel motors for Unit Rig trucks. If the Company is unable to
develop alternative sources, or if there is disruption or termination of its
relationship with General Electric Company (which is not governed by a written
contract), it could have a material adverse effect on Unit Rig's operations.
Working Capital Items
The Company, in the normal course of business, does not provide right of return
on merchandise sold, nor does it provide extended payment terms to customers.
Competition
Telescopic Mobile Cranes -- The domestic telescopic mobile crane industry is
comprised primarily of three manufacturers. The Company believes that Terex
Lifting is the second largest domestic manufacturer. The Company believes that
the number one domestic manufacturer is Grove Worldwide, and the number three
domestic manufacturer is Link-Belt, a subsidiary of Sumitomo Corp. The Company's
principal markets in Europe are in France and Italy, where the Company believes
it has the largest market shares. 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 the Company 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. The Company believes that its market share in boom
lifts is greater than its market share in scissor lifts.
Utility Aerial Devices -- The utility aerial device industry is comprised
primarily of three manufacturers. The Company believes that it 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 - The Company believes that three manufacturers
account for a majority of the global market for telescopic container stackers.
The Company 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).
11
<PAGE>
High Capacity Surface Mining Trucks -- The high capacity surface mining truck
industry includes three principal manufacturers: Caterpillar, Komatsu-Dresser
and the Company. The Company believes that it is the third largest manufacturer.
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.
Employees
As of December 31, 1998, the Company had approximately 4,142 employees. The
Company considers its relations with its personnel to be good. Approximately
25% of the Company's employees are represented by labor unions which have
entered into or are in the process of entering into various separate collective
bargaining agreements with the Company.
Patents, Licenses and Trademarks
Several of the trademarks and trade names of the Company, in particular the
TEREX, LORAIN, UNIT RIG, MARK, P&H, PPM, SIMON, TELELECT, SQUARE SHOOTER,
PAYHAULER, O&K, HOLLAND LIFT, AMERICAN, ITALMACCINE, PEINER and COMEDIL
trademarks, are important to the business of the Company. The Company owns and
maintains trademark registrations and patents in countries where it conducts
business, and monitors the status of its trademark registrations and patents to
maintain them in force and renews them as required. The Company also protects
its trademark, trade name and patent rights when circumstances warrant such
action, including the initiation of legal proceedings, if necessary. P&H is a
registered trademark of Harnischfeger Corporation which the Company has the
right to use for certain products pursuant to a license agreement until 2011.
Pursuant to the terms of the acquisition agreements for the Simon Access
Companies, the Company has the right to use the SIMON name (which is a
registered trademark of Simon Engineering plc) for certain products until April
7, 2000. CELLA is a trademark of Sergio Cella. EFFER is a trademark of Effer
SpA. The Company 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
The Company generates hazardous and non-hazardous wastes in the normal course of
its operations. As a result, the Company is subject to a wide range of federal,
state, local and foreign environmental laws and regulations, including the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"),
that (i) govern activities or operations that may have adverse environmental
effects, such as discharges to air and water, as well as handling and disposal
practices for hazardous and non-hazardous wastes, and (ii) impose liability for
the costs of cleaning up, and certain damages resulting from, sites of past
spills, disposals or other releases of hazardous substances. Compliance with
such laws and regulations has, and will, require expenditures by the Company on
a continuing basis. However, the Company has not incurred, and does not expect
to incur in the future, any material capital expenditures for environmental
control facilities.
Seasonal Factors
The Company 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.
12
<PAGE>
ITEM 2. PROPERTIES
The following table outlines the principal manufacturing, warehouse and office
facilities owned or leased by the Company and its subsidiaries:
Entity Facility Location Type and Size of Facility
Terex
(Corporate Offices)....Westport, Connecticut (1) Office; 14,898 sq. ft.
Terex
(Distribution Center)..Southaven, Mississippi (1) Warehouse and light
manufacturing;
505,000 sq. ft. (2)
Terex Lifting
Terex Lifting -
Waverly Operations.....Waverly, Iowa Office, manufacturing and
warehouse; 383,000 sq. ft.
Terex Lifting -
Conway Operations......Conway, South Carolina (1) Office, manufacturing and
warehouse; 168,716 sq. ft.
PPM S.A.................Montceau-les-Mines, France Office, manufacturing and
warehouse; 418,376 sq. ft.
P.P.M SpA...............Crespellano, Italy Office, manufacturing and
warehouse; 68,501 sq ft.
PPM Europe Subsidiary...Dortmund, Germany (1) Office and warehouse;
129,180 sq. ft.
PPM Europe Subsidiary...Rethel, France Office, manufacturing and
warehouse; 213,058 sq. ft.
Terex Manufacturing.....Huron, South Dakota Manufacturing;
88,000 sq.ft.
Telelect................Watertown, South Dakota (3) Office, manufacturing and
warehouse; 205,350 sq. ft.
Cella...................Brescia, Italy (1) Office and manufacturing;
35,508 sq. ft.
Terex Aerials Limited...Cork, Ireland (1) Office and manufacturing;
35,250 sq. ft.
Terex RO................Olathe, Kansas Office and manufacturing;
80,400 sq. ft.
Terex Aerials...........Milwaukee, Wisconsin Office, manufacturing and
warehouse; 103,000 sq. ft.
Square Shooter..........Baraga, Michigan Office, manufacturing and
warehouse; 61,380 sq. ft.
Comedil.................Fontanafredda, Italy Office, manufacturing and
warehouse; 100,682 sq. ft.
Holland Lift............Hoorn, The Netherlands Office, manufacturing and
warehouse; 30,000 sq. ft.
Italmacchine............Perugia, Italy Office, manufacturing and
warehouse; 113,834 sq. ft.
Peiner..................Trier, Germany Office, manufacturing and
warehouse; 85,787 sq. ft.
American Crane..........Wilmington, North Carolina Office, manufacturing and
warehouse; 572,200 sq. ft.
American Crane
International..........Oudenbosch, The Netherlands Office and warehouse;
86,111 sq. ft.
Terex Earthmoving
O&K Mining..............Dortmund, Germany (1) Office, manufacturing,
warehouse; 775,000 sq. ft.
Unit Rig
and Payhauler..........Tulsa, Oklahoma Office, manufacturing and
warehouse; 375,587 sq. ft.
TEL.....................Motherwell, Scotland Office, manufacturing and
warehouse; 473,000 sq. ft.
- ------------------------------
(1) These facilities are either leased or subleased by the indicated entity.
(2) Includes 239,400 sq. ft. of warehouse space currently available for lease
to others.
(3) Includes 18,550 sq. ft. which are leased by the indicated entity.
13
<PAGE>
Unit Rig and O&K Mining also have 10 owned or leased locations for parts
distribution and rebuilding of components, of which one are in the United
States, two are in Canada and seven are outside North America.
Management believes that the properties listed above are suitable and adequate
for the Company's use. The Company has determined that certain of its properties
exceed its requirements. Such properties may be sold, leased or utilized in
another manner and have been excluded from the above list.
Discontinued Operations
On November 27, 1996, the Company sold substantially all the assets and
liabilities of its worldwide material handling business ("CMHC") for an
aggregate cash purchase price, subject to adjustments, of $139.5 million (the
"Clark Sale"). Prior to the disposition on November 27, 1996, CMHC consisted of
Clark Material Handling Company and certain affiliated companies which were
acquired by the Company in July 1992 from Clark Equipment Company. CMHC
designed, manufactured and marketed a complete line of internal combustion and
electric lift trucks, electric walkies and related components and replacement
parts under the CLARK trademark.
Financial Information about Industry and Geographic Segments, Export Sales and
Major Customers
Information regarding foreign and domestic operations, export sales, segment
information and major customers is included in Note O -- "Business Segment
Information" in the Notes to the Consolidated Financial Statements.
ITEM 3. LEGAL PROCEEDINGS
As described in Note M -- "Litigation and Contingencies" in the Notes to the
Consolidated Financial Statements, the Company is involved in various legal
proceedings, including product liability and workers' compensation liability
matters, which have arisen in the normal course of its operations and to which
the Company is self-insured for up to $2.5 million per incident. Management
believes that the final outcome of such matters will not have a material adverse
effect on the Company's consolidated financial position.
As described in Note I - "Income Taxes" in the Notes to the Consolidated
Financial Statements, the Company's federal income tax returns for the years
1987 through 1989 are currently being audited by the Internal Revenue Service
("IRS"). In December 1994, the Company received an examination report from the
IRS proposing a substantial tax deficiency. The examination report raised many
issues. Among these issues are substantiation for certain tax deductions and
whether the Company was able to use certain net operating loss carryovers
("NOLs") to offset taxable income. In April 1995, the Company filed an
administrative appeal to the examination report. The Company believes, however,
that it will be able to provide adequate documentation for a large part of the
tax deductions the IRS has disallowed. The IRS is currently reviewing
information the Company provided to it. The IRS has recently advised the Company
that it is no longer challenging the Company's right to use the NOLs in
question. The final outcome of this audit is subject to the resolution of
complicated legal and factual issues.
In March 1994, the Securities and Exchange Commission ("SEC") initiated a
private investigation, which included Terex Corporation and certain of its
affiliates, to determine whether violations of certain aspects of the Federal
securities laws had occurred. The SEC has advised the Company that it may bring
an administrative proceeding against the Company and certain of its present and
former officers and directors. The Company understands that if the SEC brings
such proceedings, the SEC would seek an order requiring the Company to cease and
desist violating the federal securities laws, but would not impose monetary
penalties on the Company. The Company is currently in negotiations with the SEC
to resolve this matter.
For information concerning other contingencies and uncertainties, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Contingencies and Uncertainties."
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
14
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
(a) The Company's Common Stock is listed on the NYSE under the symbol "TEX." The
high and low stock prices for the Company's Common Stock on the NYSE Composite
Tape (for the last two completed years) are as follows:
1998 1997
------------------------------- ----------------------------------
Fourth Third Second First Fourth Third Second First
High.. $ 28.94 $ 29.56 $31.50 $27.44 $ 25.50 $ 24.50 $ 19.50 $ 13.50
Low... 13.38 14.00 26.88 20.00 18.94 18.75 13.13 9.50
No dividends were declared or paid in 1997 or in 1998. Certain of the Company's
debt agreements contain restrictions as to the payment of cash dividends. In
addition, payment of dividends is limited by Delaware law. The Company intends
generally to retain earnings, if any, to fund the development and growth of its
business. The Company does not plan on paying dividends on the Common Stock in
the near term. Any future payments of cash dividends will depend upon the
financial condition, capital requirements and earnings of the Company, as well
as other factors that the Board of Directors may deem relevant.
As of March 25, 1999, there were 667 stockholders of record of the Company's
Common Stock.
(b) Not Applicable.
15
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
(in millions except per share amounts and employees)
<TABLE>
<CAPTION>
As of or for the Year Ended December 31,
-------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ------------ ------------ -----------
Summary of Operations
<S> <C> <C> <C> <C> <C>
Net sales....................................................$ 1,233.2 $ 842.3 $ 678.5 $ 501.4 $ 314.1
Operating income from continuing operations.................. 122.0 71.1 5.1 12.8 10.4
Income (loss) from continuing operations before
extraordinary items........................................ 72.8 30.3 (54.3) (32.1) 4.9
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
Net income (loss)............................................ 34.5 15.5 47.7 (35.2) 0.5
Income (loss) applicable to common stock..................... 34.5 10.7 24.8 (42.5) (5.5)
Per Common and Common Equivalent Share:
Basic
Income (loss) from continuing operations.................$ 3.52 $ 1.57 $ (6.54) $ (3.79) $ (0.10)
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)
Net income (loss)........................................ 1.67 0.66 2.10 (4.09) (0.53)
Diluted
Income (loss) from continuing operations.................$ 3.25 $ 1.44 $ (5.81) $ (3.79) $ (0.10)
Income (loss) from discontinued operations............... --- --- 7.67 0.42 (0.36)
Income (loss) before extraordinary items................. 3.25 1.44 1.86 (3.37) (0.46)
Net income (loss)........................................ 1.54 0.60 1.86 (4.09) (0.53)
Working Capital
Current assets...............................................$ 771.6 $ 426.5 $ 390.2 $ 312.0 $ 278.1
Current liabilities.......................................... 425.4 236.1 195.0 196.3 221.6
Working capital.............................................. 346.2 190.4 195.2 115.7 56.5
Property, Plant and Equipment
Net property, plant and equipment............................$ 99.5 $ 47.8 $ 31.7 $ 40.1 $ 86.2
Capital expenditures......................................... 13.1 9.9 8.1 5.2 12.7
Depreciation................................................. 10.1 8.2 7.0 7.4 13.7
Total Assets...................................................$ 1,151.2 $ 588.5 $ 471.2 $ 478.9 $ 401.6
Capitalization
Long-term debt and notes payable, including current
maturities.................................................$ 631.3 $ 300.1 $ 281.3 $ 329.9 $ 190.9
Minority interest, including redeemable preferred stock
of a subsidiary............................................ 0.6 0.6 10.0 9.4 ---
Redeemable convertible preferred stock....................... --- --- 46.2 24.6 17.3
Stockholders' equity (deficit)............................... 98.1 59.6 (71.7) (96.9) (55.7)
Dividends per share of Common Stock..........................$ --- $ --- $ --- $ --- $ ---
Shares of Common Stock outstanding at year end............... 20.8 20.5 13.2 10.6 10.3
Employees
Continuing operations........................................ 4,142 2,950 2,270 2,614 1,549
Discontinued operations (Material Handling).................. --- --- --- 986 1,302
Total...................................................... 4,142 2,950 2,270 3,600 2,851
</TABLE>
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. See Note B -- "Acquisitions" in the Notes to the
Consolidated Financial Statements for further information. The Selected
Financial Data for the years ended December 31, 1994, 1995 and 1996 include the
results of operations of CMHC as discontinued operations. See Note C --
"Discontinued Operations" in the Notes to the Consolidated Financial Statements
for further information.
16
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
The Company currently operates in two industry segments: Terex Lifting and Terex
Earthmoving. The Company previously operated a third industry segment, the
Material Handling segment, the results of which are now accounted for as Income
from Discontinued Operations. The 1997 Terex Lifting results include the
operations of Simon Access and Square Shooter businesses from their respective
acquisition dates of April 7, 1997 and April 14, 1997. The 1998 results for
Terex Lifting include the results of Holland Lift, American Crane, Italmacchine,
Peiner and Comedil from their respective acquisition dates of May 4, 1998, July
31, 1998, November 3, 1998, November 13, 1998 and December 18, 1998. Terex
Earthmoving results for 1998 includes the results of Payhauler and O&K Mining
from their respective acquisition dates of January 5, 1998 and March 31, 1998.
1998 Compared with 1997
The table below is a comparison of net sales, gross profit, engineering, selling
and administrative expenses and income (loss) from operations, by segment, for
1998 and 1997.
Year Ended December 31,
Increase
-----------------------
1998 1997 (Decrease)
--------- ----------- -----------
(in millions of dollars)
NET SALES
Terex Lifting ...............................$ 770.9 $ 548.0 $ 222.9
Terex Earthmoving ........................... 456.4 288.4 168.0
General/Corporate/Eliminations .............. 5.9 5.9 ---
--------- --------- -----------
Total ....................................$ 1,233.2 $ 842.3 $ 390.9
========= ========= ===========
GROSS PROFIT
Terex Lifting ...............................$ 128.5 $ 87.2 $ 41.3
Terex Earthmoving ........................... 96.5 50.7 45.8
General/Corporate/Eliminations .............. 0.8 1.7 (0.9)
--------- --------- -----------
Total ....................................$ 225.8 $ 139.6 $ 86.2
========= ========= ===========
ENGINEERING, SELLING AND ADMINISTRATIVE EXPENSES
Terex Lifting ...............................$ 46.4 $ 40.0 $ 6.4
Terex Earthmoving ........................... 54.8 26.0 28.8
General/Corporate ........................... 2.6 2.5 0.1
--------- --------- -----------
Total ....................................$ 103.8 $ 68.5 $ 35.3
========= ========= ===========
INCOME (LOSS) FROM OPERATIONS
Terex Lifting ...............................$ 82.1 $ 47.2 $ 34.9
Terex Earthmoving ........................... 41.7 24.7 17.0
General/Corporate ........................... (1.8) (0.8) (1.0)
--------- --------- -----------
Total ....................................$ 122.0 $ 71.1 $ 50.9
========= ========= ===========
17
<PAGE>
Net Sales
Sales increased $390.9 million, or approximately 46%, to $1,233.2 million in
1998 from $842.3 million in 1997. Internally generated growth represented
approximately $146 million of this revenue increase while the acquired companies
contributed approximately $245 million.
Terex Lifting's sales were $770.9 million for 1998, an increase of $222.9
million, or 41%, from $548.0 million in 1997 which did not include the results
of Simon Access in the first quarter. Machine sales increased $183.2 million to
$643.7 million while part sales increased $8.7 million to $81.6 million. The
increase in sales is related to internally generated growth of approximately
$138 million, primarily driven by strong performances within our crane and
utility aerial device businesses, and approximately $85 million related to
acquisitions. Terex Lifting's backlog increased $35.3 million to $221.8 million
driven by acquisitions in 1998 and a 9% increase in backlog at existing
businesses.
Terex Earthmoving's sales were $456.4 million in 1998, an increase of $168.0
million, or 58%, from $288.4 million in 1997, primarily driven by acquisitions
in 1998. Machine sales increased $86.6 million to $275.6 million while parts
sales increased $47.5 million to $143.7 million. The sales mix was approximately
31% parts in 1998 compared to approximately 33% parts in 1997. Backlog increased
to $196.4 million at December 31, 1998 from $30.3 million at December 31, 1997
primarily as a result of the Coal India order and the O&K acquisition.
Gross Profit
Gross profit for 1998 increased $86.2 million to $225.8 million as a result of
acquisitions, internally generated growth in Terex Lifting and general
improvements in gross profit margins. Gross profit as a percentage of net sales
for 1998 increased to 18.3% as compared to 16.6% for 1997.
Terex Lifting's gross profit increased $41.3 million, or 47%, to $128.5 million,
compared to $87.2 million in 1997. The increase in gross profit is driven by
acquisitions (approximately $16 million), internally generated growth and the
improvement in the gross profit percentage. Gross profit as a percentage of
sales increased to 16.7% from 15.9% in 1997 driven primarily by improvements in
our utility aerial device business.
Terex Earthmoving's gross profit increased $45.8 million, or 90%, to $96.5
million, compared to $50.7 million in 1997. The increase on gross profit and
gross profit as a percentage of sales, 21.1% compared to 17.6% in 1997, is
primarily related to the acquisitions in 1998.
Engineering, Selling and Administrative Expenses
Engineering, selling and administrative expenses (which include the Company's
research and development expenses) increased to $103.8 million in 1998 from
$68.5 million for 1997, reflecting the effects of the companies acquired in 1998
and 1997. However, excluding the effects of the acquisitions, engineering,
selling and administrative expenses as a percentage of sales decreased to 7.4%
from 8.1% in 1997. Terex Earthmoving's engineering, selling and administrative
expenses increased $28.8 million to $54.8 million for 1998 primarily due to the
effect of the 1998 acquisitions. Terex Lifting's engineering, selling and
administrative expenses increased to $46.4 million from $40.0 million in 1997,
reflecting the 1998 and 1997 acquisitions. Engineering, selling administrative
expenses as a percentage of sales, however, decreased to 6.0% from 7.3% in 1997.
Unallocated corporate expenses increased slightly to $2.6 million in 1998 as
compared to $2.5 million in 1997. See "Business--Research and Development" for a
discussion of the Company's engineering expenses.
Income (Loss) from Operations
Income from operations for the Company increased $50.9 million, or 72%, to
$122.0 million, compared to $71.1 million in 1997. Income from operations as a
percentage of sales increased to 9.9% compared to 8.4% in 1997.
Terex Lifting's income from operations increased $34.9 million, or 74%, to $82.1
million, as compared to $47.2 million in 1997. The increase is the result of
acquisitions (approximately $9 million), internal growth primarily driven by
strong performances within our crane and utility aerial businesses, and
continuing cost control efforts.
18
<PAGE>
Terex Earthmoving's income from operations increased $17.0 million, or 69%, to
$41.7 million, compared to $24.7 million in 1997. As a percentage of sales,
income from operations increased to 9.1% from 8.6% in 1997. The increase in both
dollars and as a percentage is driven primarily by acquisitions.
Interest Expense
Net interest expense increased to $44.5 million for 1998 from $38.5 million in
1997 as a result of higher average debt levels due to the 1998 acquisitions. The
effect of the increased average debt levels was somewhat offset by the lower
interest rates due to the redemption by the Company of $166.7 million of the
13-1/4 % Senior Secured Notes (the "Senior Secured Notes") on March 6, 1998.
Extraordinary Items
During 1998, the Company recorded a charge of $38.3 million to recognize a loss
on the early extinguishment of debt in connection with the redemption of its
Senior Secured Notes and the refinancing of the Company's bank credit
facilities.
The Company recorded a charge of $2.6 million in 1997 to recognize a loss on the
early extinguishment of debt in connection with a debt refinancing in April
1997. Additionally, the Company recorded a charge of $12.2 million to recognize
a loss on the early extinguishment of debt in connection with the September 1997
redemption of $83.3 million of the Senior Secured Notes.
19
<PAGE>
1997 Compared with 1996
The table below is a comparison of net sales, gross profit, engineering, selling
and administrative expenses, income (loss) from operations, and income (loss)
from discontinued operations, by segment, for 1997 and 1996. The 1996 amounts
include $30.0 million in special charges comprised of $18.3 million at Terex
Lifting ($16.8 gross profit; $1.6 million engineering, selling and
administrative expenses), $10.4 million at Terex Earthmoving (gross profit), and
$1.2 million General/Corporate (engineering, selling and administrative
expenses).
Year Ended December 31,
Increase
---------------------------
1997 1996 (Decrease)
------------- -------------- ---------------
(in millions of dollars)
NET SALES
Terex Lifting....................$ 548.0 $ 363.9 $ 184.1
Terex Earthmoving................. 288.4 314.9 (26.5)
General/Corporate/Eliminations.... 5.9 (0.3) 6.2
------------- -------------- ----------------
Total.........................$ 842.3 $ 678.5 $ 163.8
============= ============== ================
GROSS PROFIT
Terex Lifting....................$ 87.2 $ 38.1 $ 49.1
Terex Earthmoving................. 50.7 31.3 19.4
General/Corporate/Eliminations.... 1.7 (0.2) 1.9
------------- -------------- ----------------
Total.........................$ 139.6 $ 69.2 $ 70.4
============= ============== ===============
ENGINEERING, SELLING AND ADMINISTRATIVE EXPENSES
Terex Lifting....................$ 40.0 $ 33.3 $ 6.7
Terex Earthmoving................. 26.0 25.7 0.3
General/Corporate................. 2.5 5.1 (2.6)
------------- -------------- ----------------
Total.........................$ 68.5 $ 64.1 $ 4.4
============= ============== ================
INCOME (LOSS) FROM OPERATIONS
Terex Lifting....................$ 47.2 $ 4.8 $ 42.4
Terex Earthmoving................. 24.7 5.6 19.1
General/Corporate................. (0.8) (5.3) 4.5
------------- -------------- ----------------
Total.........................$ 71.1 $ 5.1 $ 66.0
============= ============== ================
INCOME FROM DISCONTINUED OPERATIONS
$ --- $ 102.0 $ (102.0)
============= ============== ================
Net Sales
Sales increased $163.8 million, or approximately 24.1%, to $842.3 million in
1997 from $678.5 million in 1996, primarily reflecting the Simon Access and
Square Shooter Acquisitions in the second quarter of 1997.
Terex Lifting's sales were $548.0 million for 1997, an increase of $184.1
million, or 50.6%, from $363.9 million in 1996 which did not include the results
of Simon Access and Square Shooter. Machine sales increased $168.7 million to
$460.5 million in 1997. This increase in sales was due primarily to the
inclusion of Simon Access and Square Shooter since their acquisition in April
1997. The increase in Terex Lifting's sales in 1997 as compared to 1996 was also
attributable to an increase of $22.7 million in sales at Terex--Waverly
Operations as compared to 1996. Parts sales increased $8.6 million to $72.9
million in 1997. Terex Lifting's bookings were $613.3 million for 1997, compared
to $356.1 million for 1996, an increase of $257.2 million.
20
<PAGE>
Terex Earthmoving's sales decreased $26.5 million in 1997 to $288.4 million.
This decline in sales resulted from a decrease in sales of Unit Rig machines
which was partially offset by sales increases in the other Terex Earthmoving
businesses. Machine sales at Terex Earthmoving in 1997 decreased $22.2 million
to $189.0 million from $211.2 million in 1996 of which approximately $33 million
was attributable to a decrease in Unit Rig's machine sales partially offset by
increased sales in Terex products primarily in North America. Sales of parts at
Terex Earthmoving in 1997 increased $2.2 million to $96.2 million as compared to
$94.0 million in 1996. The sales mix was approximately 33% parts in 1997
compared to approximately 29% parts in 1996. Terex Earthmoving's bookings for
1997 were $268.0 million, a decrease of $9.9 million, or 3.6%, from 1996.
Backlog decreased to $30.3 million at December 31, 1997 from $53.4 million in
1996 primarily as a result of the decrease in machine sales at Unit Rig.
Gross Profit
Gross profit for 1997 increased $70.4 million to $139.6 million. The increase in
the gross profit was due to the addition of the Simon Access and Square Shooter
businesses, general improvements at most operations and the effect of $27.1
million of non-recurring charges in 1996. The 1996 charges included a $16.8
million write down of goodwill and other long lived assets at Terex Lifting and
$10.4 million of non-recurring charges recorded at Terex Earthmoving, primarily
Unit Rig, in the fourth quarter of 1996. Gross profit as a percentage of net
sales for 1997 increased to 16.6% as compared to 10.2% for 1996 as a result of
the effect of the non-recurring charges in 1996. Excluding these $27.1 million
charges in 1996, gross profit as a percentage of sales in 1997 increased to
16.6% from 14.2% in 1996.
Terex Lifting's gross profit increased $49.1 million to $87.2 million for 1997,
compared to $38.1 million for 1996, reflecting the Simon Access and Square
Shooter acquisitions. The gross profit percentage increased to 15.9% in 1997 as
compared to 10.5% in 1996. Excluding the effect of the Simon Access and Square
Shooter acquisitions and the 1996 impairment charge, Terex Lifting's gross
profit in 1997 increased $3.6 million as compared to 1996.
Terex Earthmoving's gross profit increased $19.4 million to $50.7 million in
1997 compared to $31.3 million for 1996. Excluding the $10.4 million
non-recurring charges in 1996 noted above, Terex Earthmoving's gross profit
increased $9.0 million in 1997 as compared to 1996. Excluding the 1996
non-recurring charges, the gross profit percentage in 1997 increased to 17.6%
from 13.2% in 1996 due to an increase in the proportion of higher margin parts
sales as compared to machine sales, an increase in the gross margin for the
Terex product line, primarily due to cost reduction initiatives, and a decrease
in the percentage of Terex Earthmoving's sales in 1997 comprised of the lower
margin Unit Rig machines.
Engineering, Selling and Administrative Expenses
Engineering, selling and administrative expenses (which include the Company's
research and development expenses) increased to $68.5 million in 1997 from $64.1
million for 1996, reflecting the effects of the acquisition of the Simon Access
Companies and Square Shooter. However, engineering, selling and administrative
expenses as a percentage of net sales decreased to 8.1% for 1997 from 9.4% for
1996. Terex Earthmoving's engineering, selling and administrative expenses
increased $0.3 million to $26.0 million for 1997 due to increased selling
efforts. Terex Lifting's engineering, selling and administrative expenses
increased to $40.0 million for 1997 from $33.3 million for 1996, reflecting the
acquisition of the Simon Access Companies and Square Shooter. Excluding the
effect of the acquired companies, Terex Lifting engineering, selling and
administrative expenses fell by almost 22% year over year. Unallocated corporate
engineering, selling and administrative expenses decreased to $2.5 million in
1997 as compared to $5.1 million in 1996. See "Business--Research and
Development" for a discussion of the Company's engineering expenses.
Income (Loss) from Operations
Terex Lifting's income from operations of $47.2 million for 1997 increased by
$42.4 million over 1996, primarily due to the inclusion of the Simon Access and
Square Shooter businesses ($14.3 million), the 1996 impairment charges, improved
results at the European operations and continued strong performance by Terex
Lifting--Waverly Operations.
Terex Earthmoving's income from operations increased by $19.1 million to $24.7
million for 1997 from $5.6 million in 1996, primarily due to improved profits at
Unit Rig, higher gross margin percentages and the 1996 non-recurring charges
mentioned above under "Gross Profit."
On a consolidated basis, the Company had operating income of $71.1 million for
1997,compared to operating income of $5.1 million for 1996, for the reasons
mentioned above.
21
<PAGE>
Interest Expense
Net interest expense decreased to $38.5 million for 1997 from $43.6 million in
1996 as a result of lower average debt levels and interest rates in 1997. A
portion of the decrease was due to the $139.5 million of cash provided from the
sale of the Company's Materials Handling Segment in November 1996, which allowed
the Company to eliminate borrowings under its revolving credit facility prior to
the acquisition of the Simon Access Companies on April 7, 1997. Furthermore, the
proceeds from the issuance of Common Stock in July 1997 were used to reduce the
average balance borrowed under the then existing revolving credit facility, and
then on September 4, 1997, the Company redeemed $83.3 million of then
outstanding Senior Secured Notes.
Other Income (Expense)
The Company realized gains in 1996 of $3.3 million from the sale of excess
property principally in Scotland and Italy. During 1996, the Company recorded a
provision for income taxes of $12.1 million; in 1997, the Company recorded $0.7
million provision for income taxes. The 1996 provision for income taxes
primarily relates to $11.3 million of tax expense recognized at PPM Europe in
connection with its recapitalization which required the Company to utilize a net
operating loss carryforward. The additional $0.8 million provision relates to
taxes due on the sale of property in Europe.
Income (Loss) from Discontinued Operations
Income from discontinued operations in the Company's Material Handling Segment
("Clark") was $102.0 million for 1996. The income was primarily due to the gain
realized on the Clark Sale of $84.5 million.
Extraordinary Items
The Company recorded a charge of $2.6 million in 1997 to recognize a loss on the
early extinguishment of debt in connection with its debt refinancing in April
1997. Additionally, the Company recorded a charge of $12.2 million to recognize
a loss on the early extinguishment of debt in connection with the September 1997
redemption of $83.3 million of the Senior Secured Notes.
Liquidity and Capital Resources
Net cash of $19.5 million was used by operating activities during the year ended
December 31, 1998. During this period, $91.2 million was provided by operating
results before depreciation, amortization and extraordinary loss on retirement
of debt, and approximately $110 million was invested in working capital. The
investment in working capital was the result of a decision to invest in the
Terex Aerials business in Europe, the impact of the Coal India order and to
support the general increase in business activity. Net cash used in investing
activities was $222.0 million during the year ended December 31, 1998, primarily
related to the acquisitions of O&K Mining, Payhauler, Holland Lift, American
Crane, Italmacchine, Peiner, and Comedil. Net cash provided by financing
activities was $239.3 million during the year ended December 31, 1998. As
described below, cash was provided by the net proceeds from the issuance of
Terex's 8-7/8% Senior Subordinated Notes due 2008 and additional borrowings from
Terex's new bank credit facility. As also described below, cash was used in the
redemption or defeasance of the remainder of the Company's formerly outstanding
13-1/4% Senior Secured Notes. Cash and cash equivalents totaled $25.1 million at
December 31, 1998.
Debt reduction and an improved capital structure are major focal points for the
Company. In this regard, the Company regularly reviews its alternatives to
improve its capital structure and to reduce debt service through debt
refinancings, issuance of debt and/or equity, asset sales, including the sale of
business units, or any combination thereof.
Including the 1998 acquisitions of O&K Mining, American Crane, Holland Lift,
Payhauler, Italmacchine, Peiner and Comedil, since the beginning of 1995 Terex
has invested approximately $430 million to strengthen its core businesses
through ten strategic acquisitions. Terex expects that acquisitions and new
product development will continue to be important components of its growth
strategy and is continually reviewing acquisition opportunities. As with its
previous acquisitions, the Company will continue to pursue strategic
acquisitions, some of which could individually or in the aggregate be material,
which complement the Company's core operations, offer cost reduction
opportunities as well as distribution and purchasing synergies and provide
product diversification.
On October 15, 1998, the Company, through its Unit Rig division, was awarded a
$157.0 million order for the construction and delivery of 160 rigid off-highway
haul trucks from Coal India, the government agency for coal management in India.
As part of the contract, in January 1999 the Company received a down payment of
10% of the total contract value and in 1998 posted approximately $30 million in
letters of credit related to certain performance guarantees and to the 10% down
payment. It is anticipated that all trucks will be delivered during calendar
year 1999 and deliveries have commenced. Coal India is paying for the trucks
with a portion of a World Bank loan granted to the government of India in 1997,
and the order is fully supported by letters of credit.
22
<PAGE>
On March 6, 1998, the Company refinanced its then existing credit facility and
redeemed or defeased all $166.7 million principal amount of its then outstanding
Senior Secured Notes. The proceeds for the offer to purchase the former 13-1/4%
Senior Secured Notes and the repayment of its then existing revolving credit
facility were obtained from borrowings under the Company's current bank credit
facility. In connection with the refinancing of the Company's then existing
credit facility and the repurchase of the remaining 13-1/4% Senior Secured
Notes, the Company incurred extraordinary losses of $1.9 million and $36.4
million, respectively. These extraordinary charges were recorded in the first
quarter of 1998. The total funds paid at the redemption were $202.2 million
($166.7 million principal, $28.7 million redemption premium and $6.8 million
accrued interest).
In addition, on March 31, 1998 the Company acquired O&K Mining GmbH for a net
aggregate consideration of approximately $168 million. Concurrently with the O&K
Mining acquisition, the Company issued $150.0 million of its 8-7/8% Senior
Subordinated Notes due 2008.
As of December 31, 1998, the Company's balance outstanding under its revolving
credit facility totaled $44.1 million, letters of credit issued under Terex's
revolving credit facility totaled $51.6 million, and the additional amount the
Company could have borrowed under its revolving credit facility was $29.3
million.
On March 9, 1999, the Company issued $100.0 million of its 8-7/8% Series C
Senior Subordinated Notes due 2008. The net proceeds from the offering will be
used to prepay scheduled principal payments due through March 31, 2000 of
approximately $30.0 million with respect to Term A and Term B indebtedness under
Terex's bank credit facility, to repay outstanding revolving credit indebtedness
and for acquisitions.
The Company's businesses are working capital intensive and require funding for
purchases of production and replacement parts inventories, capital expenditures
for repair, replacement and upgrading of existing facilities as well as
financing of receivables from customers and dealers. The Company has significant
debt service requirements including semi-annual interest payments on its 8-7/8%
Senior Subordinated Notes due 2008 and monthly interest payments on the
Company's bank credit facility.
The Company believes that cash generated from operations, together with the
Company's revolving credit facility and recently issued 8-7/8% senior
subordinated notes due 2008, provides the Company adequate liquidity to meet its
operating and debt service requirements.
Contingencies and Uncertainties
Internal Revenue Service
The Company's federal income tax returns for the years 1987 through 1989 are
currently being audited by the IRS. In December 1994, the Company 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 the Company was able to use certain net
operating loss carryovers ("NOLs") to offset taxable income. In April 1995, the
Company filed an administrative appeal to the examination report. The IRS is
currently reviewing information the Company 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.
If the IRS prevails on all the issues raised, the amount of the tax the Company
would have to pay would be approximately $56 million plus penalties of
approximately $12.8 million and interest through December 31, 1998 of
approximately $112.1 million. The penalties claimed by the IRS are between 20%
and 25% of the amount of the tax deficiency assessed against the Company.
Interest on the amount of tax deficiency and penalties assessed against the
Company is currently accruing at a rate of 9% per annum. If the Company is
required to pay a significant portion of the tax deficiency claimed by the IRS,
it may not have or be able to obtain the money necessary to pay the tax
deficiency and continue in business.
The Company believes that it is able to provide adequate documentation for a
large part of the tax deductions the IRS has disallowed. In addition, the IRS
has recently advised the Company that it is no longer challenging the Company's
right to use the NOLs in question. As a result, the Company does not believe
that the outcome of the audit will have a material adverse effect on its
financial condition or results of operations. However, the Company may lose or
have to use some of its NOLs as a result of the audit. In addition, there is
also a possibility that the Company 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, the
Company does not have any additional reserves for amounts which might be due as
a result of the audit because the loss ranges from zero to $56 million plus
interest and penalties.
23
<PAGE>
Securities and Exchange Commission
In March 1994, the Securities and Exchange Commission began a private
investigation of the Company and certain of its present and former officers and
directors. The purpose of the investigation was to determine whether any of
these parties had violated federal securities laws. To date, this investigation
has focused primarily on the accounting treatment and the reporting (in filings
with the SEC) of various transactions which took place in the late 1980s and the
early 1990s. The Company is cooperating with the SEC in its investigation.
The SEC has advised the Company that it may bring an administrative proceeding
against the Company and certain of its present and former officers and
directors. The Company understands that if the SEC brings such proceedings, the
SEC would seek an order requiring the Company to cease and desist violating the
federal securities laws, but would not impose monetary penalties on the Company.
Such an order would be based on claims relating to the accounting treatment and
the reporting in the Company's financial statements for the years ended December
31, 1990 and 1991, and its Proxy Statement for the 1992 fiscal year. The Company
is currently in negotiations with the SEC to resolve this matter.
It is not possible at this time for us to determine the outcome of this
investigation.
Year 2000 Issue
The Year 2000 ("Y2K") problem is the result of computer programs being written
using two digits rather than four to define the applicable year. Thus, the year
1998 is represented by the number "98" in many legacy software applications.
Consequently, on January 1, 2000 the year will jump back to "00" for many
non-Y2K compliant applications. To systems that are non-Y2K compliant, the time
will seem to have reverted back 100 years. Accordingly, when computing basic
lengths of time, computer programs, certain building infrastructure components
(including elevators, alarm systems, telephone networks, sprinkler systems,
security access systems and certain HVAC systems) and any additional
time-sensitive software that are non-Y2K compliant may recognize a date using
"00" as the Year 1900. This could result in system failures or miscalculations
which could cause personal injury, property damage, disruption of operations,
and/or delays in payments from Terex's customers, any or all of which could
materially adversely affect Terex's business, financial condition, liquidity or
results of operations.
The Company has conducted a company-wide assessment of its computer systems,
products and operations infrastructure to identify computer hardware, software,
and process control systems that are not Y2K compliant. The Company believes
that it has identified those business-critical computer systems which are not
presently Y2K compliant, and has instituted a plan to replace, upgrade or modify
most of these systems by mid-1999. However, the Company acquired seven new
companies during 1998, all but one of which is located in Europe. The
business-critical systems of certain of the newly acquired companies, including
O&K Mining, were not Y2K compliant at the time of acquisition. The Company has
instituted a plan to replace, upgrade or modify the systems at these acquired
companies and expects to be completed by the end of 1999; however, no assurance
can be given that the replacement, upgrade or modification of the systems at
these companies will be timely completed. The total cost associated with
required modifications to become Y2K compliant is not expected to exceed $5
million, and a significant portion of these costs were planned upgrades to the
current financial and operating systems.
The Company has also initiated communications with third parties whose computer
systems' functionality could impact Terex. These communications will facilitate
coordination of Y2K solutions and will permit the Company to determine the
extent to which the Company may be vulnerable to failures of third parties to
address their own Y2K issues. To date, the Company has not identified any
significant issues with respect to third parties.
The failure to correct a material Y2K problem could result in an interruption
in, or a failure of, certain normal business activities or operations. Such
failures could materially and adversely affect the Company's results of
operations, liquidity and financial condition. Due to the general uncertainty
inherent in the Y2K problem, resulting in part from the uncertainty of the Year
2000 readiness of third-party suppliers and customers, the Company is unable to
determine at this time whether the consequences of Y2K failures will have a
material impact on the Company's results of operations, liquidity or financial
condition, and as such, has not yet established a contingency plan to handle the
most reasonably likely worst case scenario. The Company's Y2K project is
expected to significantly reduce the Company's level of uncertainty about the
Y2K problem and, in particular, about the Y2K compliance and readiness of its
material suppliers and customers. The Company believes that, with the
implementation of new business systems and completion of its Y2K project as
scheduled, the possibility of significant interruptions of normal operations
should be reduced.
24
<PAGE>
Euro
On January 1, 1999, 11 of the 15 member countries of the European Union
established fixed conversion rates between their existing currencies ("legacy
currencies") and one common currency--the euro. The euro now trades on currency
exchanges and may be used in business transactions. Beginning in January 2002,
new euro-denominated bills and coins will be issued, and legacy currencies will
be withdrawn from circulation. Terex's operating subsidiaries affected by the
euro conversion are assessing the systems and business issues raised by the euro
currency conversion. These issues include, among others, (1) the need to adapt
computer and other business systems and equipment to accommodate
euro-denominated transactions and (2) the competitive impact of cross-border
price transparency, which may make it more difficult for businesses to charge
different prices for the same products on a country-by-country basis
particularly once the euro currency is issued in 2002. The Company anticipates
that the euro conversion will not have a material adverse impact on its
financial condition or results of operations.
Other
The Company is subject to a number of contingencies and uncertainties including
product liability claims, self-insurance obligations, tax examinations and
guarantees. Many of the exposures are unasserted or proceedings are at a
preliminary stage, and it is not presently possible to estimate the amount or
timing of any cost to the Company. However, the Company does not believe that
these contingencies and uncertainties will, in the aggregate, have a material
adverse effect on the Company. When it is probable that a loss has been incurred
and possible to make reasonable estimates of the Company's liability with
respect to such matters, a provision is recorded for the amount of such estimate
or for the minimum amount of a range of estimates when it is not possible to
estimate the amount within the range that is most likely to occur.
The Company generates hazardous and nonhazardous wastes in the normal course of
its manufacturing operations. As a result, the Company is subject to a wide
range of federal, state, local and foreign environmental laws and regulations.
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,
the Company to make expenditures. The Company does not expect that these
expenditures will have a material adverse effect on its business or
profitability.
Foreign Currencies and Interest Rate Risk
The Company's products are sold in over 50 countries around the world and,
accordingly, revenues of the Company are generated in foreign currencies, while
the costs associated with those revenues are only partly incurred in the same
currencies. The major foreign currencies, among others, in which the Company
does business are the Pound Sterling, the French Franc, the German Mark and the
Italian Lira. The Company may, from time to time, hedge specifically identified
committed cash flows in foreign currencies using forward currency sale or
purchase contracts. Such foreign currency contracts have not historically been
material in amount.
Because certain of the Company's obligations, including indebtedness under the
Company's bank credit facility will bear interest at floating rates, an increase
in interest rates could adversely affect, among other things, the results of
operations of the Company. The Company has entered into interest protection
arrangements with respect to approximately $220 million of the principal amount
of its indebtedness under its bank credit facility fixing interest at various
rates between 6.6% and 8.2%.
Forward-Looking Information
Certain information in this Annual Report includes forward looking statements
regarding future events or the future financial performance of the Company that
involve certain contingencies and uncertainties, including those discussed above
in the section entitled Contingencies and Uncertainties. In addition, when
included in this Annual Report or in documents incorporated herein by reference,
the words "may," "expects," "intends," "anticipates," "plans," "projects,"
"estimates" and the negatives thereof and analogous or similar expressions are
intended to identify forward-looking statements. However, the absence of these
words does not mean that the statement is not forward-looking. The Company has
based these forward-looking statements on current expectations and projections
about future events. These statements are not guarantees of future performance.
Such statements are inherently subject to a variety of risks and uncertainties
that could cause actual results to differ materially from those reflected in
such forward-looking statements. Such risks and uncertainties, many of which are
beyond the Company's control, include, among others: the sensitivity of
construction and mining activity to interest rates, government spending and
general economic conditions; the ability to successfully integrate acquired
businesses; the retention of key management personnel; foreign currency
fluctuations; the Company's businesses are very competitive and may be affected
25
<PAGE>
by pricing, product initiatives and other actions taken by competitors; the
effects of changes in laws and regulations; the Company's business is
international in nature and is subject to exchange rates between currencies, as
well as international politics; the ability of suppliers to timely supply parts
and components at competitive prices and the Company's ability to timely
manufacture and deliver products to customers; compliance with the restrictive
covenants contained in the Company's debt agreements; continued use of net
operating loss carryovers; the outcome of the Internal Revenue Service audit;
the outcome of the Securities and Exchange Commission investigation; compliance
with applicable environmental laws and regulations; and other factors. Actual
events or the actual future results of the Company may differ materially from
any forward looking statement due to these and other risks, uncertainties and
significant factors. The forward-looking statements contained herein speak only
as of the date of this Annual Report and the forward-looking statements
contained in documents incorporated herein by reference speak only as of the
date of the respective documents. The Company expressly disclaims any obligation
or undertaking to release publicly any updates or revisions to any
forward-looking statement contained or incorporated by reference in this Annual
Report to reflect any change in the Company's expectations with regard thereto
or any change in events, conditions or circumstances on which any such statement
is based.
Item 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to certain market risks which exist as part of its
ongoing business operations and the Company uses derivative financial
instruments, where appropriate, to manage these risks. The Company, as a matter
of policy, does not engage in trading or speculative transactions. See Note A in
the Consolidated Financial Statements for further information on accounting
policies related to derivative financial statements.
Foreign Exchange Risk
The Company is exposed to fluctuations in foreign currency cash flows related to
third party purchases, intercompany product shipments and intercompany loans.
The Company is also exposed to fluctuations in the value of foreign currency
investments in subsidiaries and cash flows related to repatriation of these
investments. Additionally, the Company is exposed to volatility in the
translation of foreign currency earnings to U.S. Dollars. Primary exposures
include the U.S. Dollars versus functional currencies of the Company's major
markets which include, British Pound, German Mark, French Franc and Italian
Lira. The Company assesses foreign currency risk based on transactional cash
flows and identifies naturally offsetting positions and purchases hedging
instruments to protect anticipated exposures. At December 31, 1998 and 1997 the
Company had foreign exchange contracts, which were hedges of firm commitments,
totaling $11.0 million and $13.8 million, respectively, fair value of which
approximates carrying value.
Interest Rate Risk
The Company is exposed to interest rate volatility with regard to future
issuances of fixed rate debt and existing issuances of variable rate debt.
Primary exposure includes movements in the U.S. prime rate and London Interbank
Offer Rate ("LIBOR"). The Company uses interest rate swaps to reduce interest
rate volatility. At December 31, 1998, the Company had approximately $220
million of interest rate swaps fixing interest rates between 6.6% and 8.2%. The
fair market value of these arrangements, which represents the cost to settle
these contracts, was a liability of approximately $(4.3) million at December 31,
1998.
At December 31, 1998, the Company performed a sensitivity analysis for the
Company's derivatives and other financial instruments that have interest rate
risk. The Company calculated the pretax earnings effect on its interest
sensitive instruments. Based on this sensitivity analysis, the Company has
determined that an increase of 10% in the Company's weighted average interest
rates at December 31, 1998 would have increased interest expense by
approximately $1.6 million.
26
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Unaudited Quarterly Financial Data
Summarized quarterly financial data for 1998 and 1997 are as follows (in
millions, except per share amounts):
<TABLE>
<CAPTION>
1998 1997
----------------------------------------------------------------------------
Fourth Third Second First Fourth Third Second First
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $ 320.4 $ 318.7 $ 333.5 $ 260.6 $ 219.7 $ 214.1 $ 232.2 $ 176.3
Gross profit 61.7 58.7 60.6 44.8 36.8 37.0 38.3 27.5
Income (loss) before extraordinary items 18.1 19.7 20.6 14.4 10.0 8.7 7.7 3.9
Net income (loss) 18.1 19.7 20.6 (23.9) 10.0 (3.5) 5.1 3.9
Income (loss) applicable to common stock 18.1 19.7 20.6 (23.9) 6.4 (3.9) 4.7 3.5
Per share:
Basic
Income (loss) before extraordinary items $ 0.87 $ 0.95 $ 1.00 $ 0.70 $ 0.32 $ 0.47 $ 0.54 $ 0.26
Net income (loss) 0.87 0.95 1.00 (1.16) 0.32 (0.21) 0.35 0.26
Diluted
Income (loss) before extraordinary items $ 0.81 $ 0.88 $ 0.92 $ 0.65 $ 0.30 $ 0.43 $ 0.48 $ 0.24
Net income (loss) 0.81 0.88 0.92 (1.08) 0.30 (0.20) 0.31 0.24
</TABLE>
The accompanying unaudited quarterly financial data of the Company have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with Item 302 of Regulation S-K. In the opinion of
management, all adjustments considered necessary for a fair presentation have
been made and were of a normal recurring nature except for those discussed
below.
In the first quarter of 1998, the Company recognized extraordinary losses on the
early extinguishment of debt -- $1.9 million in connection with the refinancing
of its then existing credit facility and $36.4 million in connection with the
repurchase of its Senior Secured Notes.
In 1997, the Company recognized an extraordinary loss on the early
extinguishment of debt -- $2.6 million in connection with the refinancing of its
then existing revolving credit in the second quarter and $12.2 million in
connection with the redemption of $83.3 million of its Senior Secured Notes in
the third quarter.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
27
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Items 10 through 13 is incorporated by reference to
the definitive Terex Corporation Proxy Statement to be filed with the Securities
and Exchange Commission not later than 120 days after the end of the fiscal year
covered by this Annual Report on Form 10-K.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) and (2) Financial Statements and Financial Statement Schedules.
See "Index to Consolidated Financial Statements and Financial Statement
Schedule" on Page F-1.
(3) Exhibits
See "Index to Exhibits" on Page E-1.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the fourth quarter of 1998.
28
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
TEREX CORPORATION
By: /s/ Ronald M. DeFeo March 30, 1999
-------------------------
Ronald M. DeFeo,
Chairman, Chief Executive Officer
and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Name Title Date
/s/ Ronald M. DeFeo Chairman, Chief Executive Officer, March 30, 1999
- --------------------------
Ronald M. DeFeo and Director
(Principal Executive Officer)
/s/ Joseph F. Apuzzo Vice President - Corporate Finance March 30, 1999
- --------------------------
Joseph F. Apuzzo (Principal Financial Officer)
/s/ Kevin M. O'Reilly Controller March 30, 1999
- --------------------------
Kevin M. O'Reilly (Principal Accounting Officer))
/s/ G. Chris Andersen Director March 30, 1999
- --------------------------
G. Chris Andersen
/s/ Donald P. Jacobs Director March 30, 1999
- --------------------------
Donald P. Jacobs
/s/ William H. Fike Director March 30, 1999
- --------------------------
William H. Fike
/s/ Bruce I. Raben Director March 30, 1999
- --------------------------
Bruce I. Raben
/s/ Marvin B. Rosenberg Director March 30, 1999
- --------------------------
Marvin B. Rosenberg
/s/ David A. Sachs Director March 30, 1999
- --------------------------
David A. Sachs
29
<PAGE>
THIS PAGE IS INTENTIONALLY BLANK
NEXT PAGE IS NUMBERED "F-1"
30
<PAGE>
TEREX CORPORATION AND SUBSIDIARIES
Index to Consolidated Financial Statements and Financial Statement Schedules
Page
TEREX CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 1998 AND 1997
AND FOR EACH OF THE THREE YEARS
IN THE PERIOD ENDED DECEMBER 31, 1998
Report of independent accountants...................................... F - 2
Consolidated statement of income ...................................... F - 3
Consolidated balance sheet............................................. F - 4
Consolidated statement of changes in stockholders' equity (deficit).... F - 5
Consolidated statement of cash flows................................... F - 6
Notes to consolidated financial statements............................. F - 7
PPM CRANES, INC.
CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 1998 AND 1997
AND FOR EACH OF THE THREE YEARS
IN THE PERIOD ENDED DECEMBER 31, 1998
Report of independent accountants...................................... F - 36
Consolidated statement of operations................................... F - 37
Consolidated balance sheet............................................. F - 38
Consolidated statement of changes in shareholders' deficit............. F - 39
Consolidated statement of cash flows................................... F - 40
Notes to consolidated financial statements............................. F - 41
FINANCIAL STATEMENT SCHEDULES
Schedule II -- Valuation and Qualifying Accounts and Reserves.......... F - 48
Schedule IV -- Indebtedness of and to Related Parties -- Not Current... F - 49
All other schedules for which provision is made in the applicable regulations of
the Securities and Exchange Commission are not required under the related
instructions or are not applicable, and therefore have been omitted.
F - 1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Stockholders of Terex Corporation
In our opinion, the Terex Corporation consolidated financial statements listed
in the accompanying index on page F-1 present fairly, in all material respects,
the financial position of Terex Corporation and its subsidiaries (the "Company")
at December 31, 1998 and 1997, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 1998, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
Stamford, Connecticut
March 1, 1999
F - 2
<PAGE>
<TABLE>
<CAPTION>
TEREX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(in millions, except per share amounts)
Year Ended December 31,
------------------------------------
1998 1997 1996
----------- ----------- ------------
<S> <C> <C> <C>
NET SALES................................................. $ 1,233.2 $ 842.3 $ 678.5
COST OF GOODS SOLD........................................ 1,007.4 702.7 609.3
----------- ----------- ------------
GROSS PROFIT........................................... 225.8 139.6 69.2
ENGINEERING, SELLING AND ADMINISTRATIVE EXPENSES.......... 103.8 68.5 64.1
----------- ----------- ------------
INCOME FROM OPERATIONS................................. 122.0 71.1 5.1
OTHER INCOME (EXPENSE)
Interest income........................................ 2.7 0.9 1.2
Interest expense....................................... (47.2) (39.4) (44.8)
Amortization of debt issuance costs.................... (2.1) (2.6) (2.6)
Other income (expense) - net........................... (0.9) 1.0 (1.1)
----------- ----------- ------------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES AND EXTRAORDINARY ITEMS................. 74.5 31.0 (42.2)
PROVISION FOR INCOME TAXES................................ (1.7) (0.7) (12.1)
----------- ----------- ------------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE
EXTRAORDINARY ITEMS.................................... 72.8 30.3 (54.3)
INCOME FROM DISCONTINUED OPERATIONS
(net of tax expense of $2.6 in 1996)................... --- --- 102.0
----------- ----------- ------------
INCOME BEFORE EXTRAORDINARY ITEMS....................... 72.8 30.3 47.7
EXTRAORDINARY LOSS ON RETIREMENT OF DEBT.................. (38.3) (14.8) ---
----------- ----------- ------------
NET INCOME ............................................ 34.5 15.5 47.7
LESS PREFERRED STOCK ACCRETION............................ --- (4.8) (22.9)
----------- ----------- ------------
INCOME APPLICABLE TO COMMON STOCK...................... $ 34.5 $ 10.7 $ 24.8
=========== =========== ============
PER COMMON AND COMMON EQUIVALENT SHARE:
Basic
Income (loss) from continuing operations............ $ 3.52 $ 1.57 $ (6.54)
Income from discontinued operations................. --- --- 8.64
----------- ----------- ------------
Income before extraordinary items................ 3.52 1.57 2.10
Extraordinary loss on retirement of debt............ (1.85) (0.91) ---
----------- ----------- ------------
Net income........................................... $ 1.67 $ 0.66 $ 2.10
=========== =========== ============
Diluted
Income (loss) from continuing operations............ $ 3.25 $ 1.44 $ (5.81)
Income from discontinued operations................. --- --- 7.67
----------- ----------- ------------
Income before extraordinary items............... 3.25 1.44 1.86
Extraordinary loss on retirement of debt............ (1.71) (0.84) ---
----------- ----------- ------------
Net income.......................................... $ 1.54 $ 0.60 $ 1.86
=========== =========== ============
AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT SHARES
OUTSTANDING IN PER SHARE CALCULATION:
Basic............................................. 20.7 16.2 11.8
Diluted........................................... 22.4 17.7 13.3
</TABLE>
The accompanying notes are an integral part of these financial statements.
F - 3
<PAGE>
<TABLE>
<CAPTION>
TEREX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in millions, except par value)
December 31,
------------------------
1998 1997
------------ -----------
CURRENT ASSETS
<S> <C> <C>
Cash and cash equivalents.......................................... $ 25.1 $ 28.7
Trade receivables (less allowance $5.6 and $4.5 as
of December 31, 1998 and 1997)................................... 249.8 139.3
respectively).........................................................
Net inventories.................................................... 472.8 232.1
Other current assets............................................... 23.9 26.4
------------ -----------
Total Current Assets............................ 771.6 426.5
LONG-TERM ASSETS
Property, plant and equipment - net................................ 99.5 47.8
Goodwill - net..................................................... 240.9 88.4
Other assets - net................................................. 39.2 25.8
------------ ------------
TOTAL ASSETS.......................................................... $ 1,151.2 $ 588.5
============ ============
CURRENT LIABILITIES
Notes payable and current portion of long-term debt................ $ 44.7 $ 26.6
Trade accounts payable............................................. 226.9 138.1
Accrued compensation and benefits.................................. 24.7 16.4
Accrued warranties and product liability........................... 36.0 25.3
Other current liabilities.......................................... 93.1 29.7
------------ ------------
Total Current Liabilities........................ 425.4 236.1
NON CURRENT LIABILITIES
Long-term debt, less current portion............................... 586.6 273.5
Other.............................................................. 41.1 19.3
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Warrants to purchase common stock.................................. 0.8 0.8
Equity rights....................................................... 3.1 3.2
Common Stock, $0.01 par value --
authorized 150.0 and 30.0 shares; issued and outstanding 20.8
and 20.5 shares at December 31, 1998 and 1997, respectively..... 0.2 0.2
Additional paid-in capital......................................... 179.0 178.7
Accumulated deficit................................................ (80.9) (115.4)
Accumulated other comprehensive income............................. (4.1) (7.9)
------------ ------------
Total Stockholders' Equity......................... 98.1 59.6
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY............................ $ 1,151.2 $ 588.5
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F - 4
<PAGE>
<TABLE>
<CAPTION>
TEREX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
(in millions)
Acumulated
Additional Accumu- Other
Equity Common Paid-in lated Comprehensive Total
Warrants Rights Stock Capital Deficit Income
--------- ----------- --------- ---------- ------------ ------------- ---------------
BALANCE AT
<S> <C> <C> <C> <C> <C> <C> <C>
DECEMBER 31, 1995....... $ 17.2 $ --- $ 0.1 $ 40.5 $ (150.9) $ (3.8) $ (96.9)
Net income................ --- --- --- --- 47.7 --- 47.7
Other Comprehensive Income:
Unrealized holding loss
on equity securities... --- --- --- --- --- (1.0) (1.0)
Translation adjustment --- --- --- --- --- (0.6) (0.6)
Pension liability --- --- --- --- --- 0.7 0.7
adjustment
----------------
Comprehensive Income...... 46.8
----------------
Accretion of carrying value
of redeemable preferred
stock to redemption value --- --- --- --- (22.9) --- (22.9)
Conversion of Warrants.... (14.0) --- --- 14.0 --- --- ---
Issuance of common stock.. --- --- --- 1.3 --- --- 1.3
---------- ----------- ---------- --------- ------------ ------------- ----------------
BALANCE AT
DECEMBER 31, 1996....... 3.2 --- 0.1 55.8 (126.1) (4.7) (71.7)
Net income................ --- --- --- --- 15.5 --- 15.5
Other Comprehensive Income:
Conversion of Series
B preferred stock --- --- --- 1.0 --- --- 1.0
Translation adjustment --- --- --- --- --- (3.4) (3.4)
Pension liability --- --- --- --- --- 0.2 0.2
adjustment
----------------
Comprehensive Income...... 13.3
----------------
Accretion of carrying value
of redeemable preferred
stock to redemption value --- --- --- --- (4.8) --- (4.8)
Conversion of Warrants.... (2.4) --- --- 2.4 --- --- ---
Issuance of Common Stock.. --- --- 0.1 106.1 --- --- 106.2
Reclassification of equity
rights from non-current --- 3.2 --- --- --- --- 3.2
liabilities
Exchange of Preferred Stock
of a subsidiary for common
stock................... --- --- --- 13.4 --- --- 13.4
---------- ----------- ---------- --------- ------------ ------------- ----------------
BALANCE AT
DECEMBER 31, 1997....... 0.8 3.2 0.2 178.7 (115.4) (7.9) 59.6
Net income................ --- --- --- --- 34.5 --- 34.5
Other Comprehensive Income:
Translation adjustment --- --- --- --- --- 3.8 3.8
----------------
Comprehensive Income...... 38.3
----------------
Issuance of Common Stock.. --- --- --- 0.8 --- --- 0.8
Exercise of Equity Rights. --- (0.1) --- (0.5) --- --- (0.6)
---------- ----------- ---------- --------- ------------ ------------- ----------------
BALANCE AT DECEMBER 31, 1998
$ 0.8 $ 3.1 $ 0.2 $ 179.0 $ (80.9) $ (4.1) $ 98.1
========== =========== ========== ========= ============ ============= ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F - 5
<PAGE>
<TABLE>
<CAPTION>
TEREX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
Year Ended December 31,
------------------------------------------
1998 1997 1996
--------------- ------------- ------------
OPERATING ACTIVITIES
<S> <C> <C> <C>
Net Income................................................................$ 34.5 $ 15.5 $ 47.7
Adjustments to reconcile net income to cash used in operating activities:
Depreciation .......................................................... 10.1 8.2 7.0
8.3 6.1 6.7
Amortization...........................................................
Extraordinary loss on retirement of debt............................... 38.3 14.8 ---
Gain on sale of discontinued operations................................ --- --- (84.5)
Impairment charges and asset writedowns................................ --- --- 33.8
Deferred taxes......................................................... --- --- 11.3
Other.................................................................. --- 0.1 (2.9)
Changes in operating assets and liabilities (net of effects of acquisitions):
Trade receivables.................................................. (45.5) (4.8) (23.7)
Net inventories.................................................... (106.1) (11.5) (12.7)
Net assets of discontinued operations.............................. --- --- (5.4)
Trade accounts payable............................................. 35.7 6.5 4.9
Accrued compensation and benefits.................................. 7.8 (2.6) 3.3
Other, net......................................................... (2.6) (32.6) (3.1)
--------------- ------------- -------------
Net cash used in operating activities............................ (19.5) (0.3) (17.6)
--------------- ------------- -------------
INVESTING ACTIVITIES
Acquisition of businesses, net of cash acquired........................ (211.3) (97.2) ---
Capital expenditures................................................... (13.1) (9.9) (8.1)
Proceeds from sale of excess assets.................................... 2.4 8.5 6.5
Net proceeds from sale of discontinued operations ..................... --- --- 137.2
Other.................................................................. --- --- 0.1
--------------- ------------- -------------
Net cash provided by (used in) investing activities.............. (222.0) (98.6) 135.7
--------------- ------------- -------------
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt, net of issuance costs........ 513.6 --- ---
Net borrowings (repayments) under revolving line of credit agreements.. (71.5) 99.7 (55.0)
Principal repayments of long-term debt................................. (170.8) (83.7) (1.0)
Payment of premiums on early extinguishment of debt.................... (29.0) (9.9) ---
Redemption of preferred stock.......................................... --- (45.4) ---
Issuance of common stock............................................... --- 104.6 ---
Other.................................................................. (3.0) (1.1) 5.6
--------------- ------------- -------------
Net cash provided by (used in) financing activities.............. 239.3 64.2 (50.4)
--------------- ------------- -------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS..............
(1.4) (8.6) (2.7)
--------------- ------------- -------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS...................... (3.6) (43.3) 65.0
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD.......................... 28.7 72.0 7.0
--------------- ------------- -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD................................$ 25.1 $ 28.7 $ 72.0
=============== ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F - 6
<PAGE>
TEREX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998
(dollar amounts in millions, unless otherwise noted, except per share amounts)
NOTE A -- SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation. As set forth in Note C below, the Company sold its Clark
Material Handling business on November 27, 1996. The sale resulted in a gain of
$84.5. The Clark Material Handling business is accounted for as a discontinued
operation in the consolidated statement of operations for the year ended
December 31, 1996.
Generally accepted accounting principles permit, but do not require, the
allocation of interest expense between continuing and discontinued operations.
Because the methods allowed under generally accepted accounting principles for
calculating interest expense to be allocated to discontinued operations are not
necessarily indicative of the use of proceeds from the sale of the Clark
Material Handling business by the Company, and the effect on interest expense of
the continuing operations of the Company, the Company has elected not to
allocate interest expense to discontinued operations. The results of this
election is that loss from continuing operations includes substantially all of
the interest expense of the Company, and income from discontinued operations
does not include any material interest expense.
Principles of Consolidation. The Consolidated Financial Statements include the
accounts of Terex Corporation and its majority owned subsidiaries ("Terex" or
the "Company"). All material intercompany balances, transactions and profits
have been eliminated. The equity method is used to account for investments in
affiliates in which the Company has an ownership interest between 20% and 50%.
Investments in entities in which the Company has an ownership interest of less
than 20% are accounted for on the cost method or at fair value in accordance
with Statement of Financial Accounting Standards ("SFAS") No. 115 "Accounting
for Certain Investments in Debt and Equity Securities."
Use of Estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents. Cash equivalents consist of highly liquid investments
with original maturities of three months or less. The carrying amount of cash
and cash equivalents approximates their fair value.
Inventories. Inventories are stated at the lower of cost or market value. Cost
is determined by the first-in, first-out ("FIFO") method.
Debt Issuance Costs. Debt issuance costs incurred in securing the Company's
financing arrangements are capitalized and amortized over the term of the
associated debt. Capitalized debt issuance costs related to debt that is retired
early are charged to expense at the time of retirement. Debt issuance costs
before amortization totaled $14.2 and $12.6 at December 31, 1998 and 1997,
respectively. During 1998, 1997 and 1996, the Company amortized $2.1, $2.6 and
$2.6, respectively, of capitalized debt issuance costs; in addition, $7.7 and
$4.1 of such costs were charged to extraordinary loss on retirement of debt in
1998 and 1997, respectively.
Intangible Assets. Intangible assets include purchased patents, trademarks and
other specifically identifiable assets arising from business combinations and
are amortized on a straight-line basis over the respective estimated useful
lives not exceeding seven years.
Goodwill. Goodwill, representing the difference between the total purchase price
and the fair value of assets (tangible and intangible) and liabilities at the
date of acquisition, is being amortized on a straight-line basis over between
fifteen and forty years. Accumulated amortization is $15.1 and $8.9 at December
31, 1998 and 1997, respectively.
Property, Plant and Equipment. Property, plant and equipment are stated at cost.
Expenditures for major renewals and improvements are capitalized while
expenditures for maintenance and repairs not expected to extend the life of an
asset beyond its normal useful life are charged to expense when incurred. Plant
and equipment are depreciated over the estimated useful lives of the assets
under the straight-line method of depreciation for financial reporting purposes
and both straight-line and other methods for tax purposes.
F - 7
<PAGE>
Impairment of Long Lived Assets. The Company's policy is to assess the
realizability of its long lived assets and to evaluate such assets for
impairment whenever events or changes in circumstances indicate that the
carrying amount of such assets (or group of assets) may not be recoverable.
Impairment is determined to exist if the estimated future undiscounted cash
flows is less than its carrying value. The amount of any impairment then
recognized would be calculated as the difference between estimated future
discounted cash flows and the carrying value of the asset. (See Note D --
"Impairment of Long Lived Assets and Other Special Charges.")
Revenue Recognition. Revenue and costs are generally recorded when products are
shipped and invoiced to either independently owned and operated dealers or to
customers. Certain new units may be invoiced prior to the time customers take
physical possession. Revenue is recognized in such cases only when the customer
has a fixed commitment to purchase the units, the units have been completed,
tested and made available to the customer for pickup or delivery, and the
customer has requested that the Company hold the units for pickup or deliver at
a time specified by the customer. In such cases, the units are invoiced under
the Company's customary billing terms, title to the units and risks of ownership
pass to the customer upon invoicing, the units are segregated from the Company's
inventory and identified as belonging to the customer and the Company has no
further obligations under the order.
Accrued Warranties and Product Liability. The Company records accruals for
potential warranty and product liability claims based on the Company's claim
experience. Warranty costs are accrued at the time revenue is recognized. The
Company provides self-insurance accruals for estimated product liability
experience on known claims and for claims anticipated to have been incurred
which have not yet been reported.
Non Pension Postretirement Benefits. The Company provides postretirement
benefits to certain former salaried and hourly employees and certain hourly
employees covered by bargaining unit contracts that provide such benefits and
has elected the delayed recognition method of adoption of the new standard
related to the benefits. (See Note L -- "Retirement Plans.")
Foreign Currency Translation. Assets and liabilities of the Company's
international operations are translated at year-end exchange rates. Income and
expenses are translated at average exchange rates prevailing during the year.
For operations whose functional currency is the local currency, translation
adjustments are accumulated in the Cumulative Translation Adjustment component
of Stockholders' Equity. Gains or losses resulting from foreign currency
transactions are recorded in the accounts based on the underlying transaction.
Financial Instruments. The Company may from time to time use foreign exchange
contracts to hedge recorded balance sheet amounts related to certain
international operations and firm commitments that create currency exposures.
The Company does not enter into speculative contracts. Gains and losses on
hedges of assets and liabilities are recognized in income as offsets to the
gains and losses from the underlying hedged amounts. Gains and losses on hedges
of firm commitments are recorded on the basis of the underlying transaction. At
December 31, 1998 and 1997 the Company had foreign exchange contracts, which
were hedges of firm commitments, totaling $11.0 and $13.8, respectively, fair
value of which approximates their carrying value.
As certain of the Company's obligations, including indebtedness under the New
Bank Credit facility (as defined in Note G), bear interest at floating rates,
the Company entered into certain interest protection arrangements. At December
31, 1998, the Company had approximately $220 of such interest protection
arrangements fixing interest at various rates between 6.6% and 8.2%. The
differentials to be received or paid are recognized as adjustments to interest
expense. The fair market value of these arrangements approximated $(4.3).
Environmental Policies. Environmental expenditures that relate to current
operations are either expensed or capitalized depending on the nature of the
expenditure. Expenditures relating to conditions caused by past operations that
do not contribute to current or future revenue generation are expensed.
Liabilities are recorded when environmental assessments and/or remedial actions
are probable, and the costs can be reasonably estimated. Such amounts were not
material at December 31, 1998 and 1997.
Research and Development Costs. Research and development costs are expensed as
incurred. Such costs incurred in the development of new products or significant
improvements to existing products are included in Engineering, Selling and
Administrative Expenses.
F - 8
<PAGE>
Income Taxes. Prepaid and deferred taxes reflect the impact of temporary
differences between the amounts of assets and liabilities recognized for
financial reporting purposes and the amounts recognized for tax purposes as well
as tax credit carryforwards and loss carryforwards. These deferred taxes are
measured by applying currently enacted tax rates. A valuation allowance reduces
deferred tax assets when it is "more likely than not" that some portion or all
of the deferred tax assets will not be realized. (See Note I -- "Income Taxes.")
Earnings Per Share. Basic earnings per share is computed by dividing net income
for the period by the weighted average number of shares of Terex common stock
outstanding. Diluted earnings per share is computed by dividing net income for
the period by the weighted average number of shares of Terex common stock
outstanding and dilutive potential common shares. In computing diluted earnings
per share the assumed exercise of warrants, equity rights and stock options at
December 31, 1998 was 0.1, 0.8 and 0.8, respectively.
Comprehensive Income. In the first quarter of 1998, the Company adopted SFAS No.
130, "Reporting Comprehensive Income." SFAS No. 130 requires disclosure of total
non-shareowner changes in equity in interim periods and additional disclosures
of the components of non-shareowner changes in equity on an annual basis.
Comprehensive income is disclosed in the Consolidated Statement of Changes in
Stockholder's Equity (Deficit).
Hedging Activities. In June 1998, the Financial Accounting Standards Board
issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," which establishes a new model for accounting for derivative and
hedging activities and supersedes and amends a number of existing standards.
SFAS No. 133 is effective for fiscal years beginning after June 15, 1999. Upon
initial application, all derivatives are required to be recognized in the
statement of financial position as either assets or liabilities and measured at
fair value. Changes in the fair value of derivatives are recorded each period in
current earnings or other comprehensive income, depending on whether a
derivative is designated as part of a hedge transaction and, if it is, the type
of hedge transaction. In addition, all hedging relationships must be reassessed
and documented pursuant to the provisions of SFAS No. 133. The Company does not
expect that adoption of this statement will have a significant impact on its
financial position or results of operations.
NOTE B -- ACQUISITIONS
On January 5, 1998, the Company completed the purchase of Payhauler Corp.
("Payhauler"). Payhauler, which is part of the Terex Earthmoving segment,
manufactures four-wheel drive off-highway trucks.
On March 31, 1998, the Company purchased all of the outstanding shares of O&K
Mining GmbH ("O&K Mining") from O&K Orenstein & Koppel AG ("Orenstein & Koppel")
for net aggregate consideration of approximately $168, subject to certain
post-closing adjustments. The transaction was financed through the issuance of
the Company's New Senior Subordinated Notes (as defined in Note G) and
borrowings under the Company's New Bank Credit Facility. O&K Mining, which is
part of the Terex Earthmoving segment, is headquartered in Dortmund, Germany,
and has operations in the United States, the United Kingdom, Australia, Canada,
South Africa and Singapore. O&K Mining markets a complete range of large
hydraulic mining shovels serving the global surface mining industry and the
global construction and infrastructure development markets.
On May 4, 1998, the Company completed the purchase of Holland Lift International
B.V. ("Holland Lift"). Holland Lift, which is part of the Terex Lifting segment,
manufactures aerial work platforms at its facility near Amsterdam, the
Netherlands.
On July 31, 1998, the Company completed the acquisition of The American Crane
Corporation ("American Crane"). American Crane, which is part of the Terex
Lifting segment, manufactures lattice boom cranes at its facility in Wilmington,
North Carolina.
On November 3, 1998, the Company completed the acquisition of Italmacchine SpA
("Italmacchine"). Italmacchine, which is part of the Terex Lifting segment,
manufactures rough terrain telescopic boom forklifts at its facility near
Perugia, Italy
On November 13, 1998, the Company completed the acquisition of Peiner HTS
("Peiner"). Peiner, which is part of the Terex Lifting segment, manufactures
tower cranes at it its facility in Trier, Germany.
On December 18, 1998, the Company completed the acquisition of Gru Comedi SpA
("Comedil"). Comedil, which is part of the Terex Lifting segment, manufactures
tower cranes at its facility in Fontanafredda, Italy.
F - 9
<PAGE>
The Payhauler, O&K Mining, Holland Lift, American Crane, Italmacchine, Peiner
and Comedil acquisitions are being accounted for using the purchase method, with
the purchase price allocated to the assets acquired and the liabilities assumed
based upon their respective estimated fair values at the date of acquisition.
The excess of purchase price over the net assets acquired (approximately $153)
is being amortized on a straight-line basis over 40 years. The Company is in the
process of completing evaluations and estimates for purposes of determining
certain values and as such, may revise the estimates as additional information
is obtained.
Simon Access and Baraga - On April 7, 1997, the Company completed the purchase
of the industrial businesses of Simon Access division ("Simon Access") of Simon
Engineering plc for $90 in cash, subject to adjustment. Simon Access, which is
part of the Terex Lifting segment, consists principally of several business
units in the United States and Europe which are engaged in the manufacture and
sale of access equipment designed to position people and materials to work at
heights. Simon Access products include truck mounted aerial devices, aerial work
platforms and truck mounted cranes (boom trucks) which are sold to utility
companies as well as to customers in the industrial and construction markets.
The Company obtained the funds necessary to complete the transaction from its
cash on hand and borrowings under the 1997 Credit Facility. (See Note G -
"Long-Term Obligations").
On April 14, 1997 the Company completed the purchase of Baraga Products, Inc.
and M&M Enterprises of Baraga, Inc. (collectively, "Baraga", or the "Square
Shooter Business"). Baraga, which is part of the Terex Lifting segment,
manufactures rough terrain telescopic boom forklifts.
The Simon Access and Baraga acquisitions are being accounted for using the
purchase method, with the purchase price allocated to the assets acquired and
the liabilities assumed based upon their respective estimated fair values at the
date of acquisition. The excess of purchase price over the net assets acquired
(approximately $66) is being amortized on a straight-line basis over 40 years.
The operating results of the acquired businesses are included in the Company's
consolidated results of operations since the date of acquisition. The following
pro forma summary presents the consolidated results of operations, including the
pre-acquisition results of the acquired businesses, for the respective period,
after giving effect to certain adjustments, including amortization of goodwill,
interest expense and amortization of debt issuance costs related to the
Company's refinancings discussed in Note G.
Unaudited Pro Forma for the
Year Ended December 31,
------------- --------------
1998 1997
------------- --------------
Net sales.......................................$ 1,366.5 $ 1,307.2
Income from operations.......................... 117.5 84.2
Income before extraordinary items............... 64.9 34.8
Income before extraordinary items, per share:
Basic........................................$ 3.14 $ 1.54
Diluted......................................$ 2.90 $ 1.43
The pro forma information is not necessarily indicative of what the actual
results of operations of the Company would have been for the periods indicated,
nor does it purport to represent the results of operations for future periods.
F - 10
<PAGE>
NOTE C -- DISCONTINUED OPERATIONS
The Company sold its worldwide Clark Material Handling business ("CMHC") on
November 27, 1996 for $139.5 in cash. The sale resulted in a $84.5 gain net of
$2.6 of income taxes. CMHC comprised the Company's Material Handling Segment.
The accompanying Consolidated Statement of Operations for the year ended
December 31, 1996 includes the results of CMHC in "Income from Discontinued
Operations." Please refer to Note A - Basis of Presentation for a discussion of
allocation of interest expense. Summary operating results of discontinued
operations are as follows:
Year ended
December 31,
1996
------------
Net sales................................................... $ 404.6
Income before income taxes.................................. 17.5
Provision for income taxes.................................. ---
Income from operations of discontinued operations........... $ 17.5
Gain on sale of discontinued operations..................... 84.5
------------
Income from discontinued operations......................... $ 102.0
============
NOTE D -- IMPAIRMENT OF LONG LIVED ASSETS AND OTHER SPECIAL CHARGES
As required by generally accepted accounting principles, in the acquisition of
PPM Cranes, Inc. and PPM S.A. in May 1995 goodwill was allocated to various
operating units. After eighteen months of continuous rationalization, it was
estimated that future undiscounted cash flows for certain operations would not
be sufficient to recover the goodwill and fixed assets recorded for these
operations. Thus, in the fourth quarter of 1996 the Company recorded an
impairment charge of $16.8 ($13.3 related to goodwill and $3.5 related to fixed
assets). Similarly, in the fourth quarter of 1996 the Company wrote off $1.9 of
goodwill related to its IMACO unit in the United Kingdom. These 1996 impairment
charges totaling $18.7 are included in "Cost of Goods Sold."
In addition to the impairment charges described above, the Company recorded
special charges of $8.6 to reduce the value of assets at Unit Rig, $2.0 related
to 1993 tax matters at PPM Europe, and $3.0 of other one-time charges during
1996.
F - 11
<PAGE>
NOTE E -- INVENTORIES
Inventories consist of the following:
December 31,
----------------------
1998 1997
---------- -----------
Finished equipment..................................... $ 148.9 $ 54.1
Replacement parts...................................... 150.9 82.8
Work-in-process........................................ 59.4 22.4
Raw materials and supplies............................. 113.6 72.8
---------- -----------
Net inventories...................................... $ 472.8 $ 232.1
========== ===========
NOTE F -- PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
December 31,
-----------------------
1998 1997
----------- -----------
Property............................................... $ 13.6 $ 13.6
Plant.................................................. 44.6 43.8
Equipment.............................................. 90.8 25.6
----------- -----------
149.0 83.0
Less: Accumulated depreciation........................ (49.5) (35.2)
----------- -----------
Net property, plant and equipment.................... $ 99.5 $ 47.8
=========== ===========
NOTE G -- LONG-TERM OBLIGATIONS
Long-term debt is summarized as follows:
December 31,
-----------------------
1998 1997
----------- -----------
New Bank Credit Facility................................ $ 423.8 $ ---
8-7/8% Senior Subordinated Notes due March 31, 2008..... 149.4 ---
13-1/4% Senior Secured Notes due May 15, 2002........... --- 165.1
1997 Credit Facility maturing April 7, 2000............. --- 94.9
Notes payable........................................... 7.4 4.7
Capital lease obligations............................... 12.5 12.1
Other................................................... 38.2 23.3
----------- -----------
Total long-term debt.................................. 631.3 300.1
Current portion of long-term debt..................... 44.7 26.6
----------- -----------
Long-term debt, less current portion.................. $ 586.6 $ 273.5
=========== ===========
F - 12
<PAGE>
The New Bank Credit Facility
On March 6, 1998, the Company refinanced its 1997 Credit Facility and redeemed
or defeased all of its $166.7 principal amount of its then outstanding 13 1/4%
Senior Secured Notes due 2002 (the "Senior Secured Notes"). The refinancing
included effectiveness of a revolving credit facility aggregating up to $125.0
and term loan facilities providing for loans in an aggregate principal amount of
up to approximately $375.0 (collectively, the "New Bank Credit Facility"). In
connection with the refinancing of the Company's 1997 Credit Facility (as
defined below) and the repurchase of the Senior Secured Notes, the Company
incurred extraordinary losses of $1.9 and $36.4, respectively. These
extraordinary charges were recorded in the first quarter of 1998.
The New Bank Credit Facility consists of a new secured global revolving credit
facility aggregating up to $125.0 (the "New Revolving Credit Facility") and two
term loan facilities (collectively, the "Term Loan Facilities") providing for
loans in an aggregate principal amount of up to approximately $375.0. The New
Revolving Credit Facility will be used for working capital and general corporate
purposes, including acquisitions. With limited exceptions, the obligations of
the Company under the New Bank Credit Facility are secured by (i) a pledge of
all of the capital stock of domestic subsidiaries of the Company, (ii) a pledge
of 65% of the stock of the foreign subsidiaries of the Company and (iii) a first
priority security interest in, and mortgages on, substantially all of the assets
of Terex and its domestic subsidiaries. The New Bank Credit Facility contains
covenants limiting the 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 New Bank Credit Facility also contains certain financial and
operating covenants, including a maximum leverage ratio, a minimum interest
coverage ratio and a minimum fixed charge coverage ratio.
Pursuant to the Term Loan Facilities, the Company has borrowed (i) $175.0 in
aggregate principal amount pursuant to a Term Loan A due March 2004 (the "Term A
Loan") and (ii) $200.0 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 Company's option, at an all-in drawn
cost of 2.00% per annum in excess of the adjusted eurodollar rate or, with
respect to U.S. dollar denominated alternate based 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 the Company'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 weighted average interest rate on the Term A Loan
and Term B Loan at December 31, 1998 was 6.75% and 7.75%, respectively. 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.)
Pursuant to the New Revolving Credit Facility, the Company has available an
aggregate amount of up to $125.0. As of December 31, 1998, the Company's balance
outstanding under the New Revolving Credit Facility totaled $44.1, letters of
credit issued totaled $51.6, and the additional amount the Company could have
borrowed was $29.3. The outstanding principal amount of loans under the New
Revolving Credit Facility bears interest, at the Company'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 New Revolving
Credit Facility will terminate on the sixth anniversary thereof.
The New Senior Subordinated Notes
On March 31, 1998, the Company issued and sold $150.0 aggregate principal amount
of 8-7/8% Senior Subordinated Notes due 2008, discounted to yield 8.94% (the
"New Senior Subordinated Notes"). The New Senior Subordinated Notes are jointly
and severally guaranteed by certain of the domestic subsidiaries (see Note P).
The New Senior Subordinated Notes were issued in a private placement made in
reliance upon an exemption from registration under the Securities Act of 1933,
as amended. The net proceeds from the offering were used to fund a portion of
the aggregate consideration for the acquisition of O&K Mining. During the third
quarter of 1998, the New Senior Subordinated Notes were exchanged for New Senior
Subordinated Notes registered under the Securities Act of 1933, as amended.
F - 13
<PAGE>
The Senior Secured Notes
On May 9, 1995, the Company issued $250 of 13-1/4% Senior Secured Notes due May
15, 2002. The Senior Secured Notes were issued in conjunction with the PPM
Acquisition and a refinancing of 13.0% Senior Secured Notes due August 1, 1996
("Old Senior Secured Notes"), and 13.5% Secured Senior Subordinated Notes due
July 1, 1997 ("Subordinated Notes").
On September 4, 1997, the Company used a portion of the proceeds from a common
stock offering to redeem $83.3 in principal of the Secured Senior Notes. In
accordance with the terms of the Indenture, the redemption of the Senior Secured
Notes was at a 9.46% redemption premium. The redemption premium plus the
pro-rata share of unamortized debt origination costs totaled $12.2 and were
reflected as extraordinary items in the third quarter of 1997.
The 1997 Credit Facility
On April 7, 1997, the Company and certain of its domestic subsidiaries
(collectively, the "Borrowers") entered a Revolving Credit Agreement with a
financial institution, as agent (the "Agent"), pursuant to which the Agent and
other financial institutions party thereto provided the Borrowers with a line of
credit of up to $125 (the "1997 Credit Facility"). The 1997 Credit Facility was
refinanced with the New Bank Credit Facility on March 6, 1998 and incurred an
extraordinary charge of $1.9.
Loans made under the 1997 Credit Facility (a) bore interest, based on the
Company's fixed charge coverage ratio, at a rate between 0.5% and 1.5% per annum
in excess of the prime rate or at a rate between 2.0% and 3.0% per annum in
excess of the eurodollar rate, at the election of the Company, (b) were to
mature on April 7, 2000, (c) were used by the Borrowers to repay the Old Credit
Facility (as defined below), and (d) could be used for working capital and other
general corporate purposes, including acquisitions.
The Old Credit Facility
The Company's $100 revolving credit facility (the "Old Credit Facility") was
terminated in April 1997 in conjunction with the Simon Access acquisition and
entering into the 1997 Credit Facility. The Company paid a fee of $2.0 upon
termination of the Old Credit Facility and wrote off $0.6 of unamortized debt
acquisition costs. These expenses have been reflected as extraordinary items in
the second quarter of 1997.
The Company had the option to base the interest rate on prime or the Eurodollar
rate. The outstanding principal amount of prime rate loans was at the rate of
1.75% per annum in excess of the prime rate. The outstanding principal amount of
Eurodollar rate loans was at the rate of 3.75% per annum in excess of the
adjusted Eurodollar rate.
Schedule of Debt Maturities
Scheduled annual maturities of long-term debt outstanding at December 31, 1998
in the successive five-year period are summarized below. Amounts shown are
exclusive of minimum lease payments disclosed in Note H -- "Lease Commitments":
1999................................... $ 40.5
2000................................... 34.9
2001................................... 40.4
2002................................... 41.5
2003................................... 48.0
Thereafter............................. 413.5
=============
Total.............................. $ 618.8
=============
Based on quoted market values, the Company believes that the fair value of the
New Senior Subordinated Notes was approximately $148.5 as of December 31, 1998.
The Company believes that the carrying value of its other borrowings
approximates fair market value, based on discounting future cash flows using
rates currently available for debt of similar terms and remaining maturities.
The Company paid $42.5, $39.8 and $45.3 of interest in 1998, 1997 and 1996,
respectively.
F - 14
<PAGE>
The weighted average interest rate on the Company's revolving debt facilities
outstanding was 5.8% and 8.3% at December 31, 1998 and 1997, respectively.
NOTE H -- LEASE COMMITMENTS
The Company leases certain facilities, machinery and equipment, and vehicles
with varying terms. Under most leasing arrangements, the Company pays the
property taxes, insurance, maintenance and expenses related to the leased
property. Certain of the equipment leases are classified as capital leases and
the related assets have been included in Property, Plant and Equipment. Net
assets under capital leases were $19.0 and $21.9, net of accumulated
amortization of $8.6 and $8.2, at December 31, 1998 and 1997, respectively.
Future minimum capital and noncancelable operating lease payments and the
related present value of capital lease payments at December 31, 1998 are as
follows:
Capital Operating
Leases Leases
------------- -------------
1999............................................ $ 4.6 $ 10.0
2000............................................ 3.4 5.9
2001............................................ 2.7 5.0
2002............................................ 1.0 4.3
2003............................................ 0.8 3.7
Thereafter...................................... 1.1 6.0
------------- ------------
Total minimum obligations .................. 13.6 $ 34.9
=============
Less amount representing interest............... (1.1)
-------------
Present value of net minimum obligations.... 12.5
Less current portion............................ (4.2)
-------------
Long-term obligations....................... $ 8.3
=============
Most of the Company's operating leases provide the Company with the option to
renew the leases for varying periods after the initial lease terms. These
renewal options enable the Company to renew the leases based upon the fair
rental values at the date of expiration of the initial lease. Total rental
expense under operating leases was $9.3, $6.8 and $4.7 in 1998, 1997, and 1996,
respectively.
NOTE I -- INCOME TAXES
The components of Income (Loss) From Continuing Operations Before Income Taxes
and Extraordinary Items are as follows:
Year ended December 31,
-------------------------------
1998 1997 1996
--------- ---------- ----------
United States................................... $ 57.4 $ 16.1 $ (40.6)
Foreign......................................... 17.1 14.9 (1.6)
--------- ---------- ----------
Income (loss) from continuing operations
before income taxes and extraordinary items..... $ 74.5 $ 31.0 $ (42.2)
========= ========== ==========
F - 15
<PAGE>
The major components of the Company's provision for income taxes are summarized
below:
Year ended December 31,
-----------------------------
1998 1997 1996
--------- --------- ---------
Current:
Federal....................................... $ --- $ --- $ ---
State......................................... --- --- ---
Foreign....................................... 1.7 0.7 0.8
--------- --------- ---------
Current income tax provision.............. 1.7 0.7 0.8
Deferred:
Deferred foreign income tax................... --- --- 11.3
--------- --------- ---------
Total provision for income taxes.......... $ 1.7 $ 0.7 12.1
========= ========= =========
As a result of the recapitalization of PPM Europe, certain NOL benefit
carryforwards which were fully provided for at the acquisition were utilized
resulting in a deferred tax charge of $11.3 in the fourth quarter of 1996.
Deferred tax assets and liabilities result from differences in the basis of
assets and liabilities for tax and financial statement purposes. Based on
historical operating results and the uncertainty surrounding the IRS
examinations for tax years 1987 through 1989, as discussed in more detail below,
a valuation allowance has been recognized for the full amount of the deferred
tax assets. The tax effects of the basis differences and net operating loss
carryforward as of December 31, 1998 and 1997 are summarized below for major
balance sheet captions:
1998 1997
----------- -----------
Intangibles................................ $ (2.8) $ (0.4)
Accrued liabilities........................ --- (1.6)
Other...................................... (0.5) (0.8)
----------- -----------
Total deferred tax liabilities........ (3.3) (2.8)
----------- -----------
Receivables................................ 1.1 0.6
Net inventories............................ 15.2 4.0
Fixed assets............................... 0.5 0.7
Worker's compensation...................... 1.5 1.4
Warranties and product liability........... 8.2 7.8
All other items............................ 8.6 6.4
Benefit of net operating loss carryforward. 120.9 140.2
----------- -----------
Total deferred tax assets............. 156.0 161.1
----------- -----------
Deferred tax assets valuation allowance.... (152.7) (158.3)
----------- -----------
Net deferred tax liabilities.......... $ --- $ ---
=========== ===========
The valuation allowance for deferred tax assets as of January 1, 1997 was
$115.0. The net change in the total valuation allowance for the years ended
December 31, 1997 and 1998 were an increase of $43.3 and a decrease of $5.6,
respectively.
The Company's Provision for Income Taxes is different from the amount which
would be provided by applying the statutory federal income tax rate to the
Company's Income (Loss) From Continuing Operations Before Income Taxes and
Extraordinary Items. The reasons for the difference are summarized below:
<TABLE>
<CAPTION>
Year ended December 31,
------------------------------------------
1998 1997 1996
------------- ------------- --------------
<S> <C> <C> <C>
Statutory federal income tax rate................................. $ 26.1 $ 10.9 $ (14.8)
Recognition of fully reserved preacquisition deferred tax asset... --- --- 11.3
Change in valuation allowance relating to U.S. NOL................ (21.1) (6.6) 7.8
Foreign tax differential on income/losses of foreign subsidiaries. (4.4) (4.5) 1.4
Goodwill.......................................................... 1.0 0.9 6.3
Other............................................................. 0.1 --- 0.1
------------- ------------- --------------
Total provision for income taxes............................. $ 1.7 $ 0.7 $ 12.1
============= ============= ==============
</TABLE>
F - 16
<PAGE>
The effective tax rate for discontinued operations differs from the statutory
rate due primarily to utilization of NOLs and foreign tax differential on the
income of foreign subsidiaries.
The Company has not provided for U.S. federal and foreign withholding taxes on
$52.0 of foreign subsidiaries' undistributed earnings as of December 31, 1998,
because such earnings are intended to be reinvested indefinitely. Any income tax
liability that would result had such earnings actually been repatriated would
likely be offset by utilization of NOLs. On repatriation, certain foreign
countries impose withholding taxes. The amount of withholding tax that would be
payable on remittance of the entire amount of undistributed earnings would
approximate $0.2.
At December 31, 1998, the Company had domestic federal net operating loss
carryforwards of $243.5. Approximately $55.8 of the remaining net operating loss
carryforwards are subject to special limitations under the Internal Revenue
Code, and the NOLs may be affected by the current Internal Revenue Service (the
"IRS") examination discussed below.
The tax basis net operating loss carryforwards expire as follows:
Tax Basis Net
Operating Loss
Carryforwards
----------------
1999................................. 11.9
2001................................. 4.6
2004................................. 21.6
2005................................. 0.8
2006................................. 5.8
2007................................. 21.9
2008................................. 100.4
2009................................. 34.2
2010................................. 42.3
----------------
Total............................ $ 243.5
================
The Company also has various state net operating loss and tax credit
carryforwards expiring at various dates through 2013 available to reduce future
state taxable income and income taxes. In addition, the Company's foreign
subsidiaries have approximately $74.8 of loss carryforwards, $31.5 in the United
Kingdom, $9.5 in France, $10.4 in Germany, and $23.4 in other countries, which
are available to offset future foreign taxable income. The tax loss
carryforwards in the United Kingdom, Germany and France are available without
expiration. Tax loss carryforwards in other countries of $3.2 expire in 1999
through 2003, with the remaining $20.2 available without expiration.
The Company's federal income tax returns for the years 1987 through 1989 are
currently being audited by the IRS. In December 1994, the Company 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 the Company was able to use certain NOLs to
offset taxable income. In April 1995, the Company filed an administrative appeal
to the examination report. The IRS is currently reviewing information the
Company 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.
If the IRS prevails on all the issues raised, the amount of the tax the Company
would have to pay would be approximately $56 million plus penalties of
approximately $12.8 million and interest through December 31, 1998 of
approximately $112.1 million. The penalties claimed by the IRS are between 20%
and 25% of the amount of the tax deficiency assessed against the Company.
Interest on the amount of tax deficiency and penalties assessed against the
Company is currently accruing at a rate of 9% per annum. If the Company is
required to pay a significant portion of the tax deficiency claimed by the IRS,
it may not have or be able to obtain the money necessary to pay the tax
deficiency and continue in business.
The Company believes that it is able to provide adequate documentation for a
large part of the tax deductions the IRS has disallowed. In addition, the IRS
has recently advised the Company that it is no longer challenging the Company's
right to use the NOLs in question. As a result, the Company does not believe
that the outcome of the audit will have a material adverse effect on its
financial condition or results of operations. However, the Company may lose or
have to use some of its NOLs as a result of the audit. In addition, there is
also a possibility that the Company 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, the
Company does not have any additional reserves for amounts which might be due as
a result of the audit because the loss ranges from zero to $56 million plus
interest and penalties.
F - 17
<PAGE>
The Company made income tax payments of $0.7 in 1998, and $1.8 in 1997,
respectively. No income tax payments were made in 1996.
NOTE J -- PREFERRED STOCK
The Company's certificate of incorporation was amended in June 1998 to authorize
50.0 million shares of preferred stock, $.01 par value per share. As of December
31, 1998, no shares of preferred stock were outstanding.
Series A Cumulative Redeemable Convertible Preferred Stock
As of December 31, 1996, the Company had 1.2 million issued and outstanding
shares of Series A Cumulative Redeemable Convertible Preferred Stock (the
"Series A Preferred Stock"). The Liquidation Preference totaled $45.4 at
December 31, 1996. On December 30, 1996, the Company called all of its Series A
Preferred Stock for redemption and subsequently redeemed the stock in January
1997 at an aggregate redemption price of $45.4.
The aggregate net proceeds to the Company for the Series A Preferred Stock and
the Series A Warrants issued on December 20, 1993 were $27.2. The Company
allocated $10.3 and $16.9 of this amount to the Series A Preferred Stock and the
Series A Warrants, respectively, based on management's estimate of the relative
fair values of these securities at the time of their issuance, using information
provided by the Company's investment bankers. The difference between the
initially recorded amount and the redemption amount was accreted to the carrying
value of the Series A Preferred Stock using the interest method over the period
from issuance to the mandatory redemption date, December 31, 2000. As a result
of calling all of the stock for redemption on December 30, 1996, the carrying
value of the Series A Preferred Stock was further adjusted for increases in the
Liquidation Preference. There was no accretion recorded in 1997. The total
accretion recorded in 1996 was $22.9.
Series B Cumulative Redeemable Convertible Preferred Stock
As of December 31, 1996, the Company had 38.8 thousand issued and outstanding
shares of Series B Cumulative Redeemable Convertible Preferred Stock (the
"Series B Preferred Stock"). These shares constituted the remaining balance
outstanding of the Series B Preferred Stock issued to certain individuals on
December 9, 1994 in consideration for the early termination of a contract
between the Company and KCS Industries, L.P., a Connecticut limited partnership
("KCS"), a related party. On December 30, 1997, all 38.8 thousand outstanding
shares of Series B Preferred Stock were converted by the holder thereof into
87.3 thousand shares of common stock.
NOTE K -- STOCKHOLDERS' EQUITY
Common Stock. The Company's certificate of incorporation was amended in June
1998 to increase the number of authorized shares of common stock, par value $.01
(the "Common Stock"), to 150.0 million. As of December 31, 1998, there were 20.8
million shares issued and outstanding. Of the 129.2 million unissued shares at
that date, 2.5 million shares were reserved for issuance for the exercise of
stock options and Series A Warrants.
Equity Rights. On May 9, 1995, the Company sold one million equity rights
securities (the "Equity Rights") along with $250 of the Senior Secured Notes. A
portion of the proceeds ($3.2) of the sale of the Senior Secured Notes and the
Equity Rights was allocated to the Equity Rights. The portion of the proceeds
related to the Equity Rights has been recorded in the stockholders' equity
section of the balance sheet, because they can be satisfied in Common Stock or
cash at the option of the Company. The Equity Rights entitle the holders, upon
exercise at any time on or prior to May 15, 2002, to receive cash or, at the
election of the Company, Common Stock in an amount equal to the average closing
sale price of the Common Stock for the 60 consecutive trading days prior to the
date of exercise (the "Current Price"), less $7.288 per share, subject to
adjustment in certain circumstances. Changes in the Current Price do not affect
the net income or loss reported by the Company; however, changes in the Current
Price vary the amount of cash that the Company would have to pay or the number
of Shares of Common Stock that would have to be issued in the event holders
exercise the Equity Rights. During 1998 holders exercised 35.6 thousand rights.
As of December 31, 1998, the Current Price of the Common Stock was $23.382 which
would have required the Company to either pay $15.5 or issue 543.4 thousand
shares of Common Stock, at the Company's option, in the event that all of the
holders had exercised their Equity Rights.
Series A Warrants. In connection with the private placement of the Series A
Preferred Stock (see Note J -- "Series A Preferred Stock"), the Company issued
1.3 million Series A Warrants of which 62.7 thousand warrants were outstanding
at December 31, 1998. Each Series A Warrant may be exercised, in whole or in
part, at the option of the holder at any time before the expiration date on
December 31, 2000 and is redeemable by the Company under certain circumstances.
As of December 31, 1998, upon the exercise or redemption of a Warrant, the
holder thereof was entitled to receive 2.41 shares of Common Stock. The exercise
price for the Warrants is $0.01 for each share of Common Stock. The number of
shares of Common Stock issuable upon exercise or redemption of the Warrants is
subject to adjustment in certain circumstances.
F - 18
<PAGE>
Series B Warrants. In connection with the issuance of the Series B Preferred
Stock (see Note J -- "Series B Preferred Stock"), the Company issued 107.0
thousand Series B Warrants. At December 31, 1998, all Series B Warrants had been
exercised. The exercise price for the Warrants was $0.01 for each share of
Common Stock.
Stock Options. The Company maintains a qualified incentive stock option ("ISO")
plan covering certain officers and key employees. The exercise price of the ISO
is the fair market value of the shares at the date of grant. The ISO allows the
holder to purchase shares of Common Stock, commencing one year after grant. ISO
expire after ten years. At December 31, 1998, 12.8 thousand stock options were
available for grant under the ISO.
Long-Term Incentive Plans. In May 1996, the stockholders approved, the 1996
Terex Corporation Long-Term Incentive Plan (the "1996 Plan"). The 1996 Plan
authorizes the granting of (i) options ("Stock Option Awards") to purchase
shares of Common Stock, including Restricted Stock, (ii) shares of Common Stock,
including Restricted Stock ("Stock Awards"), and (iii) cash bonus awards based
upon a participant's job performance ("Performance Awards"). In May 1998, the
stockholders approved that the aggregate number of shares of Common Stock
(including Restricted Stock, if any) optioned or granted under the 1996 Plan was
not to exceed 2.0 million shares. At December 31, 1998, 736.3 thousand shares
were available for grant under the 1996 Plan. The 1996 Plan provides that a
committee (the "Committee") of the Board of Directors consisting of two or more
members thereof who are non-employee directors, shall administer the 1996 Plan
and has provided the Committee with the flexibility to respond to changes in the
competitive and legal environments, thereby protecting and enhancing the
Company's current and future ability to attract and retain directors and
officers and other key employees and consultants. The 1996 Plan also provides
for automatic grants of Stock Option Awards to non-employee directors.
In 1994, the stockholders approved a Long-Term Incentive Plan (the "Plan")
covering certain managerial, administrative and professional employees and
outside directors. The Plan provides for awards to employees, from time to time
and as determined by a committee of outside directors, of cash bonuses, stock
options, stock and/or restricted stock. The total number of shares of the
Company's Common Stock available to be awarded under the Plan is 750 thousand,
subject to certain adjustments. At December 31, 1998, 41.2 thousand shares were
available for grant under the Plan.
F - 19
<PAGE>
The following table is a summary of stock options under all three of the
Company's plans.
Weighted
Average Exercise
Number of Price per Share
Options
------------- -----------------
Outstanding at December 31, 1995................ 798,100 $ 5.65
Granted...................................... 108,500 $ 6.57
Exercised.................................... (18,075) $ 5.70
Canceled or expired.......................... (45,100) $ 6.32
-------------
Outstanding at December 31, 1996................ 843,425 $ 5.73
Granted...................................... 176,750 $ 13.93
Exercised.................................... (184,988) $ 6.04
Canceled or expired.......................... (103,600) $ 5.69
-------------
Outstanding at December 31, 1997................ 731,587 $ 7.64
Granted...................................... 547,851 $ 22.02
Exercised.................................... (100,900) $ 6.72
Canceled or expired.......................... (17,329) $ 15.00
-------------
Outstanding at December 31, 1998................ 1,161,209 $ 14.39
============= =================
Exercisable at December 31, 1998................ 579,595 $ 10.00
============= =================
Exercisable at December 31, 1997................ 473,340 $ 6.92
============= =================
Exercisable at December 31, 1996................ 479,364 $ 6.08
============= =================
The following table summarizes information about stock options outstanding at
December 31, 1998:
Weighted
Weighted Average
Average Exercise
Range of Number of Life Price per
Exercise Prices Options (in years) Share
- ---------------------------- ------------- ----------- ---------------
$ 3.50 - $ 6.00 315,633 4.2 $ 4.69
$ 6.01 - $ 10.00 128,450 4.5 $ 6.68
$ 10.01 - $ 15.00 346,125 7.9 $ 13.58
$ 15.01 - $ 25.00 156,101 8.7 $ 21.70
$ 25.01 - $ 30.38 214,900 7.7 $ 29.25
-------------
1,161,209 6.6 $ 14.39
=============
The Company has adopted SFAS No. 123, "Accounting for Stock-Based Compensation."
In accordance with the provisions of SFAS 123, the Company applies APB Opinion
No. 25, "Accounting for Stock Issued to Employees," and related interpretations
in accounting for its plans and does not recognize compensation expense for its
stock-based compensation plans other than for restricted stock. If the Company
had elected to recognize compensation expense based upon the fair value at the
grant date for awards under these plans consistent with the methodology
prescribed by SFAS No. 123, the Company's net income would have been reduced by
$3.4 ($0.16 (basic) and $0.15 (diluted) per share), $1.1 ($0.07 (basic) and
$0.06 (diluted) per share), $0.6 ($0.05 (basic) and 0.04 (diluted) per share) in
1998, 1997and 1996, respectively.
F - 20
<PAGE>
The fair value for these options was estimated at the date of grant using the
Black-Scholes option-pricing model with the following weighted-average
assumptions for 1998, 1997 and 1996, respectively: dividend yields of 0%, 0% and
0%; expected volatility of 54.86 %, 57.50% and 58.72% risk-free interest rates
of 5.26%, 6.34% and 6.42%; and expected life of 9.3 years, 8.1 years and 6.6
years. The aggregate fair value of options granted during 1998, 1997 and
1996 for which the exercise price equals the market price on the grant date was
$8.1, $1.7 and $0.4, respectively.
The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. Because
the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.
Comprehensive Income. The following table reflects the accumulated balances of
other comprehensive income.
<TABLE>
<CAPTION>
Accumulated
Pension Unrealized Cumulative Other
Liability Holding Gain Translation Comprehensive
Adjustment (Loss) Adjustment Income
---------------- ------------------ ------------------- ----------------------
<S> <C> <C> <C> <C>
Balance at December 31, 1995......$ (2.7) $ 1.0 $ (2.1) $ (3.8)
Current year change............... 0.7 (1.0) (0.6) (0.9)
---------------- ------------------ ------------------- ----------------------
Balance at December 31, 1996...... (2.0) --- (2.7) (4.7)
Current year change............... 0.2 --- (3.4) (3.2)
---------------- ------------------ ------------------- ----------------------
Balance at December 31, 1997...... (1.8) --- (6.1) (7.9)
Current year change.............. --- --- 3.8 3.8
---------------- ------------------ ------------------- ----------------------
Balance at December 31, 1998......$ (1.8) $ --- $ (2.3) $ (4.1)
================ ================== =================== ======================
</TABLE>
NOTE L -- RETIREMENT PLANS
Pension Plans
US Plans - The Company maintains four defined benefit pension plans covering
certain domestic employees. The benefits for the plans covering the salaried
employees are based primarily on years of service and employees' qualifying
compensation during the final years of employment. Participation in the plan for
salaried employees was frozen as of May 7, 1993, and no participants will be
credited with service following such date except that participants not fully
vested will be credited with service for purposes of determining vesting only.
The benefits for the plans covering the hourly employees are based primarily on
years of service and a flat dollar amount per year of service. It is the
Company's policy generally to fund these plans based on the minimum requirements
of the Employee Retirement Income Security Act of 1974 (ERISA). Plan assets
consist primarily of common stocks, bonds, and short-term cash equivalent funds.
In December 1993, Terex contributed 350.0 thousand shares of Terex Common Stock
to the Master Trust for the benefit of two of the Terex plans, which were valued
by the Company at $2.3 based upon 96.5% of the market value of Terex Common
Stock as quoted on the New York Stock Exchange on the day of contribution. The
market value of this investment was $10.0 at December 31, 1998.
Other Postemployment Benefits
The Company provides postemployment health and life insurance benefits to
certain former salaried and hourly employees of Terex Cranes - Waverly
Operations. The Company adopted SFAS No. 106, "Employers' Accounting for
Postretirement Benefits Other than Pensions," on January 1, 1993. This statement
requires accrual of postretirement benefits (such as health care benefits)
during the years an employee provides service. Terex adopted the provisions of
SFAS No. 106 using the delayed recognition method, whereby the amount of the
unrecognized transition obligation at January 1, 1993 is recognized
prospectively as a component of future years' net periodic postretirement
benefit expense. The unrecognized transition obligation at January 1, 1993 was
F - 21
<PAGE>
$4.5. Terex is amortizing this transition obligation over 12 years, the average
remaining life expectancy of the participants.
The liability of the Company's U.S. Plans, as of December 31, was as follows:
<TABLE>
<CAPTION>
Pension Benefits Other Benefits
-------------------------------------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
Change in benefit obligation:
<S> <C> <C> <C> <C>
Benefit obligation at beginning of year $ 34.6 $ 32.1 $ 2.6 $ 2.8
Service cost.......................... 0.2 0.2 --- ---
Interest cost......................... 2.4 2.4 0.2 0.2
Actuarial (gain) loss................. 2.2 2.2 --- (0.1)
Benefits paid......................... (2.4) (2.3) (0.3) (0.3)
------------- ------------- ------------- -------------
Benefit obligation end of year.......... 37.0 34.6 2.5 2.6
------------- ------------- ------------- -------------
Change in plan assets:
Fair value of plan assets at beginning
of year.............................. 32.0 30.2 --- ---
Actual return on plan assets.......... 5.9 4.0 --- ---
Employer contribution................. 0.6 0.1 --- ---
Benefits paid......................... (2.4) (2.3) --- ---
------------- ------------- ------------- -------------
Fair value of plan assets at end of year 36.1 32.0 --- ---
------------- ------------- ------------- -------------
Funded status........................... (0.9) (2.6) (2.5) (2.6)
Unrecognized actuarial loss............ 2.0 3.4 (1.2) (1.4)
Unrecognized prior service cost......... 0.7 0.7 --- ---
Unrecognized transition obligation...... --- --- 1.8 2.2
------------- ------------- ------------- -------------
Net amount recognized................... $ 1.8 $ 1.5 $ (1.9) $ (1.8)
============= ============= ============= =============
Amounts recognized in the Consolidated Balance Sheet consist of:
Prepaid benefit cost................. $ 3.1 $ 3.0 $ --- $ ---
Accrued benefit liability............ (3.1) (3.3) (1.9) (1.8)
Accumulated other comprehensive income
1.8 1.8 --- ---
------------- ------------- ------------- -------------
Net amount recognized................... $ 1.8 $ 1.5 $ (1.9) $ (1.8)
============= ============= ============= =============
Pension Benefits Other Benefits
-------------------------------------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
Weighted-average assumptions as of December 31:
Discount rate........................ 6.50% 7.00% 6.50% 7.00%
Expected return on plan.............. 9.00% 9.00% 9.00% 9.00%
Rate of compensation increase........ --- --- --- ---
</TABLE>
F - 22
<PAGE>
<TABLE>
<CAPTION>
Pension Benefits Other Benefits
-------------------------------------- -------------------------------------
1998 1997 1996 1998 1997 1996
------------ ------------ ------------ ----------- ------------ ------------
Components of net periodic benefit cost:
<S> <C> <C> <C> <C> <C> <C>
Service cost.......................... $ 0.2 $ 0.2 $ 0.2 $ --- $ --- $ ---
Interest cost......................... 2.4 2.4 2.3 0.2 0.2 0.2
Expected return on plan assets........ (2.5) (2.2) (2.1) --- ---
Amortization of prior service cost.... 0.1 0.1 0.1 --- --- (0.1)
Amortization of transition obligation. --- --- --- 0.3 0.3 0.4
Recognized actuarial (gain)loss....... 0.2 0.3 0.4 (0.1) (0.1) (0.1)
============ ============ ============ =========== ============ ============
Net periodic benefit cost............... $ 0.4 $ 0.8 $ 0.9 $ 0.4 $ 0.4 $ 0.4
============ ============ ============ =========== ============ ============
</TABLE>
The projected benefit obligation, accumulated benefit obligation, and fair value
of plan assets for the pension plan with accumulated benefit obligations in
excess of plan assets were $9.8, $9.8 and $7.1, respectively, as of December 31,
1998, and $9.3, $9.3 and $6.1, respectively, as of December 31, 1997.
The Company has two nonpension postretirement benefit plans. The health care
plan is contributory with participants' contributions adjusted annually; the
life insurance plan is noncontributory. For measurement purposes, a 8.56%
percent annual rate of increase in the per capita cost of covered health care
benefits was assumed for 1998. The rate was assumed to decrease gradually to 5
percent for 2005 and remain at that level thereafter. Assumed health care cost
trend rates have a significant effect on the amounts reported for the health
care plan. A one-percentage-point change in assumed health care cost trend rates
would have the following effects:
1-Percentage- 1-Percentage-
Point Increase Point Decrease
---------------- ---------------
Effect on total service and interest cost
components 5.13% (4.71)%
Effect on postretirement benefit obligation 5.57% (5.10)%
International Plans - Terex Equipment Limited maintains a government-required
defined benefit plan (which includes certain defined contribution elements)
covering substantially all of its management employees. This plan is fully
funded. Pension expense relating to this plan was approximately $0.4, $0.5 and
$0.4 for the years ended December 31, 1998, 1997 and 1996, respectively.
Terex Aerials Limited (Ireland) maintains two voluntary defined benefit plans
covering its employees. These plans are fully funded. Pension expense relating
to these plans was approximately $0.1 and $0.1 for the years ended December 31,
1998 and 1997, respectively.
O & K Mining maintains an unfunded noncontributory defined benefit plan covering
substantially all of its employees. The project benefit obligation, accumulated
benefit obligation and pension expense related to the plan for 1998 was $5.7,
$5.7 and $0.4, respectively
Saving Plans
The Company sponsors various tax deferred savings plans into which eligible
employees may elect to contribute a portion of their compensation. The Company
may, but is not obligated to, contribute to certain of these plans. Company
contributions to these plans were $1.2, $0.7 and $0.8 for the years ended
December 31, 1998, 1997 and 1996, respectively.
NOTE M -- LITIGATION AND CONTINGENCIES
In the Company's lines of business numerous suits have been filed alleging
damages for accidents that have arisen in the normal course of operations
involving the Company's products. The Company is self-insured, up to certain
limits, for these product liability exposures, as well as for certain exposures
related to general, workers' compensation and automobile liability. Insurance
coverage is obtained for catastrophic losses as well as those risks required to
be insured by law or contract. The Company has recorded and maintains an
estimated liability in the amount of management's estimate of the Company's
aggregate exposure for such self-insured risks.
F - 23
<PAGE>
The Company is involved in various other legal proceedings which have arisen in
the normal course of its operations. The Company has recorded provisions for
estimated losses in circumstances where a loss is probable and the amount or
range of possible amounts of the loss is estimable.
The Company's outstanding letters of credit totaled $51.6. The letters of credit
generally serve as collateral for certain liabilities included in the
Consolidated Balance Sheet. Certain of the letters of credit serve as collateral
guaranteeing the Company's performance under contracts.
As described in Note I -- "Income Taxes," the Internal Revenue Service is
currently examining the Company's federal tax returns for the years 1987 through
1989.
The Company has agreed to indemnify certain outside parties for losses related
to a former subsidiary's worker compensation obligations. Some of the claims for
which Terex is contingently obligated are also covered by bonds issued by an
insurance company. The Company recorded liabilities for these contingent
obligations representing management's estimate of the potential losses which the
Company might incur.
NOTE N -- RELATED PARTY TRANSACTIONS
On August 28, 1995, the Company's former chairman retired from his positions
with the Company and its Board of Directors. In connection with his retirement,
the Company (upon the recommendation of a committee comprised of its independent
Directors and represented by independent counsel) and the former chairman
executed a retirement agreement providing certain benefits to the former
chairman and the Company. The agreement provides, among other things, for a
five-year consulting engagement requiring the former chairman to make himself
available to the Company to provide consulting services for certain portions of
his time. The former chairman, or his designee, received a fee for consulting
services which included payments in an amount, and a rate, equal to his 1995
base salary until December 31, 1996. The agreement also provides for the (i)
granting of a five-year $1.8 million loan bearing interest at 6.56% per annum
which is subject to being forgiven in increments over the five-year term of the
agreement upon certain conditions, and (ii) equity grants having a maximum
potential of 200.0 thousand shares of Terex Common Stock conditioned upon the
Company achieving certain financial performance objectives in the future. During
1997 the former chairman received 150.0 thousand shares of common stock in
accordance with this agreement. In contemplation of the execution of this
retirement agreement, the Company advanced to the former chairman the principal
amount of the forgivable loan. During 1998, 1997 and 1996, the Company forgave
$0.5, $0.6 and $0.4, respectively, of principal on the loan along with the
current interest.
The Company, a director and certain former executives of the Company, and KCS,
have been named parties in various legal proceedings. During 1998, 1997 and
1996, the Company incurred $0.3, $0.2 and $0.3, respectively, of legal fees and
expenses on behalf of the Company, the director and former executives of the
Company, and KCS named in the lawsuits.
Ares Leverage Investment Fund L.P. ("Ares"), an affiliate of a director of the
Company, participated as a lender under the New Bank Credit Facility for the
amount of $15.0. Ares also received a fee of less than $0.1 for participating as
a lender under the New Bank Credit Facility. Participation by Ares as a lender
under the New Bank Credit Facility was made in the ordinary course of Ares'
business and on the same terms as all other lenders under the New Bank Credit
Facility.
Canadian Imperial Bank of Commerce, an affiliate of CIBC Oppenheimer Corp., of
which a director of the Company is a managing director, is a lender with a
commitment of up to $37.5 and a Co-Documentation Agent under the New Bank Credit
Facility. Canadian Imperial Bank of Commerce received a fee of $0.8 for acting
as Co-Documentation Agent under the New Bank Credit Facility. Participation by
Canadian Imperial Bank of Commerce as a lender under the New Bank Credit
Facility was made in the ordinary course of its business and on the same terms
as all other lenders under the New Bank Credit Facility. In addition, CIBC
Oppenheimer Corp. was retained by the Company in connection with the offering of
the New Senior Subordinated Notes. CIBC was paid $0.5 as an underwriting
discount upon issuance of the New Senior Subordinated Notes on the same terms as
all other underwriters.
On December 31, 1997, an officer and director of the Company retired as an
officer. In connection with his retirement, the Company and the former officer
entered into an agreement providing certain benefits to the former officer and
the Company. Pursuant to the agreement, the former officer received an award of
5.0 thousand shares of Common Stock in consideration of his years of service to
the Company. The agreement also provides for a two-year consulting engagement
requiring the former officer to make himself available to the Company to provide
consulting services for a certain portion of his time, for such services he
received a consulting fee equal to his base salary in 1997 of $0.3 for services
provided in 1998, in 1999 he will receive $0.1 for services provided.
F - 24
<PAGE>
In 1997, the Company invested $0.1 in a company ("Investee") which was
reorganizing after declaring bankruptcy. Subsequent to the initial investment,
the Company was required to make an additional investment in Investee. As a
result, the Company elected not to continue its investment in Investee and not
to make the additional required investment. A director of the Company and one of
his business associates, acquired the Company's investment in Investee for the
amount invested by the Company and assumed the Company's obligations to make
additional investments in Investee.
The Company requires that all transactions with affiliates be on terms no less
favorable to the Company than could be obtained in comparable transactions with
an unrelated person. The Board is advised in advance of any such proposed
transaction or agreement and utilizes such procedures in evaluating their terms
and provisions as are appropriate in light of the Board's fiduciary duties under
Delaware law. In addition, the Company has an Audit Committee consisting solely
of outside directors. One of the responsibilities of the Audit Committee is to
review related party transactions.
NOTE O-- BUSINESS SEGMENT INFORMATION
The Company operates in two industry segments: Terex Lifting and Terex
Earthmoving. Prior to November 27, 1996 the Company operated in a third industry
segment, the Material Handling Segment, which is treated as a discontinued
operation.
Terex Lifting designs, manufactures and markets telescopic mobile cranes
(including rough terrain, truck and all-terrain mobile cranes), lattice boom
cranes, tower cranes, aerial platforms (including-scissors, articulated boom and
straight telescoping boom aerial work platforms), utility aerial devices
(including digger derricks and articulated aerial devices), telescopic materials
handlers (including container stackers and rough terrain lift trucks),
truck-mounted cranes (boom trucks) and related components and replacement parts.
These products are used primarily for construction, repair and maintenance of
infrastructure, buildings and manufacturing facilities, for material handling
applications in the distribution, transportation and utilities industries as
well as in the scrap, refuse and lumber industries. Terex Lifting has fourteen
significant manufacturing operations: (i) P.P.M. S.A. located in Montceau Les
Mines, France, at which mobile cranes and container stackers under the brand
names TEREX and PPM are manufactured; (ii) PPM SpA, located in Crespellano,
Italy, at which mobile cranes are manufactured under the TEREX, BENDINI and PPM
brand names; (iii) Terex Lifting, located in Conway, South Carolina, at which
mobile cranes are manufactured under the P&H (a licensed trademark of
Harnischfeger Corporation) and TEREX brand names; (iv) Terex Lifting - Waverly
Operations, located in Waverly, Iowa, at which rough terrain hydraulic
telescoping mobile cranes and truck cranes are manufactured under the brand
names TEREX, KOEHRING and LORAIN, and aerial lift equipment is manufactured
under the brand names TEREX AERIALS, TEREX AND MARK; (v) Terex-Telelect, Inc.,
located in Watertown, South Dakota, at which utility aerial devices and digger
derricks are manufactured under the TELELECT and HI-RANGER brand names, (vi)
Terex Aerials, Inc., located in Milwaukee, Wisconsin, at which aerial platforms
are manufactured under the TEREX, SIMON, MARK and TEREX AERIALS brand names;
(vii) Terex Aerials Limited, located in Cork, Ireland, at which aerial platforms
are manufactured under the TEREX brand name; (viii) Terex-RO Corporation,
located in Olathe, Kansas, at which truck mounted cranes are manufactured under
the RO-STINGER brand name; (ix) Baraga Products, located in Baraga, Michigan, at
which rough terrain telescopic lift trucks are manufactured under the SQUARE
SHOOTER brand name; (x) Holland Lift, located in Hoorn, the Netherlands, at
which aerial platforms are manufactured under the HOLLAND LIFT brand name; (xi)
American Crane, located in Wilmington, North Carolina, at which lattice boom
cranes are manufactured under the AMERICAN brand, (xii) Italmacchine, located
near Perugia, Italy at which rough terrain telescopic material handlers are
manufactured under the ITALMACCHINE and TEREX brand names and cement mixers and
concrete pumps are manufactured under the ITALMACCHINE brand name; (xiii) Peiner
located in Trier, Germany at which tower cranes are manufactured under the
PEINER trade name; and (xiv) Comedil, located in Fontanfredda, Italy, at which
tower cranes are manufactured under the COMEDIL trade name.
Terex Earthmoving designs, manufactures and markets large hydraulic excavators,
articulated and rigid off-highway trucks, high capacity surface mining trucks
and related components and replacement parts. These products are used primarily
by construction, mining, logging, industrial and government customers in
building roads, dams and commercial and residential buildings; supplying coal,
minerals, sand and gravel. Terex Earthmoving has three manufacturing operations:
(i) Terex Equipment Limited ("TEL"), located in Motherwell, Scotland, which
manufactures off-highway rigid haulers and articulated haulers and scrapers,
each sold under the TEREX brand name and to other truck manufacturers on a
private label basis; (ii) the Unit Rig Division ("Unit Rig") and Payhauler,
located in Tulsa, Oklahoma, manufacture electric rear and bottom dump haulers
principally sold to the copper, gold and coal mining industry customers in North
and South America, Asia, Africa and Australia and all wheel drive rigid off
highway trucks. These products are sold under the Company's TEREX, UNIT RIG,
LECTRA HAUL and PAYHAULER trademarks. TEL's North, Central and South American
sales and distribution are managed by Terex Americas, a division of the Company,
located in Tulsa, Oklahoma; and (iii) O&K Mining, located in Dortmund, Germany
which manufactures large hydraulic excavators, principally sold to the mining
industry under the O&K brand name.
F - 25
<PAGE>
Industry segment information is presented below:
<TABLE>
<CAPTION>
1998 1997 1996
------------- ------------- --------------
Sales
<S> <C> <C> <C>
Terex Earthmoving.................................. $ 456.4 $ 288.4 $ 314.9
Terex Lifting...................................... 770.9 548.0 363.9
General/Corporate/Eliminations..................... 5.9 5.9 (0.3)
============= ============= ==============
Total............................................ $ 1,233.2 $ 842.3 $ 678.5
============= ============= ==============
Income (Loss) from Operations
Terex Earthmoving.................................. $ 41.7 $ 24.7 $ 5.6
Terex Lifting...................................... 82.1 47.2 4.8
General/Corporate/Eliminations..................... (1.8) (0.8) (5.3)
============= ============= ==============
Total............................................ $ 122.0 $ 71.1 $ 5.1
============= ============= ==============
Depreciation and Amortization
Terex Earthmoving.................................. $ 6.7 $ 2.3 $ 1.8
Terex Lifting...................................... 9.5 8.8 8.6
General/Corporate.................................. 2.2 3.2 3.3
============= ============= ==============
Total............................................ $ 18.4 $ 14.3 $ 13.7
============= ============= ==============
Capital Expenditures
Terex Earthmoving.................................. $ 4.8 $ 4.5 $ 5.1
Terex Lifting...................................... 7.5 4.3 2.9
General/Corporate.................................. 0.8 1.1 0.1
============= ============= ==============
Total............................................ $ 13.1 $ 9.9 $ 8.1
============= ============= ==============
Identifiable Assets
Terex Earthmoving.................................. $ 544.9 $ 174.6 $ 189.2
Terex Lifting...................................... 574.3 402.1 210.5
General/Corporate.................................. 32.0 11.8 71.5
==========================================
Total............................................ $ 1,151.2 $ 588.5 $ 471.2
==========================================
</TABLE>
F - 26
<PAGE>
Geographic segment information is presented below:
1998 1997 1996
------------- ------------- --------------
Sales
United States................ $ 700.4 $ 499.8 $ 379.2
Europe....................... 477.5 362.3 348.6
All other.................... 312.2 91.0 27.2
Eliminations................. (256.9) (110.8) (76.5)
============= ============= ==============
Total...................... $ 1,233.2 $ 842.3 $ 678.5
============= ============= ==============
Long-lived Assets
United States................ $ 38.5 $ 25.6 $ 8.0
Europe....................... 59.7 22.0 23.5
All other.................... 1.3 0.2 0.2
============= ============= ==============
Total...................... $ 99.5 $ 47.8 $ 31.7
============= ============= ==============
Sales between segments and geographic areas are generally priced to recover
costs plus a reasonable markup for profit. Long-lived assets include net fixed
assets which can be attributed to the specific geographic regions.
The Company is not dependent upon any single customer.
NOTE P -- CONSOLIDATING FINANCIAL STATEMENTS
On March 31, 1998, the Company issued and sold $150.0 aggregate principal amount
of the New Senior Subordinated Notes. The New Senior Subordinated Notes are
jointly and severally guaranteed by the following subsidiaries of the Company:
Terex Cranes, Inc., PPM Cranes, Inc., Koehring Cranes, Inc., Terex-Telelect,
Inc., Terex-RO Corporation, Terex Aerials, Inc., Payhauler Corp. and The
American Crane Corporation. With the exception of PPM Cranes, Inc., which is
92.4% owned by Terex, each of the Guarantors is a wholly-owned subsidiary of the
Company.
The following summarized condensed consolidating financial information for the
Company segregates the financial information of Terex Corporation, the
Wholly-owned Guarantors, PPM Cranes, Inc. and the Non-guarantor Subsidiaries.
Separate financial statements of the Wholly-owned Guarantors are not presented
because management has determined that they would not be material to investors.
Separate audited financial statements of PPM Cranes, Inc. have been provided
pursuant to Rule 3-10 of Regulation S-X.
Terex Corporation consists of parent company operations. Subsidiaries of the
parent company are reported on the equity basis.
Wholly-owned Guarantors combine the operations of the Wholly-owned Guarantor
Subsidiaries (Terex Cranes, Inc., Koehring Cranes, Inc., Terex Aerials, Inc.,
Terex-RO Corporation, Terex-Telelect, Inc., Payhauler Corportation and The
American Crane Corporation (collectively, "Wholly-owned Guarantors").
Non-guarantor subsidiaries of Wholly-owned Guarantors are reported on the equity
basis.
PPM Cranes, Inc. presents the operations of PPM Cranes, Inc. and its
subsidiaries (PPM of Australia Pty Ltd and PPM Far East Private Ltd) are
reported on an equity basis.
Non-Guarantor Subsidiaries combine the operations of subsidiaries which have not
provided a guarantee of the obligations of Terex Corporation under the New
Senior Subordinated Notes. These subsidiaries include Terex Equipment Limited,
Unit Rig Australia (Pty) Ltd., Unit Rig South Africa (Pty) Ltd., Unit Rig
(Canada) Ltd., PPM S.A., PPM S.p.A., Brimont Agraire, PPM Deutschland GmbH, PPM
of Australia Pty Ltd., and PPM Far East Private Ltd. Terex Aerials Limited,
Terex Italia, S.r.l., Sim-Tech Management Limited and Simon-Tomen Engineering
Company Limited are included in the results of the Non-Guarantor Subsidiaries
since April 7, 1997. O&K Mining GmbH, Holland Lift International B.V., American
Crane International B.V., Italmacchine S.r.l., Terex-Peiner GmbH and Gru Comedil
S.p.A. are included in the results of the Non Guarantor Subsidiaries since March
31, 1998, May 4, 1998, July 31, 1998, November 3, 1998, November 13, 1998 and
December 18, 1998.
F - 27
<PAGE>
Debt and Goodwill allocated to subsidiaries is presented on an accounting
"push-down" basis.
F - 28
<PAGE>
<TABLE>
<CAPTION>
TEREX CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
(in millions)
Wholly- Non-
Terex owned PPM guarantor Intercompany
Corporation Guarantors Cranes, Inc. Subsidiaries Eliminations Consolidated
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net Sales............................... $ 208.9 $ 445.7 $ 84.9 $ 616.8 $ (123.1) $ 1,233.2
Cost of goods sold.................... 174.0 360.8 74.7 516.4 (118.5) 1,007.4
------------- ------------- ------------- ------------- ------------- -------------
Gross Profit............................ 34.9 84.9 10.2 100.4 (4.6) 225.8
Engineering, selling & administrative 20.5 24.5 3.4 55.4 --- 103.8
expenses................................
------------- ------------- ------------- ------------- ------------- -------------
Income (Loss) From Operations........... 14.4 60.4 6.8 45.0 (4.6) 122.0
Interest income....................... 1.0 0.5 --- 1.2 --- 2.7
Interest expense...................... (8.5) (8.0) (5.4) (25.3) --- (47.2)
Income (loss) from equity investees... 36.8 5.5 (1.1) --- (41.2) ---
Other income (expense) - net.......... (0.7) (0.4) (0.2) (1.7) --- (3.0)
------------- ------------- ------------- ------------- ------------- -------------
Income (Loss) From Continuing Operations
Before Income Taxes And Extraordinary 43.0 58.0 0.1 19.2 (45.8) 74.5
Items.................................
Provision for income taxes............ --- --- --- (1.7) --- (1.7)
------------- ------------- ------------- ------------- ------------- -------------
Income (Loss) From Continuing Operations
Before Extraordinary Items............ 43.0 58.0 0.1 17.5 (45.8) 72.8
Extraordinary loss on retirement of (8.5) (5.0) (10.4) (14.4) --- (38.3)
debt....................................
------------- ------------- ------------- ------------- ------------- -------------
Net Income (Loss)....................... 34.5 53.0 (10.3) 3.1 (45.8) 34.5
Less preferred stock accretion........ --- --- --- --- --- ---
============= ============= ============= ============= ============= =============
Income (Loss) Applicable To Common Stock $ 34.5 $ 53.0 $ (10.3) $ 3.1 $ (45.8) $ 34.5
============= ============= ============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
TEREX CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
(in millions)
Wholly- Non-
Terex owned PPM guarantor Intercompany
Corporation Guarantors Cranes, Inc. Subsidiaries Eliminations Consolidated
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net Sales............................... $ 163.3 $ 304.3 $ 79.5 $ 398.6 $ (103.4) $ 842.3
Cost of goods sold.................... 136.0 248.8 70.0 349.4 (101.5) 702.7
------------- ------------- ------------- ------------- ------------- -------------
Gross Profit............................ 27.3 55.5 9.5 49.2 (1.9) 139.6
Engineering, selling & administrative 15.0 18.4 3.3 31.8 --- 68.5
expenses................................
------------- ------------- ------------- ------------- ------------- -------------
Income (Loss) From Operations........... 12.3 37.1 6.2 17.4 (1.9) 71.1
Interest income....................... 0.5 0.1 --- 0.3 --- 0.9
Interest expense...................... (14.2) (6.3) (6.7) (12.2) --- (39.4)
Income (loss) from equity investees... 29.3 (2.4) (0.3) --- (26.6) ---
Other income (expense) - net.......... (2.0) 0.4 (0.3) 0.3 --- (1.6)
------------- ------------- ------------- ------------- ------------- -------------
Income (Loss) From Continuing Operations
Before Income Taxes And Extraordinary 25.9 28.9 (1.1) 5.8 (28.5) 31.0
Items.................................
Provision for income taxes............ --- --- --- (0.7) --- (0.7)
------------- ------------- ------------- ------------- ------------- -------------
Income (Loss) From Continuing Operations
Before Extraordinary Items............ 25.9 28.9 (1.1) 5.1 (28.5) 30.3
Extraordinary loss on retirement of (14.8) --- --- --- --- (14.8)
debt....................................
------------- ------------- ------------- ------------- ------------- -------------
Net Income (Loss)....................... 11.1 28.9 (1.1) 5.1 (28.5) 15.5
Less preferred stock accretion........ (0.4) (4.4) --- --- --- (4.8)
------------- ------------- ------------- ------------- ------------- -------------
Income (Loss) Applicable To Common Stock $ 10.7 $ 24.5 $ (1.1) $ 5.1 $ (28.5) $ 10.7
============= ============= ============= ============= ============= =============
</TABLE>
F - 29
<PAGE>
<TABLE>
<CAPTION>
TEREX CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
(in millions)
Wholly- Non-
Terex owned PPM guarantor Intercompany
Corporation Guarantors Cranes, Inc. Subsidiaries Eliminations Consolidated
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net Sales............................... $ 175.3 $ 134.7 $ 88.0 $ 356.5 $ (76.0) $ 678.5
Cost of goods sold.................... 163.1 110.8 91.3 318.8 (74.7) 609.3
------------- ------------- ------------- ------------- ------------- -------------
Gross Profit............................ 12.2 23.9 (3.3) 37.7 (1.3) 69.2
Engineering, selling & administrative 18.3 8.7 5.2 31.9 --- 64.1
expenses................................
------------- ------------- ------------- ------------- ------------- -------------
Income (Loss) From Operations........... (6.1) 15.2 (8.5) 5.8 (1.3) 5.1
Interest income....................... 0.4 --- --- 0.8 --- 1.2
Interest expense...................... (23.6) (2.5) (7.0) (11.7) --- (44.8)
Income (loss) from equity investees... (22.0) (37.4) (1.2) --- 60.6 ---
Other income (expense) - net.......... (3.7) (0.7) (0.4) 1.1 --- (3.7)
------------- ------------- ------------- ------------- ------------- -------------
Income (Loss) From Continuing Operations
Before Income Taxes And Extraordinary (55.0) (25.4) (17.1) (4.0) 59.3 (42.2)
Items.................................
Provision For Income Taxes............ --- --- --- (12.1) --- (12.1)
------------- ------------- ------------- ------------- ------------- -------------
Income (Loss) From Continuing Operations
Before Extraordinary Items............ (55.0) (25.4) (17.1) (16.1) 59.3 (54.3)
Income (loss) from discontinued
operations, net of tax expense....... 102.1 17.6 --- 3.0 (20.7) 102.0
------------- ------------- ------------- ------------- ------------- -------------
Net Income (Loss)....................... 47.1 (7.8) (17.1) (13.1) 38.6 47.7
Less preferred stock accretion........ (22.3) (0.6) --- --- --- (22.9)
------------- ------------- ------------- ------------- ------------- -------------
Income (Loss) Applicable To Common Stock $ 24.8 $ (8.4) $ (17.1) $ (13.1) $ 38.6 $ 24.8
============= ============= ============= ============= ============= =============
</TABLE>
F - 30
<PAGE>
TEREX CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 1998
(in millions)
<TABLE>
<CAPTION>
Wholly- Non-
Terex owned PPM guarantor Intercompany
Corporation Guarantors Cranes, Inc. Subsidiaries Eliminations Consolidated
------------- ------------- ------------- ------------- ------------- -------------
Assets
Current Assets
<S> <C> <C> <C> <C> <C> <C>
Cash and cash equivalents.......... $ 9.3 $ 0.5 $ 0.1 $ 15.2 $ --- $ 25.1
Trade receivables - net............ 19.7 51.9 18.0 160.2 --- 249.8
Intercompany receivables........... 7.0 16.9 12.8 96.5 (133.2) ---
Inventories - net.................. 113.9 101.1 30.0 235.2 (7.4) 472.8
Other current assets............... 4.8 4.1 0.1 14.9 --- 23.9
------------- ------------- ------------- ------------- ------------- -------------
Total current assets............. 154.7 174.5 61.0 522.0 (140.6) 771.6
Property, plant & equipment - net.... 10.8 28.4 --- 60.3 --- 99.5
Investment in and advances to
(from) subsidiaries.............. 75.2 (92.7) (1.4) (49.0) 67.9 ---
Goodwill - net....................... 30.3 80.4 13.7 116.5 --- 240.9
Other assets - net................... 9.9 12.7 1.3 15.3 --- 39.2
------------- ------------- ------------- ------------- ------------- -------------
Total Assets............................ $ 280.9 $ 203.3 $ 74.6 $ 665.1 $ (72.7) $ 1,151.2
============= ============= ============= ============= ============= =============
Liabilities and Stockholders' Equity
(Deficit)
Current Liabilities
Notes payable and current portion
of long-term debt................ $ 13.5 $ 3.4 $ 0.8 $ 27.0 $ --- $ 44.7
Trade accounts payable............. 29.4 53.7 8.4 135.4 --- 226.9
Intercompany payables.............. 13.1 15.2 26.5 78.4 (133.2) ---
Accruals and other current 44.8 22.6 9.3 77.1 --- 153.8
liabilities......................
------------- ------------- ------------- ------------- ------------- -------------
Total current liabilities........ 100.8 94.9 45.0 317.9 (133.2). 425.4
Long-term debt less current portion.. 69.9 100.1 60.8 355.8 --- 586.6
Other long-term liabilities.......... 12.1 9.3 0.6 19.1 --- 41.1
Stockholders' equity (deficit)....... 98.1 (1.0) (31.8) (27.7) 60.5 98.1
------------- ------------- ------------- ------------- ------------- -------------
Total Liabilities and Stockholders'
Equity (Deficit)..................... $ 280.9 $ 203.3 $ 74.6 $ 665.1 $ (72.7) $ 1,151.2
============= ============= ============= ============= ============= =============
</TABLE>
F - 31
<PAGE>
<TABLE>
<CAPTION>
TEREX CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 1997
(in millions)
Wholly- Non-
Terex owned PPM guarantor Intercompany
Corporation Guarantors Cranes, Inc. Subsidiaries Eliminations Consolidated
------------- ------------- ------------- ------------- ------------- -------------
Assets
Current Assets
<S> <C> <C> <C> <C> <C> <C>
Cash and cash equivalents.......... $ 5.6 $ 0.1 $ --- $ 23.0 $ --- $ 28.7
Trade receivables - net............ 10.6 40.8 20.5 67.4 --- 139.3
Intercompany receivables........... 4.3 19.5 12.6 45.6 (82.0) ---
Inventories - net.................. 55.7 59.7 27.8 92.4 (3.5) 232.1
Other current assets............... 3.5 2.5 0.1 20.3 --- 26.4
------------- ------------- ------------- ------------- ------------- -------------
Total current assets............. 79.7 122.6 61.0 248.7 (85.5) 426.5
Property, plant & equipment - net.... 5.2 18.5 --- 24.1 --- 47.8
Investment in and advances to
(from) subsidiaries.............. 110.2 (99.6) (9.7) (115.7) 114.8 ---
Goodwill - net....................... --- 53.9 14.9 19.6 --- 88.4
Other assets - net................... 5.7 15.9 2.0 2.2 --- 25.8
------------- ------------- ------------- ------------- ------------- -------------
Total Assets............................ $ 200.8 $ 111.3 $ 68.2 $ 178.9 $ 29.3 $ 588.5
============= ============= ============= ============= ============= =============
Liabilities and Stockholders' Equity
(Deficit)
Current Liabilities
Notes payable and current portion
of long-term debt................ $ 0.5 $ 3.0 $ 0.8 $ 22.3 $ --- $ 26.6
Trade accounts payable............. 24.3 37.8 7.4 68.6 --- 138.1
Intercompany payables.............. 21.0 21.3 19.9 19.8 (82.0) ---
Accruals and other current 26.0 14.8 9.6 21.0 --- 71.4
liabilities......................
------------- ------------- ------------- ------------- ------------- -------------
Total current liabilities........ 71.8 76.9 37.7 131.7 (82.0) 236.1
Long-term debt less current portion.. 62.6 82.3 51.3 77.3 --- 273.5
Other long-term liabilities.......... 6.8 6.1 0.9 5.5 --- 19.3
Stockholders' equity (deficit)....... 59.6 (54.0) (21.7) (35.6) 111.3 59.6
------------- ------------- ------------- ------------- ------------- -------------
Total Liabilities and Stockholders'
Equity (Deficit)..................... $ 200.8 $ 111.3 $ 68.2 $ 178.9 $ 29.3 $ 588.5
============= ============= ============= ============= ============= =============
</TABLE>
F - 32
<PAGE>
<TABLE>
<CAPTION>
TEREX CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1998
(in millions)
Wholly- Non-
Terex owned PPM guarantor Intercompany
Corporation Guarantors Cranes, Inc. Subsidiaries Eliminations Consolidated
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net cash provided by (used in)
operating activities $ 6.6 $ (0.8) $ (1.4) $ (23.9) $ --- $ (19.5)
------------- ------------- ------------- ------------- ------------- -------------
Cash flows from investing activities:
Acquisition of business, net of cash
acquired............................. (184.9) --- --- (26.4) --- (211.3)
Capital expenditures.................. (1.7) (4.1) (0.1) (7.2) --- (13.1)
Proceeds from sale of excess assets... --- 1.9 0.2 0.3 --- 2.4
------------- ------------- ------------- ------------- ------------- -------------
Net cash used in investing (186.6) (2.2) 0.1 (33.3) --- (222.0)
activities...........................
------------- ------------- ------------- ------------- ------------- -------------
Cash flows from financing activities:
Net borrowings (repayments) under
revolving line of credit agreements.. (24.9) (64.1) 0.5 17.0 --- (71.5)
Principal repayments of long-term debt (39.3) (20.1) (47.9) (63.5) --- (170.8)
Proceeds from issuance of long-term
debt, net of issuance costs.......... 254.4 90.8 58.6 109.8 --- 513.6
Payment of premiums on early
extinguishment of debt............... (6.0) (3.7) (8.6) (10.7) --- (29.0)
Other................................. --- --- (1.2) (1.8) --- (3.0)
------------- ------------- ------------- ------------- ------------- -------------
Net cash provided by financing
activities........................... 184.2 2.9 1.4 50.8 --- 239.3
------------- ------------- ------------- ------------- ------------- -------------
Effect of exchange rates on cash and
cash equivalents...................... (0.5) 0.5 --- (1.4) --- (1.4)
------------- ------------- ------------- ------------- ------------- -------------
Net (decrease) increase in cash and cash
equivalents........................... 3.7 0.4 0.1 (7.8) --- (3.6)
Cash and cash equivalents, beginning of 5.6 0.1 --- 23.0 --- 28.7
period................................
------------- ------------- ------------- ------------- ------------- -------------
Cash and cash equivalents, end of period $ 9.3 $ 0.5 $ 0.1 $ 15.2 $ --- $ 25.1
============= ============= ============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
TEREX CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1997
(in millions)
Wholly- Non-
Terex owned PPM guarantor Intercompany
Corporation Guarantors Cranes, Inc. Subsidiaries Eliminations Consolidated
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net cash provided by (used in) $ (7.2) $ (5.1) $ 1.4 $ 10.6 $ --- $ (0.3)
operating activities
------------- ------------- ------------- ------------- ------------- -------------
Cash flows from investing activities:
Acquisition of businesses, net of cash (97.2) --- --- --- --- (97.2)
acquired.............................
Capital expenditures.................. (1.2) (2.4) (0.7) (5.6) --- (9.9)
Proceeds from sale of excess assets... 0.1 7.5 0.7 0.2 --- 8.5
------------- ------------- ------------- ------------- ------------- -------------
Net cash (used in) provided by
investing activities.............. (98.3) 5.1 --- (5.4) --- (98.6)
------------- ------------- ------------- ------------- ------------- -------------
Cash flows from financing activities:
Net borrowings (repayments) under
revolving line of credit agreements.. 94.9 --- (0.3) 5.1 --- 99.7
Principal repayments of long-term debt (83.0) --- (0.7) --- --- (83.7)
Redemption of preferred stock......... (45.4) --- --- --- --- (45.4)
Issuance of common stock.............. 104.6 --- --- --- --- 104.6
Payment of premiums on early
extinguishment of debt............... (9.9) --- --- --- --- (9.9)
Other................................. 2.5 --- --- (3.6) --- (1.1)
------------- ------------- ------------- ------------- ------------- -------------
Net cash provided by (used in)
financing activities............... 63.7 --- (1.0) 1.5 --- 64.2
------------- ------------- ------------- ------------- ------------- -------------
Effect of exchange rates on cash and
cash equivalents...................... (6.0) --- (0.4) (2.2) --- (8.6)
------------- ------------- ------------- ------------- ------------- -------------
Net (decrease) increase in cash and cash
equivalents........................... (47.8) --- --- 4.5 --- (43.3)
Cash and cash equivalents, beginning of 53.4 0.1 --- 18.5 --- 72.0
period................................
------------- ------------- ------------- ------------- ------------- -------------
Cash and cash equivalents, end of period $ 5.6 $ 0.1 $ --- $ 23.0 $ --- $ 28.7
============= ============= ============= ============= ============= =============
</TABLE>
F - 33
<PAGE>
<TABLE>
<CAPTION>
TEREX CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1996
(in millions)
Wholly- Non-
Terex owned PPM guarantor Intercompany
Corporation Guarantors Cranes, Inc. Subsidiaries Eliminations Consolidated
------------- ------------- ------------- ------------- ------------- -------------
Net cash provided by (used in) operating
<S> <C> <C> <C> <C> <C> <C>
activities............................ $ (18.7) $ --- $ (0.5) $ 1.6 $ --- $ (17.6)
------------- ------------- ------------- ------------- ------------- -------------
Cash flows from investing activities:
Capital expenditures.................. (0.5) (0.1) (0.3) (7.2) --- (8.1)
Net proceeds from sale of discontinued
operations........................... 137.2 --- --- --- --- 137.2
Proceeds from sale of excess assets... 0.4 0.1 1.0 5.0 --- 6.5
Other................................. --- --- --- 0.1 --- 0.1
------------- ------------- ------------- ------------- ------------- -------------
Net cash provided by (used in)
investing activities............... 137.1 --- 0.7 (2.1) --- 135.7
------------- ------------- ------------- ------------- ------------- -------------
Cash flows from financing activities:
Net borrowings (repayments) under
revolving line of credit agreements... (66.8) --- 0.4 11.4 --- (55.0)
Principal repayments of long-term debt.. --- --- (1.0) --- --- (1.0)
Other................................... (0.8) --- 0.1 6.3 --- 5.6
------------- ------------- ------------- ------------- ------------- -------------
Net cash (used in) provided by
financing activities............... (67.6) --- (0.5) 17.7 --- (50.4)
------------- ------------- ------------- ------------- ------------- -------------
Effect of exchange rates on cash and
cash equivalents...................... (0.4) --- --- (2.3) --- (2.7)
------------- ------------- ------------- ------------- ------------- -------------
Net increase (decrease) in cash and cash
equivalents........................... 50.4 --- (0.3) 14.9 --- 65.0
Cash and cash equivalents, beginning of 3.1 --- 0.3 3.6 --- 7.0
period................................
------------- ------------- ------------- ------------- ------------- -------------
Cash and cash equivalents, end of period $ 53.5 $ --- $ --- $ 18.5 $ --- $ 72.0
============= ============= ============= ============= ============= =============
</TABLE>
F - 34
<PAGE>
NOTE Q - SUBSEQUENT EVENTS (UNAUDITED)
On March 9, 1999, Company issued and sold $100.0 aggregate principal amount of
8-7/8 % Senior Subordinated Notes due 2008 (the "1999 Senior Subordinated
Notes"). The 1999 Senior Subordinated Notes were issued at a discount with the
Company receiving net proceeds of $94.9. The 1999 Senior Subordinated Notes were
issued in a private placement made in reliance upon an exemption from
registration under the Securities Act of 1933, as amended. The net proceeds from
the offering are being used to repay a portion of the outstanding indebtedness
under Terex's credit facilities incurred primarily in connection with the
Company's 1998 acquisitions and for future acquisitions.
Canadian Imperial Bank of Commerce, an affiliate of CIBC Oppenheimer Corp., of
which a director of the Company is a managing director, was retained by the
Company in connection with the offering of the 1999 Senior Subordinated Notes.
CIBC was paid $0.4 as an underwriting discount upon issuance of the 1999 Senior
Subordinated Notes on the same terms as the other underwriter.
F - 35
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Shareholders of PPM Cranes, Inc.
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations, of changes in shareholders' deficit and
of cash flows present fairly, in all material respects, the financial position
of PPM Cranes, Inc. and its subsidiary (the "Company") at December 31, 1998 and
1997, and the results of their operations and their cash flows for each of the
three years in the period ended December 31,1998, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Stamford, Connecticut
March 1, 1999
F - 36
<PAGE>
PPM Cranes, Inc.
Consolidated Statement of Operations
(in millions)
Year Ended December 31,
---------------------------
1998 1997 1996
--------- -------- --------
Net sales........................................... $ 92.4 $ 87.4 $ 95.9
Cost of goods sold.................................. 81.2 76.5 98.4
--------- -------- --------
Gross profit................................... 11.2 10.9 (2.5)
Engineering, selling and administrative expenses.... 4.5 4.5 6.6
--------- -------- --------
Income (loss) from operations................... 6.7 6.4 (9.1)
Other income (expense):
Interest expense................................ (5.8) (7.1) (7.5)
Amortization of debt issuance costs............. (0.3) (0.5) (0.5)
Other income.................................... --- 0.1 ---
--------- -------- --------
Income (loss) before income taxes............... 0.6 (1.1) (17.1)
Provision for income taxes........................... --- --- ---
--------- -------- --------
Income (loss) before extraordinary items........ 0.6 (1.1) (17.1)
Extraordinary loss on retirement of debt............. (10.9) --- ---
--------- -------- --------
Net loss........................................$ (10.3) $ (1.1) $ (17.1)
========= ======== ========
The accompanying notes are an integral part of these financial statements.
F - 37
<PAGE>
PPM Cranes, Inc.
Consolidated Balance Sheet
(in millions, except share amounts)
December 31,
------------------
1998 1997
-------- ---------
Assets
Current assets:
Cash and cash equivalents...................................$ 0.2 $ 0.2
Trade accounts receivable (net of allowance of $0.8
and $0.7 at December 31, 1998 and 1997, respectively)...... 19.3 21.4
Net inventories............................................. 30.4 29.7
Due from affiliates......................................... 15.1 14.0
Prepaid expenses and other current assets................... 0.1 0.2
-------- ---------
Total current assets.......................................... 65.1 65.5
Property, plant and equipment - net........................... --- --
Intangible assets:
Goodwill - net.............................................. 14.4 15.7
Other assets - net.......................................... 1.3 1.9
-------- ---------
Total assets..................................................$ 80.8 $ 83.1
======== =========
Liabilities and shareholders' deficit Current liabilities:
Trade accounts payable......................................$ 10.6 $ 7.4
Accrued warranties and product liability.................... 8.0 7.5
Accrued expenses............................................ 1.8 2.3
Due to affiliates........................................... 26.4 22.0
Due to Terex Corporation.................................... 0.3 9.8
Current portion of long-term debt........................... 0.8 1.0
-------- --------
Total current liabilities..................................... 47.9 50.0
-------- --------
Non-current liabilities:
Long-term debt, less current portion........................ 63.9 53.8
Other non-current liabilities............................... 0.8 1.0
-------- --------
Total non-current liabilities................................. 64.7 54.8
-------- --------
Commitments and contingencies
Shareholders' deficit:
Common stock, Class A, $.01 par value --
authorized 8,000 shares; issued and outstanding 5,000 share --- ---
Common stock, Class B, $.01 par value --
authorized 2,000 shares; issued and outstanding 413 shares. --- ---
Accumulated deficit......................................... (31.7) (21.4)
Foreign currency translation adjustments.................... (0.1) (0.3)
-------- --------
Total shareholders' deficit................................... (31.8) (21.7)
-------- --------
Total liabilities and shareholders' deficit...................$ 80.8 $ 83.1
======== ========
The accompanying notes are an integral part of these financial statements.
F - 38
<PAGE>
<TABLE>
<CAPTION>
PPM Cranes, Inc.
Consolidated Statement of Changes in Shareholders' Deficit
(in millions)
Foreign
Currency
Common Stock Accumulated Translation
Deficit Adjustments Total
--------------- --------------------------------- ----------------
<S> <C> <C> <C> <C>
Balance at December 31, 1995.......... $ --- $ (3.2) $ 0.1 $ (3.1)
Net loss.......................... --- (17.1) --- (17.1)
Translation adjustment............ --- --- --- ---
----------------
Comprehensive Income............. (17.1)
--------------- --------------------------------- ----------------
Balance at December 31, 1996.......... --- (20.3) 0.1 (20.2)
Net loss.......................... --- (1.1) --- (1.1)
Translation adjustment............ --- --- (0.4) (0.4)
----------------
Comprehensive Income............. (1.5)
--------------- --------------------------------- ----------------
Balance at December 31, 1997.......... --- (21.4) (0.3) (21.7)
Net loss.......................... --- (10.3) --- (10.3)
Translation adjustment............ --- --- 0.2 0.2
----------------
Comprehensive Income.............. (10.1)
--------------- --------------------------------- ----------------
Balance at December 31, 1998 $ --- $ (31.7) $ (0.1) $ (31.8)
=============== ================================= ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F - 39
<PAGE>
<TABLE>
<CAPTION>
PPM Cranes, Inc.
Consolidated Statement of Cash Flows
(in millions)
Year Ended December 31,
---------------------------------------------------------
1998 1997 1996
------------------ ------------------ ----------------
Operating activities
<S> <C> <C> <C>
Net loss........................................................$(10.3) $ (1.1) $ (17.1)
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation and amortization.............................. 1.6 1.8 3.2
Extraordinary loss on retirement of debt................... 10.9 --- ---
Impairment charge.......................................... --- --- 13.5
Other...................................................... --- 0.4 1.4
Changes in operating assets and liabilities:
Trade accounts receivable............................. 2.1 (7.0) (2.5)
Net inventories....................................... (0.7) (0.5) (4.2)
Prepaid expenses and other current assets............. 0.1 (0.1) 0.1
Trade accounts payable................................ 3.2 2.4 (0.5)
Net amounts due to affiliates......................... (6.2) 6.8 6.0
Accrued warranty and product liability................ 0.5 --- (0.7)
Accrued expenses...................................... (0.5) (0.6) (1.2)
Other - net........................................... (0.2) (0.8) 1.3
------------------ ------------------ ----------------
Net cash provided by (used in) operating activities............ 0.5 1.3 (0.7)
------------------ ------------------ ----------------
Investing activities
Capital expenditures............................................ (0.1) (0.7) (0.4)
Proceeds from sale of excess assets............................. 0.2 0.7 1.1
------------------ ------------------ ----------------
Net cash provided by (used in) investing activities............. 0.1 --- 0.7
------------------ ------------------ ----------------
Financing activities
Proceeds from issuance of long-term debt, net of issuance costs.
60.0 --- ---
Net (repayments) borrowings under revolving line of credit
agreements.................................................... --- (0.3) 0.8
Principal repayments of long-term debt.......................... (50.8) (0.7) (1.0)
Payment of premiums on early extinguishment of debt............. (8.6) --- ---
Other........................................................... (1.2) (0.1) 0.1
------------------ ------------------ ----------------
Net cash used in financing activities........................... (0.6) (1.1) (0.1)
------------------ ------------------ ----------------
Effect of exchange rate changes on cash......................... --- (0.4) ---
------------------ ------------------ ----------------
Net increase (decrease) in cash and cash equivalents............ --- (0.2) (0.1)
Cash and cash equivalents at beginning of period................ 0.2 0.4 0.5
------------------
================== ================
Cash and cash equivalents at end of period......................$ 0.2 $ 0.2 $ 0.4
================== ================== ================
Supplemental disclosure of cash flow information
Cash paid for interest..........................................$ 0.5 $ 0.4 $ ---
================== ================== ================
Cash paid for income taxes......................................$ --- $ --- $ ---
================== ================== ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F - 40
<PAGE>
PPM CRANES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
(In millions of dollars)
NOTE 1 -- DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION
PPM Cranes, Inc. (the "Company" or "PPM") is engaged in the design, manufacture,
marketing and worldwide distribution and support of construction equipment,
primarily hydraulic cranes and related spare parts.
On May 9, 1995 (the "date of acquisition"), Terex Corporation, through its
wholly-owned subsidiary Terex Cranes, Inc., completed the acquisition of all of
the capital stock of Legris Industries, Inc., a Delaware Corporation which owns
92.4% of the capital stock of PPM Cranes, Inc. Terex Corporation and Terex
Cranes, Inc., are both Delaware corporations. Prior to the acquisition of Legris
Industries, Inc. by Terex Cranes, Inc. on May 9, 1995, Legris Industries, Inc.
was a holding company, with no assets, liabilities, or operations other than its
investment in PPM.
The financial statements reflect Terex Corporation's basis in the assets and
liabilities of the Company which was accounted for as a purchase transaction. As
a result, the debt and goodwill associated with the acquisition have been
"pushed down" to the Company's financial statements.
NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation. The consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiary: PPM of Australia Pty.
Ltd. All material intercompany transactions and profits have been eliminated.
Use of Estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Inventories. Inventories are stated at the lower of cost or market. Cost is
determined by the first-in, first-out (FIFO) method.
Property, Plant and Equipment. Additions and major replacements or improvements
to property, plant and equipment are recorded at cost. Maintenance, repairs and
minor replacements are charged to expense when incurred. Plant and equipment are
depreciated over the estimated useful lives of the assets under the
straight-line method of depreciation for financial reporting purposes and both
straight-line and other methods for tax purposes.
Goodwill. Goodwill, representing the difference between the total purchase price
and the fair value of assets (tangible and intangible) and liabilities at the
date of acquisition, is amortized on a straight-line basis over fifteen years.
Accumulated amortization is $4.8 and $3.5 at December 31, 1998 and 1997,
respectively.
Debt Issuance Costs. Debt issuance costs incurred by Terex Corporation in
securing the financing related to acquiring the Company have been capitalized
and are reflected in the financial statements. Capitalized debt issuance costs
are amortized over the term of the related debt. Accumulated amortization is
$0.2 and $1.2 at December 31, 1998 and 1997, respectively.
Impairment of Long Lived Assets. The Company's policy is to assess the
realizability of its long lived assets and to evaluate such assets for
impairment whenever events or changes in circumstances indicate that the
carrying amount of such assets (or group of assets) may not be recoverable.
Impairment is determined to exist if the estimated future undiscounted cash
flows is less than its carrying value. The amount of any impairment then
recognized would be calculated as the difference between estimated future
discounted cash flows and the carrying value of the asset.
F - 41
<PAGE>
Product Liability and Warranty. The Company records accruals for potential
warranty and product liability claims based on the Company's claim experience.
Warranty costs are accrued at the time revenue is recognized. The Company
provides self-insurance accruals for estimated product liability experience on
claims and for claims anticipated to have been incurred which have not yet been
reported.
Income Taxes. Income taxes are provided using the liability method in accordance
with Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting
for Income Taxes." The Company is a part of a group that files a consolidated
income tax return. The method used to allocate income taxes to members of the
group is one in which current and deferred income taxes are calculated on a
separate return basis as if the Company had not been included in a consolidated
income tax return with its parent. The tax benefit associated with the
acquisition debt has been taken into account in the Company's tax provision.
Revenue Recognition. Revenue and costs are generally recorded when products are
shipped and invoiced to either independently owned and operated dealers or to
customers. Certain new units may be invoiced prior to the time customers take
physical possession. Revenue is recognized in such cases only when the customer
has a fixed commitment to purchase the units, the units have been completed,
tested and made available to the customer for pickup or delivery, and the
customer has requested that the Company hold the units for pickup or delivery at
a time specified by the customer. In such cases, the units are invoiced under
the Company's customary billing terms, title to the units and risks of ownership
pass to the customer upon invoicing, the units are segregated from the Company's
inventory and identified as belonging to the customer and the Company has no
further obligations under the order.
Foreign Currency Translation. Assets and liabilities of the Company's
international operations are translated at year-end exchange rates. Income and
expenses are translated at average exchange rates prevailing during the year.
For operations whose functional currency is the local currency, translation
adjustments are accumulated in the Cumulative Translation Adjustment component
of Stockholders' Deficit. Gains or (losses) resulting from foreign currency
transactions are recorded in the accounts based on the underlying transaction.
Foreign Exchange Contracts. The Company may from time to time use foreign
exchange contracts to hedge recorded balance sheet amounts related to certain
international operations and firm commitments that create currency exposures.
The Company does not enter into speculative contracts. Gains and losses on
hedges of assets and liabilities are recognized in income as offsets to the
gains and losses from the underlying hedged amounts. Gains and losses on hedges
of firm commitments are recorded on the basis of the underlying transaction. At
December 31, 1998 the Company had no material outstanding foreign exchange
contracts.
Environmental Policies. Environmental expenditures that relate to current
operations are either expensed or capitalized depending on the nature of the
expenditure. Expenditures relating to conditions caused by past operations that
do not contribute to current or future revenue generation are expensed.
Liabilities are recorded when environmental assessments and/or remedial actions
are probable, and the costs can be reasonably estimated. Such amounts were not
material at December 31, 1998 and 1997.
Research and Development Costs. Research and development costs are expensed as
incurred. Such costs incurred in the development of new products or significant
improvements to existing products are included in Engineering, Selling and
Administrative Expenses and amounted to $0.0, $0.1 and $0.1 in 1998, 1997 and
1996, respectively.
NOTE 3 -- IMPAIRMENT OF LONG LIVED ASSETS
The Company adopted SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and Long-Lived Assets to be Disposed of," in 1996. This statement
establishes accounting standards for determining impairment of long-lived assets
and long-lived assets to be disposed of. The Company assesses the realizability
of its long-lived assets and evaluates such assets for impairment whenever
events or changes in circumstances indicate that the carrying amount of such
assets (or group of assets) may not be recoverable. For assets in use or under
development, impairment is determined to exist if the estimated future cash flow
associated with the asset, undiscounted and without interest charges, is less
than the carrying amount of the asset. When the estimated future cash flow
indicates that the carrying amount of the asset will not be recovered, the asset
is written down to its fair value.
F - 42
<PAGE>
As required by generally accepted accounting principles, goodwill was allocated
in the PPM Acquisition to various operating units. After eighteen months of
continuous rationalization, estimated future undiscounted cash flows for certain
U.S. operations would not be sufficient to recover the goodwill and fixed assets
recorded for these operations. Thus, in the fourth quarter of 1996 the Company
recorded an impairment charge of $13.5. These 1996 impairment charges totaling
$13.5 are included in "Cost of Goods Sold."
NOTE 4 -- INVENTORIES
Inventories at December 31, 1998 and 1997 consist of the following:
1998 19957
--------- ----------
Raw materials and supplies....................... $ 10.4 $ 9.0
Work in process.................................. 1.6 0.3
Replacement parts................................ 9.1 9.7
Finished goods equipment......................... 9.3 10.7
========= ==========
$ 30.4 $ 29.7
========= ==========
NOTE 5 -- PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at December 31, 1998 and 1997 consists of the
following:
1998 1997
---------------------
Property.......................................... $ 0.2 $ 0.1
Plant............................................. --- ---
Machinery and equipment........................... --- ---
---------------------
0.2 0.1
Less accumulated depreciation..................... (0.2) (0.1)
=====================
$ --- $ ---
=====================
Depreciation expense for 1998, 1997 and 1996 was $0.1, $0.1 and $0.6,
respectively.
NOTE 6 - LONG-TERM DEBT
Long-term debt at December 31, 1998 and 1997 is summarized as follows:
1998 1997
--------- ---------
New Bank Credit Facility.................................... $ 60.0 $ ---
13 1/4% Senior Secured Notes due May 15, 2002............... --- 49.5
Note payable................................................ 4.4 4.7
Other....................................................... 0.3 0.6
--------- ---------
Total long-term debt................................... 64.7 54.8
Current portion long-term debt.............................. 0.8 1.0
========= =========
Long-term debt less current portion.................... $ 63.9 $ 53.8
========= =========
On March 6, 1998, Terex Corporation redeemed or defeased all of its $166.7
principal amount of its then outstanding 13-1/4% Senior Secured Notes due 2002
(the "Senior Secured Notes"). The Company had $50.0 in principal of the Senior
Secured Notes that were redeemed. Concurrently therewith, Terex Corporation also
refinanced substantially all of its then existing domestic and foreign revolving
credit debt. The proceeds for the offer to purchase and the repayment of its
then existing revolving credit facility were obtained from borrowings under
Terex Corporation's new $500.0 global bank credit facility ("New Bank Credit
Facility"). In connection with the repurchase of the Senior Secured Notes, the
Company incurred an extraordinary loss of $10.9. This extraordinary loss was
recorded in the first quarter of 1998.
F - 43
<PAGE>
The New Bank Credit Facility consists of a new secured global revolving credit
facility aggregating up to $125.0 (the "New Revolving Credit Facility") and two
term loan facilities (collectively, the "Term Loan Facilities") providing for
loans in an aggregate principal amount of up to approximately $375.0. With
limited exceptions, the obligations under the New Bank Credit Facility are
secured by (i) a pledge of all of the capital stock of domestic subsidiaries of
Terex Corporation, (ii) a pledge of 65% of the stock of the foreign subsidiaries
of Terex Corporation and (iii) a first priority security interest in, and
mortgages on, substantially all of the assets of Terex and its domestic
subsidiaries. The New Bank Credit Facility contains covenants limiting Terex
Corporation's activities, including, without limitation, limitations on
dividends and other payments, liens, investments, incurrence of indebtedness,
mergers and asset sales, related party transactions and capital expenditures.
The new Bank Credit Facility also contains certain financial and operating
covenants, including a maximum leverage ratio, a minimum interest coverage ratio
and a minimum fixed charge coverage ratio.
Pursuant to the Term Loan Facilities, Terex Corporation has borrowed (i) $175.0
in aggregate principal amount pursuant to a Term Loan A due March 2004 (the
"Term A Loan") and (ii) $200.0 in aggregate principal amount pursuant to a Term
Loan B due March 2005 (the "Term B Loan") of which $60.0 was pushed down to the
Company. The outstanding principal amount of the Term B Loan currently bears
interest, at Terex Corporation'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 weighted
average interest rate on the Term B Loan at December 31, 1998 was 7.75%. 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.)
The Senior Secured Notes
On May 9, 1995, Terex Corporation issued $250 of 13-1/4% Senior Secured Notes
due May 15, 2002. The Senior Secured Notes were issued in conjunction with Terex
Corporation's acquisition of substantially all of the capital stock of PPM
Cranes, Inc. and P.P.M. S.A. and the refinancing of Terex Corporation's debt. Of
the total principal amount $50 related to the acquisition of substantially all
of the capital stock of PPM Cranes, Inc. and was included in the Company's
consolidated balance sheet prior to March 6, 1998.
Repayment of the Senior Secured Notes were guaranteed by certain domestic
subsidiaries of Terex Corporation (the "Guarantors"), including PPM Cranes, Inc.
The Senior Secured Notes were secured by a first priority security interest on
substantially all of the assets of Terex Corporation and the Guarantors, other
than cash and cash equivalents, except that as to accounts receivable and
inventory and proceeds thereof, and certain related rights, such security was
subordinated to liens securing obligations outstanding under any working capital
or revolving credit facility secured by such accounts receivable and inventory.
The indenture for the Senior Secured Notes placed certain limits on Terex
Corporation's ability to incur additional indebtedness; permit the existence of
liens; issue, pay dividends on or redeem equity securities; sell assets;
consolidate, merge or transfer assets to another entity; and enter into
transactions with affiliates.
Note payable - Harnischfeger Corporation
The note payable to Harnischfeger Corporation is not interest bearing.
F - 44
<PAGE>
Schedule of Debt Maturities
Scheduled annual maturities of long-term debt outstanding at December 31, 1998
in the successive five-year period are summarized as follows:
Note Payable -
Harnischfeger Other Total
--------------- --------------- -------------
1999...........................$ 0.8 $ --- $ 0.8
2000........................... 0.8 --- 0.8
2001........................... 0.8 0.1 0.9
2002........................... 0.4 0.1 0.5
2003........................... 0.5 0.1 0.6
Thereafter..................... 4.1 60.0 64.1
------------------------------- -------------
7.4 60.3 67.7
Imputed Interest............... (3.0) --- (3.0)
=============================== =============
$ 4.4 $ 60.3 $ 64.7
=============================== =============
The Company believes that the carrying value of other borrowings approximates
fair market value, based on discounting future cash flows using rates currently
available for debt of similar terms and remaining maturities.
NOTE 7 -- EMPLOYEE BENEFIT PLAN
The Company participates in a defined contribution plan which is sponsored by
Terex Corporation. The plan covers U.S. employees. Under the plan, the Company
matches a portion of an employee's contribution to the plan. The related expense
to the Company was $0.1, $0.1 and $0.1 for 1998, 1997 and 1996, respectively.
F - 45
<PAGE>
NOTE 8 -- INCOME TAXES
The components of income (loss) from continuing operations before income taxes
and extraordinary items consisted of the following:
Year Ended December 31,
------------------------------------
1998 1997 1996
----------- ------------- ---------
Domestic....................................$ 0.4 $ (1.1) $ (16.3)
Foreign..................................... 0.2 --- (0.8)
----------- ------------- ---------
$ 0.6 $ (1.1) $ (17.1)
=========== ============= =========
The Company has no provision for federal, foreign and state income taxes
(benefit).
The Company has not provided deferred taxes on $1.3 of cumulative undistributed
earnings of foreign subsidiaries as of December 31, 1998 as these earnings will
be either permanently re-invested or remitted substantially free of additional
income tax.
Deferred tax assets and liabilities result from differences in the basis of
assets and liabilities for tax and financial statements purposes. In accordance
with SFAS No. 109, "Accounting for income taxes," a valuation allowance fully
offsetting the net deferred tax asset, has been recognized. The tax effects of
the basis differences and Net Operating Loss ("NOL") carryforward as of December
31, 1998 and 1997 are summarized below:
Year Ended December 31,
-----------------------------
1998 1997
------------ ------------
Total deferred tax liabilities.................... $ --- $ ---
------------ ------------
Receivables....................................... 0.1 0.1
Inventory......................................... 0.7 0.9
Fixed Assets...................................... 0.8 0.8
Product liability................................. 2.1 2.1
Warranty.......................................... 0.7 0.5
Other............................................. --- 0.2
NOL carryforwards................................. 20.7 16.9
------------ ------------
Total deferred tax assets......................... 25.1 21.5
Deferred tax asset valuation allowance............ (25.1) (21.5)
------------ ------------
Net deferred taxes................................ $ --- $ ---
============ ============
The valuation allowance for deferred tax assets at acquisition date, May 9,
1995, was $19.0. Any future reduction of this valuation allowance attributable
to the pre-acquisition period will reduce goodwill. The net change in the
valuation allowance for 1998, 1997 and 1996 was an increase of $3.6, a decrease
of $3.1 and an increase of $1.2, respectively.
F - 46
<PAGE>
At December 31, 1998, the Company has loss carryforwards for federal income tax
purposes of approximately $59.1 available to offset future taxable income. The
expiration of the Company's loss carryforwards are as follows:
Year
Expiring Amount
------------ -------------
2004 ................. $ 21.7
2005 ................. 0.8
2006 ................. 5.8
2007 ................. 8.9
2008 ................. 3.1
2009 ................. 2.4
2010 ................. 0.2
2011 ................. 5.4
2018 ................. 10.8
=============
Total ................. $ 59.1
=============
The utilization of approximately $42.7 of loss carryforwards is limited
annually, as a result of an "ownership change" (as defined by Section 382 of the
Internal Revenue code), which occurred in 1995. Further, the use of these
pre-acquisition losses is limited to future taxable income of PPM Cranes, Inc.
The Company's provision for income taxes from continuing operations is different
from the amount which would be provided by applying the statutory federal income
tax rate to the Company's loss before income taxes. The reasons for the
difference are summarized below:
Year Ended December 31,
----------------------------
1998 1997 1996
-------- --------- ---------
Statutory federal income tax rate...................$ 0.2 $ (0.4) $ (6.0)
Goodwill............................................ 0.4 0.5 3.9
NOL and basis differences with no current benefit... (0.6) (0.1) 2.1
-------- --------- ---------
Total provision for income taxes....................$ --- $ --- $ ---
======== ========= =========
There were no income taxes paid during 1998, 1997 and 1996.
NOTE 9 -- COMMITMENTS AND CONTINGENCIES
The Company has various lease agreements, primarily related to office space,
production facilities, and office equipment, which are accounted for as
operating leases. Certain leases have renewal options and provisions requiring
the Company to pay maintenance, property taxes and insurance. Rent expense for
1998, 1997 and 1996 was $0.3, $0.4 and $0.7, respectively.
Future minimum payments under noncancelable operating leases at December 31,
1998 are as follows:
1999...................................... $ 0.2
2000...................................... 0.1
2001...................................... 0.1
2002...................................... ---
2003...................................... ---
Thereafter................................. ---
==============
$ 0.4
==============
The Company is involved in product liability and other lawsuits incident to the
operation of its business. Insurance with third parties is maintained for
certain of these items. It is management's opinion that none of these lawsuits
will have a materially adverse effect on the Company's financial position.
F - 47
<PAGE>
NOTE 10 - BUSINESS SEGMENT INFORMATION
The Company operates in one industry segment, that being the designing,
manufacturing, and marketing of telescopic mobile cranes. These products are
used primarily in the construction industry.
Geographic segment information is presented below:
1998 1997 1996
-------- -------- --------
Sales
United States............................$ 66.6 $ 54.3 $ 64.7
Other North American Countries........... 9.1 6.6 2.3
Europe................................... 2.4 4.2 3.4
All Other................................ 14.3 22.3 25.5
======== ======== ========
$ 92.4 $ 87.4 $ 95.9
======== ======== ========
Sales to the Company's largest customer comprised 12%, 12% and 7% of the
Company's net sales in the years ended December 31, 1998, 1997 and 1996,
respectively.
NOTE 11 -- RELATED PARTY TRANSACTIONS
During the years ended December 31, 1998 and 1997 and 1996, the Company had
transactions with various unconsolidated affiliates as follows:
1998 1997 1996
-------- --------- ---------
Product sales and service revenues......... $ 1.3 $ 2.5 $ 2.1
Management fee expense..................... $ 1.0 $ 1.1 $ 1.1
Interest expense........................... $ 5.3 $ 6.5 $ 7.0
Included in management fee expense are expenses paid by Terex Corporation on
behalf of the Company (e.g. legal, treasury and tax expense).
F - 48
<PAGE>
TEREX CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(Amounts in millions)
Additions
---------------------------
Balance
Beginning Charges to Balance End
of Year Earnings Other Deductions (1) of Year
------------- ------------- ------------- ----------------- -------------
Year ended December 31, 1998:
Deducted from asset accounts:
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts............. $ 4.5 $ 1.8 $ --- $ (0.7) $ 5.6
Reserve for excess and obsolete inventory... 24.0 5.6 --- (5.6) 24.0
============= ============= ============= ================= =============
Totals..................................... $ 28.5 $ 7.4 $ --- $ (6.3) $ 29.6
============= ============= ============= ================= =============
Year ended December 31, 1997:
Deducted from asset accounts:
Allowance for doubtful accounts............. $ 7.0 $ 0.4 $ --- $ (2.9) $ 4.5
Reserve for excess and obsolete inventory... 18.7 8.1 --- (2.8) 24.0
============= ============= ============= ================= =============
Totals..................................... $ 25.7 $ 8.5 $ --- $ (5.7) $ 28.5
============= ============= ============= ================= =============
Year ended December 31, 1996:
Deducted from asset accounts:
Allowance for doubtful accounts............. $ 7.4 $ 2.4 $ --- $ (2.8) $ 7.0
Reserve for excess and obsolete inventory... 15.9 9.1 --- (6.3) 18.7
============= ============= ============= ================= =============
Totals..................................... $ 23.3 $ 11.5 $ --- $ (9.1) $ 25.7
============= ============= ============= ================= =============
</TABLE>
(1) Primarily represents the utilization of established reserves, net of
recoveries.
F - 49
<PAGE>
<TABLE>
<CAPTION>
TEREX CORPORATION AND SUBSIDIARIES
SCHEDULE IV - INDEBTEDNESS OF AND TO RELATED PARTIES -- NOT CURRENT
Indebtedness of
---------------------------------------------------------------
Balance at Balance at End
Beginning of of
Name of Person Period Additions Deductions Period
- ---------------------------------------------- --------------- --------------- -------------- ----------------
Year ended December 31, 1998:
Randolph W. Lenz
Promissory note, interest at 6.56% due
<S> <C> <C> <C> <C> <C>
November 2, 2000....................... $ 840,000 $ --- $ (480,000) $ 360,000
=============== =============== ============== ================
Year ended December 31, 1997:
Randolph W. Lenz
Promissory note, interest at 6.56% due
November 2, 2000....................... $ 1,440,000 $ --- $ (600,000) $ 840,000
=============== =============== ============== ================
Year ended December 31, 1996:
Randolph W. Lenz
Promissory note, interest at 6.56% due
November 2, 2000....................... $ 1,800,000 $ --- $ (360,000) $ 1,440,000
Payable for shipping charges............. 33,450 --- (33,450) ---
=============== =============== ============== ================
Total.................................. $ 1,833,450 $ --- $ (393,450) $ 1,440,000
=============== =============== ============== ================
</TABLE>
F - 50
<PAGE>
INDEX TO EXHIBITS
3.1 Restated Certificate of Incorporation of Terex Corporation (incorporated
by reference to Exhibit 3.1 to the Form S-1 Registration Statement of
Terex Corporation, Registration No. 33-52297).
3.2 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.
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 Indenture dated as of March 9, 1999 among Terex Corporation, the
Guarantors named therein and United States Trust Company of New York, as
Trustee.
10.1 Terex Corporation Incentive Stock Option Plan, as amended (incorporated
by reference to Exhibit 4.1 to the Form S-8 Registration Statement of
Terex Corporation, Registration No. 33-21483).
10.2 1994 Terex Corporation Long Term Incentive Plan (incorporated by
reference to Exhibit 10.2 to the Form 10-K for the year ended December
31, 1994 of Terex Corporation, Commission File No. 1-10702).
10.3 Terex Corporation Employee Stock Purchase Plan (incorporated by reference
to Exhibit 10.3 to the Form 10-K for the year ended December 31, 1994 of
Terex Corporation, Commission File No. 1-10702).
10.4 1996 Terex Corporation Long Term Incentive Plan (incorporated by
reference to Exhibit 10.1 to Form S-8 Registration Statement of Terex
Corporation, Registration No. 333-03983).
10.5 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).
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).
-E-1-
<PAGE>
10.11 GuaranteeAgreement 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, 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
10.15 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.
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.
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.
10.20 Purchase Agreement dated as of March 9, 1999 among the Company and the
Initial Purchasers, as defined therein.
10.21 Registration Rights Agreement dated as of March 9, 1999 among the Company
and the Purchasers, as defined therein.
11.1 Computation of per share earnings.
21.1 Subsidiaries of Terex Corporation.
23.1 Independent Accountants' Consent of PricewaterhouseCoopers LLP, Stamford,
Connecticut.
24.1 Power of Attorney.
E-2
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
RESTATED CERTIFICATE OF INCORPORATION
OF
TEREX CORPORATION
----------------------------------------------
Pursuant to Sections 228 and 242 of the
General Corporation Law of the State of Delaware
----------------------------------------------
Terex Corporation, a corporation duly organized and existing
under and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"),
DOES HEREBY CERTIFY:
FIRST: That pursuant to a consent in writing of all of the
directors of Terex Corporation, resolutions were duly adopted setting forth a
proposed amendment to the Restated Certificate of Incorporation of the
Corporation, declaring said amendment to be advisable and calling for
consideration thereof by all of the stockholders. The resolution setting forth
the proposed amendment is as follows:
RESOLVED, that the Company effect an amendment to its
Certificate of Incorporation (a) to increase the number of
shares of Common Stock that the Company will have the
authority to issue from 30,000,000 shares to 150,000,000
shares and (b) to increase the number of shares of Preferred
Stock that the Corporation will have the authority to issue
from 10,000,000 to 50,000,000.
SECOND: That thereafter, pursuant to resolution of all of
its directors, all of the stockholders of the Corporation considered the
amendment and consented to the amendment, in writing duly signed by said
stockholders.
THIRD: That the Restated Certificate of Incorporation of
the Corporation is hereby amended by changing paragraph (a) of Article IV so
that, as amended, said paragraph (a) shall be and read as follows:
"(a) The aggregate number of shares which the Corporation
shall have the authority to issue is 200,000,000, consisting
of (i) 150,000,000 designated as Common Stock, par value
$.01 per shares ("Common Stock"), and (ii) 50,000,000 shares
designated as Preferred Stock, par value $.01 per share
("Preferred Stock")."
FOURTH: That said amendment was duly adopted in accordance
with the provisions of Sections 228 and 242 of the General Corporation Law of
the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this
certificate to be signed by its Chairman and attested by its Secretary this
5th day of June, 1998.
TEREX CORPORATION
By /s/ Ronald M. DeFeo
---------------------
Ronald M. DeFeo, Chairman
Attest:
/s/ Eric I Cohen
- -----------------
Eric I Cohen, Secretary
<PAGE>
TEREX CORPORATION,
as Issuer
THE SUBSIDIARY GUARANTORS NAMED HEREIN,
as Subsidiary Guarantors
and
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
INDENTURE
Dated as of March 9, 1999
8-7/8% Senior Subordinated Notes due 2008
<PAGE>
INDENTURE, dated as of March 9, 1999, among TEREX CORPORATION,
a Delaware corporation (the "Company"), KOEHRING CRANES, INC., a Delaware
corporation, PAYHAULER CORP., an Illinois corporation, PPM CRANES, INC., a
Delaware corporation, TEREX AERIALS, INC., a Wisconsin corporation, TEREX
CRANES, INC., a Delaware corporation, TEREX MINING EQUIPMENT, INC., a Delaware
corporation, TEREX-RO CORPORATION, a Kansas corporation, TEREX-TELELECT, INC., a
Delaware corporation , THE AMERICAN CRANE CORPORATION, a North Carolina
corporation, and O&K ORENSTEIN & KOPPEL, INC., a Delaware corporation (the
"Subsidiary Guarantors"), and UNITED STATES TRUST COMPANY OF NEW YORK, a New
York banking corporation, as Trustee (the "Trustee").
The Company has duly authorized the creation of an issue of
$100,000,000 8-7/8% Series C Senior Subordinated Notes due 2008 in the form of
Initial Notes (as defined below) and, if and when issued in connection with a
registered exchange for such Initial Notes, 8-7/8% Series D Senior Subordinated
Notes due 2008 in the form of Exchange Notes (as defined below) and, if and when
issued in connection with a private exchange for such Initial Notes, 8-7/8%
Senior Subordinated Private Exchange Notes due 2008 in the form of Private
Exchange Notes (as defined below), and such Additional Notes (as defined below)
that the Company may from time to time choose to issue pursuant to the
Indenture, and, to provide therefor, the Company and each of the Subsidiary
Guarantors has duly authorized the execution and delivery of this Indenture. The
Subsidiary Guarantors have agreed to guarantee the Notes on a senior
subordinated basis.
Each party hereto agrees as follows for the benefit of each
other party and for the equal and ratable benefit of the Holders of the Notes.
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Acquired Indebtedness" means Indebtedness of a Person or any
of its Subsidiaries (the "Acquired Person") (i) existing at the time such Person
becomes a Restricted Subsidiary of the Company or at the time it merges or
consolidates with the Company or any of its Restricted Subsidiaries or (ii)
assumed in connection with the acquisition of assets from such Person.
"Additional Notes" means, subject to the Company's compliance
with Section 4.13, 8-7/8% Series C, Series D or any other series of Senior
Subordinated Notes due 2008 issued from time to time after March 9, 1999 under
the terms of this Indenture (other than pursuant to Section 2.07, 2.10, 3.06,
4.16, 4.17 or 9.06 of this Indenture or Section 2.3 of the Appendix and other
than Exchange Notes or Private Exchange Notes issued pursuant to an exchange
offer for other Notes outstanding under this Indenture).
"Adjusted Maximum Amount" has the meaning provided in Section
11.05.
"Affiliate" of any specified Person means (i) any other Person
which, directly or indirectly, is in control of, is controlled by or is under
common control with such specified Person or (ii) any other Person who is a
director or officer (A) of such specified Person, (B) of any subsidiary of such
specified Person or (C) any Person described in clause (i) above. For purposes
of this definition, control of a Person means the power, direct or indirect, to
direct or cause the direction of the management and policies of such Person
whether by contract or otherwise and the terms "controlling" and "controlled"
have meanings correlative to the foregoing.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Aggregate Payments" has the meaning provided in Section
11.05.
"Asset Disposition" means any sale, lease, transfer,
conveyance or other disposition (or series of related sales, leases, transfers
or dispositions) by the Company or any Restricted Subsidiary, including any
disposition by means of a merger or consolidation (each referred to for the
purposes of this definition as a "disposition"), of (i) any shares of Capital
Stock of a Restricted Subsidiary (other than directors' qualifying shares or
shares required by applicable law to be held by a Person other than the Company
or a Restricted Subsidiary), (ii) all or substantially all the assets of any
division or line of business of the Company or any Restricted Subsidiary or
(iii) any other assets of the Company or any Restricted Subsidiary outside of
the ordinary course of business of the Company or such Restricted Subsidiary
(other than, in the case of (i), (ii) and (iii) above, a disposition by a
Restricted Subsidiary to the Company or by the Company or a Restricted
Subsidiary to a Wholly Owned Subsidiary; provided, however, that each of (a) the
consummation of any sale or series of related sales of assets or properties of
the Company and the Restricted Subsidiaries by the Company and any Restricted
Subsidiaries having an aggregate fair market value of less than $1 million in
any fiscal year and (b) the discounting of accounts receivable or the sale of
inventory, in each case in the ordinary course of business, shall not be deemed
an Asset Disposition.
"Authenticating Agent" has the meaning provided in Section
2.02.
"Average Life" means, as of the date of determination,
with respect to any Indebtedness or Preferred Stock, the quotient obtained by
dividing (i) the sum of the products of numbers of years from the date of
determination to the dates of each successive scheduled principal payment of
such Indebtedness or redemption or similar payment with respect to such
Preferred Stock multiplied by the amount of such payment by (ii) the sum of all
such payments.
"Bank Indebtedness" means (i) the Indebtedness outstanding or
arising under the Credit Facility up to a maximum principal amount of $500
million, (ii) all obligations and other amounts owing to the holders of such
Indebtedness or any agent or representative thereof outstanding or arising under
the 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 the Company or any Restricted Subsidiary, whether
or not a claim for such interest is allowed in such proceeding), fees, charges,
indemnities, expense reimbursement obligations and other claims under the Credit
Facility), and (iii) all Hedging Obligations arising in connection therewith
with any party to the Credit Facility.
"Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal, state or foreign law for the relief of debtors.
"Board of Directors" means the Board of Directors of the
Company or any committee thereof duly authorized to act on behalf of such Board.
"Board Resolution" means, with respect to any Person, a copy
of a resolution certified by the Secretary or an Assistant Secretary of such
Person to have been duly adopted by the Board of Directors of such Person and to
be in full force and effect on the date of such certification, and delivered to
the Trustee.
"Business Day" means each day which is not a Legal Holiday.
"Capital Lease Obligations" of a Person means any obligation
which is required to be classified and accounted for as a capital lease on the
face of a balance sheet of such Person prepared in accordance with GAAP; the
amount of such obligation shall be the capitalized amount thereof, determined in
accordance with GAAP; and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such 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 in (however designated), including any Preferred
Stock, but excluding any debt securities convertible into or exchangeable for
such equity.
"Cash Equivalents" means (i) marketable direct obligations
issued by, or unconditionally guaranteed by, the United States Government or
issued by any agency thereof and backed by the full faith and credit of the
United States, in each case maturing within one year from the date of
acquisition thereof; (ii) marketable direct obligations issued by any state of
the United States of America or any political subdivision of any such state or
any public instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either Standard & Poor's Rating Services or
Moody's Investors Service, Inc.; (iii) commercial paper maturing no more than
one year from the date of creation thereof and, at the time of acquisition,
having a rating of at least A-1 from Standard & Poor's Rating Services or at
least P-1 from Moody's Investors Service, Inc.; (iv) certificates of deposit or
bankers' acceptances maturing within one year from the date of acquisition
thereof issued by (x) any bank organized under the laws of the United States of
America or any state thereof or the District of Columbia or (y) a commercial
banking institution organized and located in a country recognized by the United
States of America, in each case having at the date of acquisition thereof
combined capital and surplus of not less than $200 million (or the foreign
currency equivalent thereof); (v) repurchase obligations with a term of not more
than seven days for underlying securities of the types described in clause (i)
above entered into with any bank meeting the qualifications specified in clause
(iv) above; (vi) investments in money market funds which invest substantially
all their assets in securities of the types described in clauses (i) through (v)
above; and (vii) other short-term investments utilized by foreign Restricted
Subsidiaries in accordance with normal investment practices for cash management
not exceeding $1.0 million in aggregate principal amount outstanding at any
time.
"Cash Flow" for any period means the Consolidated Net Income
for such period, plus the following (but without duplication) to the extent
deducted in calculating such Consolidated Net Income for such period: (i) income
tax expense, (ii) Consolidated Interest Expense, (iii) depreciation expense and
amortization expense, provided that consolidated depreciation and amortization
expense of a Subsidiary that is not a Wholly Owned Subsidiary shall only be
added to the extent of the equity interest of the Company in such Subsidiary and
(iv) all other non-cash charges (other than any recurring non-cash charges to
the extent such charges represent an accrual of or reserve for cash expenditures
in any future period). Notwithstanding clause (iv) above, there shall be
deducted from Cash Flow in any period any cash expended in such period that
funds a non-recurring, non-cash charge accrued or reserved in a prior period
which was added back to Cash Flow pursuant to clause (iv) in such prior period.
"Change of Control" means the occurrence of any of the
following events:
(i) any "person"or "group" (as such terms are used in Sections 13(d) and
14(d) of the Exchange Act) is or becomes the beneficial owner (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a
Person shall be deemed to have beneficial ownership of all shares that
such Person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly,
of more than 40% of the total voting power of the Voting Stock of the
Company, whether as a result of issuance of securities of the Company,
any merger, consolidation, liquidation or dissolution of the Company,
any direct or indirect transfer of securities or otherwise.
(ii) (A) another corporation merges into the Company or the Company
consolidates with or merges into any other corporation, or (B) the
Company conveys, transfers or leases all or substantially all its
assets (computed on a consolidated basis) to any person or group, in
one transaction or a series of transactions other than any conveyance,
transfer or lease between the Company and a Wholly Owned Subsidiary of
the Company, in each case in one transaction or a series of related
transactions with the effect that either (x) immediately after such
transaction any person or entity or group (as so defined) 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 outstanding securities of the surviving corporation
ordinarily having the right to vote in the election of directors or (y)
the securities of the Company that are outstanding immediately prior to
such transaction and which represent 100% of the combined voting power
of the securities of the Company ordinarily having the right to vote in
the election of directors 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 corporation that represent
immediately after such transaction, at least a majority of the combined
voting power of the securities of the surviving corporation ordinarily
having the right to vote in the election of directors; or
(iii) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of the
Company (together with any new directors whose election by such Board
of Directors or whose nomination for election by the shareholders of
the Company was approved by a vote of 60% of the directors of the
Company then still in office who were either directors at the beginning
of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority
of the Board of Directors of the Company then in office.
"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 the Company and United States Trust
Company of New York, as agent.
"Company" means the party named as such in this Indenture
until a successor replaces it pursuant to this Indenture and thereafter means
such successor.
"Consolidated Cash Flow Coverage Ratio" as of any date of
determination means the ratio of (i) the aggregate amount of Cash Flow for the
period of the most recent four consecutive fiscal quarters for which financial
statements are available to (ii) Consolidated Interest Expense for such four
fiscal quarters; provided, however, that (1) if the Company or any Restricted
Subsidiary has issued any Indebtedness since the beginning of such period that
remains outstanding or if the transaction giving rise to the need to calculate
the Consolidated Cash Flow Coverage Ratio is an issuance of Indebtedness, or
both, Cash Flow and Consolidated Interest Expense for such period shall be
calculated after giving effect on a pro forma basis to such Indebtedness as if
such Indebtedness had been issued on the first day of such period and the
discharge of any other Indebtedness repaid, repurchased, defeased or otherwise
discharged with the proceeds of such new Indebtedness as if such discharge had
occurred on the first day of such period, (2) if since the beginning of such
period the Company or any Restricted Subsidiary shall have made any Asset
Disposition, the Cash Flow for such period shall be reduced by an amount equal
to the Cash Flow (if positive) directly attributable to the assets which are the
subject of such Asset Disposition for such period, or increased by an amount
equal to the Cash Flow (if negative), directly attributable thereto for such
period, and Consolidated Interest Expense for such period shall be reduced by an
amount equal to the Consolidated Interest Expense directly attributable to any
Indebtedness of the Company or any Restricted Subsidiary repaid, repurchased,
defeased or otherwise discharged with respect to the Company and its continuing
Restricted Subsidiaries in connection with such Asset Dispositions for such
period (or, if the Capital Stock of any Restricted Subsidiary is sold, the
Consolidated Interest Expense for such period directly attributable to the
Indebtedness of such Restricted Subsidiary to the extent the Company and its
continuing Restricted Subsidiaries are no longer liable for such Indebtedness
after such sale), (3) if since the beginning of such period the Company or any
Restricted Subsidiary (by merger or otherwise) shall have made an Investment in
any Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary)
or an acquisition of assets (including Capital Stock of a Subsidiary), including
any acquisition of assets occurring in connection with a transaction causing a
calculation to be made hereunder, Cash Flow and Consolidated Interest Expense
for such period shall be calculated after giving pro forma effect thereto
(including the issuance of any Indebtedness) as if such Investment or
acquisition occurred on the first day of such period, and (4) if since the
beginning of such period any Person (that subsequently became a Restricted
Subsidiary or was merged with or into the Company or any Restricted Subsidiary
since the beginning of such period) shall have made any Asset Disposition or any
Investment that would have required an adjustment pursuant to clause (2) or (3)
above if made by the Company or a Restricted Subsidiary during such period, Cash
Flow and Consolidated Interest Expense for such period shall be calculated after
giving pro forma effect thereto as if such Asset Disposition or Investment
occurred on the first day of such period. For purposes of this definition,
whenever pro forma effect is to be given to an acquisition of assets, the amount
of income or earnings relating thereto, and the amount of Consolidated Interest
Expense associated with any Indebtedness issued in connection therewith, the pro
forma calculations shall be determined in good faith by a responsible financial
or accounting Officer of the Company. If any Indebtedness bears a floating rate
of interest and is being given pro forma effect, the interest of such
Indebtedness shall be calculated as if the average interest rate for the period
up to the date of determination had been the applicable rate for the entire
period (taking into account any Interest Rate Protection Agreement applicable to
such Indebtedness if such Interest Rate Protection Agreement has a remaining
term in excess of 12 months). For purposes of this definition, whenever pro
forma effect is to be given to any Indebtedness Incurred pursuant to a revolving
credit facility the amount outstanding under such Indebtedness shall be equal to
the average of the amount outstanding during the period commencing on the first
day of the first of the four most recent fiscal quarters for which financial
statements are available and ending on the date of determination.
"Consolidated Interest Expense" means, for any period, the
total interest expense of the Company and its consolidated Restricted
Subsidiaries, plus, to the extent not included in such interest expense but
Incurred by the Company or its Restricted Subsidiaries, (i) interest expense
attributable to capital leases, (ii) amortization of debt discount, (iii)
capitalized interest, (iv) original issue discount and non-cash interest
payments or accruals, (v) commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financing, (vi) net
costs under Hedging Obligations (including amortization of fees), (vii)
dividends in respect of all Disqualified Stock held by Persons other than the
Company, a Subsidiary Guarantor or a Wholly Owned Subsidiary, (viii) interest
Incurred in connection with investments in discontinued operations, (ix) the
interest portion of any deferred payment obligations constituting Indebtedness,
and (x) the cash contributions to any employee stock ownership plan or similar
trust to the extent such contributions are used by such plan or trust to pay
interest or fees to any Person (other than the Company) in connection with
Indebtedness Incurred by such plan or trust. For purposes of this definition,
interest expense attributable to any Indebtedness represented by the guarantee
(other than (a) Guarantees permitted by the terms of clauses (b)(x) and (xi),
respectively, of Sections 4.13 and 4.18 and (b) Guarantees by the Company of
Indebtedness of a consolidated Restricted Subsidiary or by a consolidated
Restricted Subsidiary of the Company or another consolidated Restricted
Subsidiary) by such person or a Subsidiary of such person of an obligation of
another person shall be deemed to be the interest expense attributable to the
Indebtedness guaranteed.
"Consolidated Net Income" means, for any period, the net
income of the Company and its consolidated Subsidiaries; provided, however, that
there shall not be included in such Consolidated Net Income:
(i) any net income of any Person if such Person is not a Restricted
Subsidiary, except that (A) the Company'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 the Company 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 (iii) below) and (B) the Company's
equity in a net loss of any such Person for such period shall be
included in determining such Consolidated Net Income;
(ii) any net income of any Person acquired by the Company or a Subsidiary in
a pooling of interests transaction for any period prior to the date of
such acquisition;
(iii) any net income 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 Subsidiary,
directly or indirectly, to the Company, except that (A) the Company'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 actually distributed by such Restricted
Subsidiary during such period to the Company or another Restricted
Subsidiary as a dividend or other distribution (subject, in the case of
a dividend or other distribution to another Restricted Subsidiary, to
the limitation contained in this clause) and (B) the Company's equity
in a net loss of any such Restricted Subsidiary for such period shall
be included in determining such Consolidated Net Income;
(iv) any gain or loss realized upon the sale or other disposition of any
property, plant or equipment of the Company or its consolidated
subsidiaries (including pursuant to any sale and leaseback arrangement)
which is not sold or otherwise disposed of in the ordinary course of
business and any gain or loss realized upon the sale or other
disposition of any Capital Stock of any Person;
(v) all extraordinary, unusual or non-recurring gains, and any
extraordinary or non-recurring loss as recorded on the statement of
operations in accordance with GAAP; and
(vi) the cumulative effect of a change in accounting principles.
"covenant defeasance option" has the meaning provided in
Section 8.01.
"Credit Facility" means a collective reference to any term
loan and revolving credit facilities (including, but not limited to, the credit
agreement dated March 6, 1998, by and among the Company, 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 (i) extending the maturity of any Indebtedness
incurred thereunder or contemplated thereby, or (ii) adding or deleting
borrowers or guarantors thereunder, so long as borrowers and issuers include one
or more of the Company and its Restricted Subsidiaries and their respective
successors and assigns.
"Currency Agreement Obligations" means the obligations of any
person under a foreign exchange contract, currency swap agreement or other
similar agreement or arrangement to protect such person against fluctuations in
currency values.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"Default Notice" has the meaning provided in Section 10.02.
"Depository" means The Depository Trust Company, its nominees
and their respective successors.
"Designated Senior Indebtedness" means (i) so long as any Bank
Indebtedness is outstanding, such Bank Indebtedness and (ii) provided no Bank
Indebtedness is outstanding (or if Bank Indebtedness is outstanding, to the
extent permitted by the terms of, or the lenders under, such Bank Indebtedness),
any other Senior Indebtedness of the Company permitted to be incurred under the
Indenture 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 million and is specifically
designated by the Company in the instrument evidencing or governing such Senior
Indebtedness as "Designated Senior Indebtedness" for purposes of the Indenture.
"Disqualified Stock" means, with respect to any Person, any
Capital Stock which by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable) or upon the happening of any
event (i) matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise prior to the 91st day after the Stated Maturity of the
Notes, (ii) is convertible or exchangeable for Indebtedness or Disqualified
Stock prior to the 91st day after the Stated Maturity of the Notes or (iii) is
redeemable at the option of the holder thereof, in whole or in part on or prior
to the 91st day after the Stated Maturity of the Notes; 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
repurchase 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 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 provisions
described under Sections 4.17 and 4.16 below.
"Event of Default" has the meaning provided in Section 6.01.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute or statutes thereto.
"Exchange Notes" has the meaning provided in the Appendix.
"Existing Notes" means the $150,000,000 principal amount of
the Company's 8-7/8% Senior Subordinated Notes due 2008 issued under the
Existing Notes Indenture, as such may be amended or supplemented from time to
time.
"Existing Notes Indenture" means the Indenture dated March 31,
1998, among the Company, the guarantors named therein and United States Trust
Company of New York, as trustee, providing for the issuance of the Existing
Notes, as such may be amended or supplemented from time to time.
"Fair Share" has the meaning provided in Section 11.05.
"Fair Share Shortfall" has the meaning provided in Section
11.05.
"Floor Plan Guarantees" means guarantees (including but not
limited to repurchase or remarketing obligations) by the Company or a Restricted
Subsidiary Incurred in the ordinary course of business consistent with past
practice of Indebtedness Incurred by a franchise dealer, or other purchaser or
lessor, for the purchase of inventory manufactured or sold by the Company or a
Restricted Subsidiary, the proceeds of which Indebtedness is used solely to pay
the purchase price of such inventory to such franchise dealer and any related
reasonable fees and expenses (including financing fees), provided, however, that
(1) to the extent commercially practicable, the Indebtedness so guaranteed is
secured by a perfected first priority Lien on such inventory in favor of the
holder of such Indebtedness and (2) if the Company or such Restricted Subsidiary
is required to make payment with respect to such guarantee, the Company or such
Restricted Subsidiary will have the right to receive either (q) title to such
inventory, (r) a valid assignment of a perfected first priority Lien in such
inventory or (s) the net proceeds of any resale of such inventory.
"Fraudulent Transfer Laws" has the meaning provided in Section
11.05.
"Funding Subsidiary Guarantor" has the meaning provided in
Section 11.05.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect as of March 31, 1998, including those set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession.
"Guarantee" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing in any manner any Indebtedness or
other obligation of any Person and any obligation, direct or indirect,
contingent or otherwise, of such Person (i) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Indebtedness or other
obligation of such Person (whether arising by virtue of partnership
arrangements, or by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for purposes of assuring in any
other manner the obligee of such Indebtedness or other obligation of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided, however, that the term "Guarantee" shall not include
endorsements of negotiable instruments for collection or deposit in the ordinary
course of business. The term "Guarantee" used as a verb has a corresponding
meaning.
"Guarantee Obligations" has the meaning provided in Section
12.01.
"Hedging Obligations" of any Person means the obligations of
such Person pursuant to any interest rate swap agreement, foreign currency
exchange agreement, interest rate collar agreement, option or futures contract
or other similar agreement or arrangement designed to protect such Person
against changes in interest rates or foreign exchange rates.
"Holder" or "Noteholder" means the Person in whose name a Note
is registered on the Registrar's books.
"Inactive Subsidiary" means a Subsidiary which at the time of
determination (i) owns assets having a fair market value of less than $50,000,
(ii) does not conduct any business activity and (iii) is not an obligor with
respect to any Indebtedness.
"Incur" means create, issue, assume, Guarantee, incur or
otherwise become liable for, directly or indirectly, or otherwise become
responsible for, contingently or otherwise, Indebtedness or Disqualified Stock;
provided, however, that any Indebtedness or Disqualified Stock of a Person
existing at the time such Person becomes a subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by such
Subsidiary at the time it becomes a Subsidiary. The term "Incurrence" when used
as a noun shall have a correlative meaning.
"Indebtedness" of any Person means, without duplication, and
whether or not contingent,
(i) the principal of and premium (if any) in respect of (A) indebtedness of
such Person for money borrowed and (B) indebtedness evidenced by notes,
debentures, bonds or other similar instruments for the payment of which
such Person is responsible or liable;
(ii) all Capital Lease Obligations of such Person;
(iii) all obligations of such Person issued or assumed as the deferred
purchase price of property, all conditional sale obligations of such
Person and all obligations of such Person under any title retention
agreement (but excluding trade accounts payable arising in the ordinary
course of business);
(iv) all obligations of such Person for the reimbursement of any obligor on
any letter of credit, banker's acceptance or similar credit
transaction;
(v) the amount of all obligations of such Person with respect to the
redemption, repayment or other repurchase of any Disqualified Stock
(measured at the greater of its voluntary or involuntary maximum fixed
repurchase price plus accrued and unpaid dividends);
(vi) to the extent not otherwise included in this definition, all Hedging
Obligations;
(vii) all obligations of the type referred to in clauses (i) through (vi) of
other Persons and all dividends of other Persons for the payment of
which, in either case, such Person is responsible or liable, directly
or indirectly, as obligor, guarantor or otherwise, including by means
of any Guarantee (other than in each case by reason of activities
described in the proviso to the definition of "Guarantee"); and
(viii) all obligations of the type referred to in clauses (i) through (vii) of
other Persons secured by any Lien on any property or asset of such
Person (whether or not such obligation is assumed by such Person), the
amount of such obligation being deemed to be the lesser of the value of
such property or assets or the amount of the obligation so secured.
For purposes hereof, the "maximum fixed repurchase price" of
any Disqualified Stock which does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Disqualified Stock as if such
Disqualified Stock were purchased on any date on which Indebtedness shall be
required to be determined pursuant to this Indenture, and if such price is based
upon, or measured by, the fair market value of such Disqualified Stock, such
fair market value to be determined in good faith by the Board of Directors. For
purposes hereof, the amount of any Indebtedness issued with original issue
discount shall be the original purchase price plus accrued interest, provided,
however, that such accretion shall not be deemed an incurrence of Indebtedness.
"Indenture" means this Indenture, as amended or supplemented
from time to time in accordance with the terms hereof.
"Initial Notes" has the meaning provided in the Appendix.
"Initial Purchasers" has the meaning provided in the Appendix.
"Interest Payment Date" means the stated maturity of an
installment of interest on the Notes.
"Interest Rate Protection Agreement" means any interest rate
swap agreement, interest rate cap agreement or other financial agreement or
arrangement designed to protect the Company or any Restricted Subsidiary against
fluctuations in interest rates.
"Investment" in any Person means any direct or indirect
advance, loan (other than advances to customers in the ordinary course of
business that are recorded as accounts receivable or deposits on the balance
sheet of the Person making the advance or loan, in each case in accordance with
GAAP) or other extensions of credit (including by way of Guarantee or similar
arrangement) or capital contribution to (by means of any transfer of cash or
other property to others or any payment for property or services for the account
or use of others), or any purchase or acquisition of Capital Stock, Indebtedness
or other similar instruments issued by such Person and shall include the
designation of a Restricted Subsidiary as an Unrestricted Subsidiary. For
purposes of the definition of "Unrestricted Subsidiary," the definition of
"Restricted Payment" and the covenant described under Section 4.10, (i)
"Investment" shall include the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of any
Subsidiary of the Company at the time that such Subsidiary is designated an
Unrestricted Subsidiary; provided, however, that upon a redesignation of such
Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue
to have a permanent investment in an Unrestricted Subsidiary in an amount (if
positive) equal to (x) the Company's "Investment" in such Subsidiary at the time
of such redesignation less (y) the portion (proportionate to the Company's
equity interest in such Subsidiary) of the fair market value of the net assets
of such Subsidiary at the time of such redesignation, and (ii) any property
transferred to or from an Unrestricted Subsidiary shall be valued at its fair
market value at the time of such transfer, in each case as determined in good
faith by the Board of Directors. Notwithstanding the foregoing, in no event
shall any issuance of Capital Stock (other than Preferred Stock or Disqualified
Stock, or Capital Stock exchangeable, exercisable or convertible for any of the
foregoing) of the Company in exchange for Capital Stock, property or assets of
another Person constitute an Investment by the Company in such Person.
"issue" means issue, assume, Guarantee, Incur or otherwise
become liable for; provided, however, that any Indebtedness or Capital Stock of
a Person existing at the time such Person becomes a Subsidiary (whether by
merger, consolidation, acquisition or otherwise) shall be deemed to be issued by
such Subsidiary at the time it becomes a Subsidiary; and the term "issuance" has
a corresponding meaning.
"Issue Date" means the date of original issuance of the Notes.
"legal defeasance option" has the meaning provided in Section
8.01.
"Legal Holiday" has the meaning provided in Section 13.07.
"Lien" means any mortgage, pledge, security interest,
privilege, conditional sale or other title retention agreement or other similar
lien (statutory or otherwise), or encumbrance upon or with respect to any
property of any kind, real or personal, moveable or immovable, now owned or
hereafter acquired.
"Maturity Date" means April 1, 2008.
"Net Available Cash" from an Asset Disposition means cash
payments received (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
non-cash form) therefrom, in each case net of (i) 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, (ii) all
payments made on any Indebtedness which (A) is secured by any assets subject to
such Asset Disposition, in accordance with the terms of any lien upon or other
security agreement of any kind with respect to such assets, or (B) 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,
(iii) all distributions and other payments required to be made to minority
interest holders in Subsidiaries or joint ventures as a result of such Asset
Disposition and (iv) reasonable amounts provided by the seller as a reserve, in
accordance with GAAP, against any liabilities associated with the property or
other assets disposed of in such Asset Disposition and retained by the Company
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 Disposition. 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 the Company.
"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 the Company that were issued for cash on or after March 31, 1998, the
amount of cash originally received by the Company upon the issuance of such
securities (including options, warrants, rights and convertible or exchangeable
debt), net of attorneys' fees, accountants' fees, underwriters' or placement
agents' fees, discounts or commissions and brokerage, consultant and other fees
and expenses actually Incurred or required to be Incurred in connection with
such issuance or sale and also net of taxes paid or payable as a result thereof.
"Notes" means the Initial Notes, the Exchange Notes and the
Private Exchange Notes treated as a single class of securities, as amended or
supplemented from time to time in accordance with the terms hereof, that are
issued pursuant to this Indenture.
"Obligations" means with respect to any Indebtedness all
obligations for principal, premium, interest (including, without limitation,
interest after the commencement of any bankruptcy, reorganization, insolvency or
similar proceeding against the Company or any of its Subsidiaries, whether or
not allowed in any such proceeding), penalties, fees, indemnifications,
reimbursements, and other amounts payable pursuant to the documentation
governing such Indebtedness.
"Offer" has the meaning provided in Section 4.17.
"Offer Amount" has the meaning provided in Section 4.17.
"Offer Period" has the meaning provided in Section 4.17.
"Offering Memorandum" means (i) with respect to the Initial
Notes issued on March 9, 1999, the Offering Circular dated March 4, 1999,
pursuant to which the $100.0 million of 8-7/8% Series C Senior Subordinated
Notes due 2008 in the form of Initial Notes were offered, and any supplement
thereto and (ii) with respect to each issuance of Additional Notes, the offering
circular, prospectus or other similar offering document pursuant to which such
Additional Notes were offered, and any supplement thereto.
"Officer" means, with respect to any Person, the Chairman of
the Board, the Chief Executive Officer, the President, any Vice President, the
Chief Financial Officer, the Controller, the Treasurer, or the Secretary of such
Person, or any other officer designated by the Board of Directors serving in a
similar capacity.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Officers or by an Officer and either a Treasurer or
Assistant Treasurer or an Assistant Secretary of such Person and otherwise
complying with the requirements of Sections 13.04 and 13.05, to the extent they
relate to the making of an Officers' Certificate.
"Opinion of Counsel" means a written opinion from legal
counsel, who may be counsel for the Company, and who is reasonably acceptable to
the Trustee complying with the requirements of Sections 13.04 and 13.05, to the
extent they relate to the giving of an Opinion of Counsel.
"Paying Agent" has the meaning provided in Section 2.03.
"Payment Blockage Period" has the meanings provided in
Sections 10.02 and 12.02.
"Permitted Investment" means an Investment by the Company or
any Restricted Subsidiary in (i) the Company, a Restricted Subsidiary or a
Person that will, upon the making of such Investment, become a Restricted
Subsidiary; provided, however, that the primary business of such Restricted
Subsidiary is a Related Business; (ii) 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, the Company or a
Restricted Subsidiary; provided, however, that such Person's primary business is
a Related Business; (iii) Investments in Cash Equivalents; (iv) receivables
owing to the Company or any Restricted Subsidiary if created or acquired in the
ordinary course of business; (v) loans or advances to employees made in the
ordinary course of business consistent with past practices of the Company or
such Restricted Subsidiary; (vi) stock, obligations or securities received in
settlement of debts created in the ordinary course of business and owing to the
Company or any Restricted Subsidiary or in satisfaction of judgments; (vii) any
Person to the extent such Investment represents the non-cash portion of the
consideration received for an Asset Disposition as permitted pursuant to the
covenant described under Section 4.17; (viii) so long as no Default has occurred
and is continuing (or would result therefrom), any Investment made by the
issuance of, or with the proceeds of a substantially concurrent sale of, Capital
Stock (other than Disqualified Stock) of the Company; provided, however, that
the Net Cash Proceeds from such sale shall be excluded from clause 3(B) of
Section (a) of the covenant described under Section 4.10; (ix) Investments by
the Company or any Restricted Subsidiary, 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 the Company or any
Restricted Subsidiary; (x) Investments in Cash Equivalents; (xi) Floor Plan
Guarantees permitted by the terms of clauses (b)(x) and (xi), respectively, of
the covenants described under Section 4.13 and Section 4.18; and (xi) other
Investments that do not exceed in the aggregate $10 million at any one time
outstanding.
"Permitted Liens" means, with respect to any Person, (a)
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; (b)
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; (c) 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 the Company; (d) Liens to
secure the performance of statutory obligations or in favor of issuers of surety
bonds, performance bonds, appeal bonds or letters of credit or other obligations
of a like nature issued pursuant to the request of and for the account of such
Person, in each case in the ordinary course of its business; provided, however,
that such letters of credit do not constitute Indebtedness; (e) Liens securing a
Hedging Obligation 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
Hedging Obligation; (f) Liens for the purpose of securing the payment (or the
refinancing of the payment) of all or a part of any Purchase Money Indebtedness
or Capital Lease Obligations relating to assets or property acquired,
constructed or leased 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 the Company or any
Restricted Subsidiary other than such Assets or property and assets affixed or
appurtenant thereto; (g) Liens arising from precautionary Uniform Commercial
Code financing statement filings regarding operating leases entered into by the
Company and its Subsidiaries in the ordinary course of business; (h) Liens in
favor of the Company and/or any of its Restricted Subsidiaries, other than such
a Lien with respect to intercompany indebtedness if the Company or a Subsidiary
Guarantor is not the beneficiary of such a Lien; (i) Liens securing Indebtedness
of a Person existing at the time that such Person is acquired by, merged into or
consolidated with the Company or any Restricted Subsidiary; provided, however,
that such 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; (j) Liens on property or assets existing
at the time of acquisition thereof by the Company 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; (k) Liens existing on March 31, 1998; (l) Liens arising from the
rendering of a final judgement or order against the Company or any Restricted
Subsidiary that does not give rise to an Event of Default; (m) encumbrances
consisting of zoning restrictions, surety exceptions, utility easements,
licenses, rights of way, easements of ingress or egress over property of the
Company 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
the Company and the Restricted Subsidiaries; (n) Liens securing Senior
Indebtedness; (o) Liens with respect to Floor Plan Guarantees permitted by the
terms of clauses (b)(x) and (xi), respectively, of the covenants described under
Section 4.13 and Section 4.18; and (p) any extension, renewal, refinancing,
refunding or replacement of any Permitted Lien, provided that such 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 such
Liens relate.
"Person" means any individual, corporation, limited liability
company, limited or general partnership, 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.
"principal" of any Indebtedness (including the Notes) means
the principal amount of such Indebtedness plus the premium, if any, on such
Indebtedness.
"Private Exchange Notes" has the meaning provided in the
Appendix.
"pro forma" means, with respect to any calculation made or
required to be made pursuant to the terms of this Indenture, a calculation in
accordance with Article 11 of Regulation S-X under the Securities Act, as
determined by the Board of Directors of the Company.
"Public Equity Offering" means an underwritten primary or
combined primary and secondary public offering of common stock (other than
Disqualified Stock) of the Company pursuant to an effective registration
statement under the Securities Act which public equity offering results in gross
proceeds to the Company of not less than $50 million.
"Purchase Date" has the meaning provided in Section 4.17.
"Purchase Money Indebtedness" means any Indebtedness of a
Person to any seller or other Person incurred to finance the acquisition
(including in the case of a Capital Lease Obligation, the lease) of any after
acquired real or personal tangible property or assets related to the Business of
the Company or the Restricted Subsidiaries and which is incurred substantially
concurrently with such acquisition and is secured only by the assets so
financed.
"Record Date" means each Record Date specified in the Notes,
whether or not a Legal Holiday.
"Redemption Date," when used with respect to any Note to be
redeemed, means the date fixed for such redemption pursuant to this Indenture
and the Notes.
"Redemption Price," when used with respect to any Note to be
redeemed, means the price fixed for such redemption pursuant to this Indenture
and the Notes.
"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, such
indebtedness. "Refinanced" and "Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that Refinances
any Indebtedness of the Company or any Restricted Subsidiary existing on March
31, 1998 or Incurred in compliance with the Indenture, including Indebtedness
that Refinances Refinancing Indebtedness; provided, however, that (i) such
Refinancing Indebtedness has a Stated Maturity no earlier than the earlier of
(x) the Stated Maturity of the Indebtedness being Refinanced and (y) the Stated
Maturity of the Notes, (ii) such 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 (iii) such
Refinancing Indebtedness has an aggregate principal amount (or if Incurred with
original issue discount, an aggregate issue price) that is equal to or less that
the aggregate principal amount (or if Incurred with original issue discount, the
aggregate accreted value) then outstanding or committed (plus unpaid accrued
interest) under the Indebtedness being Refinanced, plus actual 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 Wholly Owned Subsidiary or a Subsidiary Guarantor that Refinances
Indebtedness of the Company or (2) Indebtedness of the Company 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.
"Registrar" has the meaning provided in Section 2.03.
"Registration Rights Agreement" has the meaning set forth in
the Appendix.
"Regulation S" means Regulation S under the Securities Act.
"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 businesses of the Company and the Restricted
Subsidiaries on March 31, 1998.
"Representative" means the indenture trustee or other trustee,
agent or representative in respect of any Designated Senior Indebtedness;
provided that if, and for so long as, any Designated Senior Indebtedness lacks
such a representative, then the Representative for such Designated Senior
Indebtedness shall at all times be the holders of a majority in outstanding
principal amount of such Designated Senior Indebtedness in respect of any
Designated Senior Indebtedness.
"Restricted Investment" means an Investment other than a
Permitted Investment.
"Restricted Payment" has the meaning provided in Section 4.10.
"Restricted Subsidiary" means any Subsidiary of the Company
that is not an Unrestricted Subsidiary.
"Rule 144A" means Rule 144A under the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of a Person
secured by a Lien.
"Securities Act" means, the Securities Act of 1933, as
amended, or any successor statute or statutes thereto.
"Senior Credit Facility Representative" means, at any time,
the then-acting administrative agent or agents under the Credit Facility, which
shall initially be Credit Suisse First Boston.
"Senior Indebtedness" means with respect to the Company or any
Subsidiary Guarantor (x) Bank Indebtedness and (y) any other Indebtedness that,
by the terms of the instrument creating or evidencing such Indebtedness, is
expressly made senior in right of payment to the Notes or the applicable
Guarantee, other than (1) any obligation of such Person to any subsidiary of
such Person or to any officer, director or employee of such Person or any such
subsidiary, (2) any liability of such Person for federal, state, local or other
taxes owed or owing by such Person, (3) any accounts payable or other liability
of such Person to trade creditors arising in the ordinary course of business
(including Guarantees thereof or instruments evidencing such liabilities), (4)
any Indebtedness, Guarantee or obligation of such Person which is, expressly by
its terms, subordinate or junior in any respect to any other Indebtedness,
Guarantee or obligation of such Person, (5) that portion of any Indebtedness of
such Person which at the time of issuance is issued in violation of the
Indenture, (6) Indebtedness of such Person represented by Disqualified Stock or
(7) Capital Lease Obligations.
"Senior Subordinated Indebtedness" means the Notes and any
other Indebtedness of the Company that specifically provides that such
Indebtedness is to rank pari passu with the Notes in right of payment and is not
subordinated by its terms in right of payment to any Indebtedness or other
obligation of the Company which is not Senior Indebtedness of the Company.
"Significant Subsidiary" means any Restricted Subsidiary that
would be a "Significant Subsidiary" of the Company within the meaning of Rule
1-02 under Regulation S-X promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the
final date specified in such security as the fixed date on which all outstanding
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 unless such contingency has occurred).
"Subordinated Obligation" means any Indebtedness of the
Company or any Subsidiary Guarantor (whether outstanding on March 31, 1998 or
thereafter Incurred) which is subordinate or junior in right of payment to the
Notes or the relevant Subsidiary Guarantee, as applicable, pursuant to a written
agreement to that effect.
"Subsidiary" means (a) any corporation, association,
partnership, limited liability company or other business entity of which more
than 50% of the total voting power of shares of Capital Stock or other interests
(including partnership interests) entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by (i) the
Company, (ii) the Company and one or more Subsidiaries or (iii) one or more
Subsidiaries or (b) any limited partnership of which the Company or any
Subsidiary is a general partner, or (c) any other Person (other than a
corporation or limited partnership) in which the Company, or one or more other
Subsidiaries or the Company and one or more other Subsidiaries, directly or
indirectly, has more than 50% of the outstanding partnership or similar
interests or has the power, by contract or otherwise, to direct or cause the
direction of the policies, management and affairs thereof. Unless the context
other wise requires, Subsidiary means each direct and indirect Subsidiary of the
Company.
"Subsidiary Guarantee" means a Guarantee by a Subsidiary
Guarantor of the Company's Obligations with respect to the Notes.
"Subsidiary Guarantor" means any Subsidiary that Guarantees
the Company's Obligations with respect to the Notes.
"TIA" means the Trust Indenture Act of 1939, as amended
(15 U.S.C. Sections 77aaa-77bbbb), as in effect on the date of this Indenture.
"Trust Officer" means any authorized officer of the Trustee
assigned by the Trustee to administer this Indenture, or in the case of a
successor trustee, an authorized officer assigned to the department, division or
group performing the corporation trust work of such successor and assigned to
administer this Indenture.
"Trustee" means the party named as such in this Indenture
until a successor replaces it in accordance with the provisions of this
Indenture and thereafter means such successor.
"Unrestricted Subsidiary" means any Subsidiary of the Company
(other than a Subsidiary Guarantor) designated as such pursuant to and in
compliance with Section 4.21." 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.
"U.S. Legal Tender" means such coin or currency of the
United States of America as at the time of payment shall be legal tender for the
payment of public and private debts.
"Voting Stock" of a Person means Capital Stock of such Person
of the class or classes pursuant to which the holders thereof have the general
voting power under ordinary circumstances to elect at least a majority of the
board of directors, managers or trustees of such Person (irrespective of whether
or not at the time stock of any other class or classes shall have or might have
voting power by reason of the happening of any contingency).
"Wholly Owned Subsidiary" means (i) a Restricted Subsidiary
all the Capital Stock of which (other than directors' qualifying shares and
shares held by other Persons to the extent such Shares are required by
applicable law to be held by a Person other than the Company or a Restricted
Subsidiary) is owned by the Company or one or more Wholly Owned Subsidiaries and
(ii) each of Terex Cranes, Inc., P.P.M. Cranes, Inc., P.P.M. S.A., and any
future wholly owned subsidiaries of any of the foregoing, in each case so long
as the Company or one or more Wholly Owned Subsidiaries maintains a percentage
ownership interest in such entity equal to or greater than such ownership
interest (on a fully diluted basis) on the later of (a) March 31, 1998 or (b)
the date such entity is incorporated or acquired by the Company or one or more
Wholly Owned Subsidiaries.
SECTION 1.02. Incorporation by Reference of TIA.
Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in, and made a part of, this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Notes.
"indenture security holder" means a Holder or a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Company or any
other obligor on the Notes.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule and
not otherwise defined herein have the meanings assigned to them therein.
SECTION 1.03. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned to it
in accordance with GAAP as in effect on March 31, 1998;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the plural
include the singular;
(5) "herein," "hereof" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
subdivision; and
(6) reference to Sections or Articles means reference to such Section or
Article in this Indenture, unless stated otherwise.
SECTION 1.04. One Class of Securities.
The Initial Notes, the Private Exchange Notes and the Exchange
Notes shall vote and consent together on all matters as one class and none of
the Initial Notes, the Private Exchange Notes or the Exchange Notes shall have
the right to vote or consent as a separate class on any matter.
ARTICLE TWO
THE NOTES
SECTION 2.01. Form and Dating.
(a) Provisions relating to the Initial Notes, the Private Exchange Notes and the
Exchange Notes are set forth in the Rule 144A/Regulation S Appendix attached
hereto (the "Appendix"), which is hereby incorporated in and expressly made a
part of this Indenture. The Initial Notes and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A hereto. The
Exchange Notes, the Private Exchange Notes and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit B hereto. The Notes
may have notations, legends or endorsements required by law, stock exchange
rule, agreements to which the Company is subject, if any, or depository rule or
usage. The Company shall approve the forms of the Notes and any notation, legend
or endorsement on them. Each Note shall be dated the date of its issuance and
shall show the date of its authentication.
(b) The terms and provisions contained in the Appendix and in the forms of the
Notes, annexed hereto as Exhibits A and B, shall constitute, and are hereby
expressly made, a part of this Indenture and, to the extent applicable, the
Company and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby.
SECTION 2.02. Execution and Authentication; Aggregate Principal Amount.
Two Officers, or an Officer and an Assistant Secretary, shall
sign, or one Officer shall sign and one Officer or an Assistant Secretary (each
of whom shall, in each case, have been duly authorized by all requisite
corporate actions) shall attest to, the Notes for the Company by manual or
facsimile signature. The Company's seal shall also be reproduced on the Notes.
If an Officer or Assistant Secretary whose signature is on a
Note was an Officer or Assistant Secretary at the time of such execution but no
longer holds that office or position at the time the Trustee authenticates the
Note, the Note shall nevertheless be valid.
On March 9, 1999, the Trustee shall authenticate and deliver
$100.0 million of 8-7/8% Series C Senior Subordinated Notes due 2008 in the form
of Initial Notes. In addition, the Trustee shall authenticate Exchange Notes and
Private Exchange Notes, as applicable, for original issue in the aggregate
principal amount not to exceed $100.0 million, in each case upon a written order
of the Company in the form of an Officers' Certificate, provided that such
Exchange Notes and Private Exchange Notes shall be issuable only upon the valid
surrender for cancellation of such Initial Notes of a like aggregate principal
amount. Further, at any time and from time to time thereafter, the Trustee shall
authenticate and deliver Notes for original issue in an aggregate principal
amount specified, in each case in a written order of the Company in the form of
an Officers' Certificate. Such order shall specify the amount of the Notes to be
authenticated and the date on which the original issue of Notes is to be
authenticated and, in the case of an issuance of Additional Notes pursuant to
Section 2.15 after March 9, 1999, shall certify that such issuance will not be
prohibited by Section 4.13.
A Note shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Note. The
signature shall be conclusive evidence that the Note has been authenticated
under this Indenture.
The Trustee may appoint an authenticating agent (the
"Authenticating Agent") reasonably acceptable to the Company to authenticate
Notes. Unless otherwise provided in the appointment, an Authenticating Agent may
authenticate Notes whenever the Trustee may do so. Each reference in this
Indenture to authentication by the Trustee includes authentication by such
Authenticating Agent. An Authenticating Agent has the same rights as an Agent to
deal with the Company and Affiliates of the Company.
The Notes shall be issuable in fully registered form only,
without coupons, in denominations of $1,000 and any integral multiple
thereof.
SECTION 2.03. Registrar and Paying Agent.
The Company shall maintain or designate an office or agency
(which shall be located in the Borough of Manhattan in the City of New York,
State of New York and which may be the office of the Trustee) where (a) Notes
may be presented or surrendered for registration of transfer or for exchange
("Registrar"), (b) Notes may be presented or surrendered for payment ("Paying
Agent") and (c) notices and demands to or upon the Company in respect of the
Notes and this Indenture may be served. The Registrar shall keep a register of
the Notes and of their transfer and exchange. The Company may have one or more
co-Registrars and one or more additional paying agents. The term "Paying Agent"
includes any additional Paying Agent. The Company or any of its Subsidiaries may
act as Paying Agent or Registrar, except that for purposes of Articles Three and
Eight and Sections 4.16 and 4.17, neither the Company nor any of its
Subsidiaries or Affiliates shall act as Paying Agent. The Company may change any
Paying Agent or Registrar without notice to any Holder.
The Company shall enter into an appropriate agency agreement
with any Agent not a party to this Indenture, which agreement shall incorporate
the provisions of the TIA and implement the provisions of this Indenture that
relate to such Agent. The Company shall notify the Trustee of the name and
address of any such Agent. If the Company fails to maintain a Registrar or
Paying Agent, or fails to give the foregoing notice, the Trustee shall act as
such.
The Company initially appoints the Trustee as Registrar,
Paying Agent and agent for service of demands and notices in connection with the
Notes, until such time as the Trustee has resigned or a successor has been
appointed. The Paying Agent or Registrar may resign upon 30 days notice to the
Company.
SECTION 2.04. Paying Agent To Hold Assets in Trust.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that each Paying Agent shall hold in trust for the
benefit of the Holders or the Trustee all assets held by the Paying Agent for
the payment of principal of, or interest on, the Notes (whether such assets have
been distributed to it by the Company or any other obligor on the Notes), and
the Company and the Paying Agent shall notify the Trustee of any Default by the
Company (or any other obligor on the Notes) in making any such payment. The
Company at any time may require a Paying Agent to distribute all assets held by
it to the Trustee and account for any assets disbursed and the Trustee may, and
upon direction of a majority of the Holders shall, at any time during the
continuance of any payment Default, upon written request to a Paying Agent,
require such Paying Agent to distribute all assets held by it to the Trustee and
to account for any assets distributed. Upon distribution to the Trustee of all
assets that shall have been delivered by the Company or any other obligor on the
Notes to the Paying Agent, the Paying Agent shall have no further liability for
such assets.
SECTION 2.05. Noteholder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of the Holders, and shall otherwise comply with TIA Section 312(a).If
the Trustee is not the Registrar, the Company shall furnish or cause the
Registrar to furnish to the Trustee before each Record Date and at such other
times as the Trustee may request in writing a list as of such date and in such
form as the Trustee may reasonably require of the names and addresses of the
Holders, which list may be conclusively relied upon by the Trustee and the
Company shall otherwise comply with TIA Section 312(a).
SECTION 2.06. [Intentionally Omitted]
SECTION 2.07. Replacement Notes.
If a mutilated Note is surrendered to the Trustee or if the
Holder of a Note claims that the Note has been lost, destroyed or wrongfully
taken, subject to the terms of the next succeeding sentence, the Company shall
issue and the Trustee shall authenticate a replacement Note if the Trustee's
reasonable requirements for replacement Notes are met. If required by the
Trustee or the Company, such Holder must provide an affidavit of lost
certificate and an indemnity bond or other indemnity, sufficient in the judgment
of both the Company and the Trustee, to protect the Company, the Trustee, any
Agent or any Authenticating Agent from any loss which any of them may suffer if
a Note is replaced. The Company and the Trustee may charge such Holder for their
out-of-pocket expenses in replacing a Note, including reasonable fees and
expenses of counsel, and for any tax that may be imposed in replacing such
Notes. Every replacement Note shall constitute an additional obligation of the
Company.
SECTION 2.08. Outstanding Notes.
Notes outstanding at any time are all the Notes that have been
authenticated by the Trustee except those cancelled by it, those delivered to it
for cancellation and those described in this Section as not outstanding. Subject
to the provisions of Section 2.09, a Note does not cease to be outstanding
because the Company or any of its Affiliates holds the Note.
If a Note is replaced pursuant to Section 2.07 (other than a
mutilated Note surrendered for replacement), it ceases to be outstanding unless
the Trustee receives proof satisfactory to it that the replaced Note is held by
a bona fide purchaser. A mutilated Note ceases to be outstanding upon surrender
of such Note and replacement thereof pursuant to Section 2.07.
Except as otherwise provided in Article 8 of this Indenture,
if on a Redemption Date or the Maturity Date the Paying Agent holds U.S. Legal
Tender or U.S. Government Obligations sufficient to pay all of the principal and
interest due on the Notes payable on that date and is not prohibited from paying
such money to the Holders thereof pursuant to the terms of this Indenture, then
on and after that date such Notes cease to be outstanding and interest on them
ceases to accrue.
SECTION 2.09. Treasury Notes.
In determining whether the Holders of the required principal
amount of Notes have concurred in any direction, waiver, consent or notice,
Notes owned by the Company or any of its Affiliates shall be considered as
though they are not outstanding, except that for the purposes of determining
whether the Trustee shall be protected in relying on any such direction, waiver,
consent or notice, only Notes which a Trust Officer of the Trustee actually
knows are so owned shall be so considered.
SECTION 2.10. Temporary Notes.
Until definitive Notes are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Notes upon receipt of a
written order of the Company in the form of an Officers' Certificate. The
Officers' Certificate shall specify the amount of temporary Notes to be
authenticated and the date on which the temporary Notes are to be authenticated.
Temporary Notes shall be substantially in the form of definitive Notes but may
have variations that the Company considers appropriate for temporary Notes.
Without unreasonable delay, the Company shall prepare and the Trustee shall
authenticate upon receipt of a written order of the Company pursuant to Section
2.02 definitive Notes in exchange for, and upon surrender of, temporary Notes.
Until so exchanged, the temporary Notes shall in all respects be entitled to the
same benefits under this Indenture as definitive Notes authenticated and
delivered hereunder.
SECTION 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Notes surrendered to them for transfer, exchange or payment. The Trustee, or
at the direction of the Trustee, the Registrar or the Paying Agent, and no one
else, shall cancel and, at the written direction of the Company, shall dispose
of all Notes surrendered for transfer, exchange, payment or cancellation.
Subject to Section 2.07, the Company may not issue new Notes to replace Notes
that it has paid or delivered to the Trustee for cancellation. If the Company
shall acquire any of the Notes, such acquisition shall not operate as a
redemption or satisfaction of the Indebtedness represented by such Notes unless
and until the same are surrendered to the Trustee for cancellation pursuant to
this Section 2.11.
SECTION 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the Notes
(without regard to any grace period therefor), it shall pay the defaulted
interest, plus (to the extent lawful) any interest payable on the defaulted
interest to the Persons who are Holders on a subsequent special record date,
which date shall be the fifteenth day preceding the date fixed by the Company
for the payment of defaulted interest or the next succeeding Business Day if
such date is not a Business Day. At least 15 days before the subsequent special
record date, the Company shall mail to each Holder, as of a recent date selected
by the Company, with a copy to the Trustee, a notice that states the subsequent
special record date, the payment date and the amount of defaulted interest, and
interest payable on such defaulted interest, if any, to be paid.
SECTION 2.13. CUSIP Number.
The Company in issuing the Notes may use "CUSIP" numbers, and
if so, the Trustee shall use such CUSIP numbers in notices of redemption or
exchange as a convenience to Holders; provided that no representation is hereby
deemed to be made by the Trustee as to the correctness or accuracy of such CUSIP
numbers printed in the notice or on the Notes, and that reliance may be placed
only on the other identification numbers printed on the Notes. The Company shall
promptly notify the Trustee of any change in a CUSIP number.
SECTION 2.14. Deposit of Moneys.
Prior to 9:00 a.m. New York City time on each Interest Payment
Date and on the Maturity Date, the Company shall deposit with the Paying Agent
in immediately available funds money sufficient to make cash payments, if any,
due on such Interest Payment Date or Maturity Date, as the case may be, in a
timely manner which permits the Paying Agent to remit payment to the Holders on
such Interest Payment Date or Maturity Date, as the case may be.
SECTION 2.15. Issuance of Additional Notes.
The Company shall be entitled to issue Additional Notes under
this Indenture which shall have identical terms as the Notes issued on March 9,
1999, other than with respect to the date of issuance, issue price and amount of
interest payable on the first payment date applicable thereto (and, if such
Additional Notes shall be issued in the form of Exchange Notes, other than with
respect to transfer restrictions); provided, that such issuance is not
prohibited by Section 4.13. The Initial Notes issued on March 9, 1999, any
Additional Notes and all Exchange Notes or Private Exchange Notes issued in
exchange therefor shall be treated as a single class for all purposes under this
Indenture.
With respect to any Additional Notes, the Company shall set
forth in a resolution of the Board of Directors and in an Officers' Certificate,
a copy of each which shall be delivered to the Trustee, the following
information:
(1) the aggregate principal amount of such Additional Notes to be
authenticated and delivered pursuant to this Indenture;
(2) the issue price, the issue date and the CUSIP number of such Additional
Notes and the amount of interest payable on the first payment date
applicable thereto; provided, however, that no Additional Notes may be
issued at a price that would cause such Additional Notes to have
"original issue discount" within the meaning of Section 1273 of the
Code; and
(3) whether such Additional Notes shall be transfer restricted securities
and issued in the form of Initial Notes or shall be registered
securities issued in the form of Exchange Notes as set forth in the
Appendix.
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee.
If the Company elects to redeem Notes pursuant to Section 3.07
of this Indenture and Paragraph 6 of the Notes, it shall notify the Trustee and
the Paying Agent in writing of the Redemption Date and the principal amount of
the Notes to be redeemed.
The Company shall give each notice provided for in this
Section 3.01 at least 45 days before the Redemption Date (unless a shorter
notice period shall be satisfactory to the Trustee, as evidenced in a writing
signed on behalf of the Trustee), together with an Officers' Certificate stating
that such redemption shall comply with the conditions contained herein and in
the Notes.
SECTION 3.02. Selection of Notes To Be Redeemed.
If fewer than all of the Notes are to be redeemed, selection
of the Notes to be redeemed will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed or, if the Notes are not then listed on a national securities
exchange, on a pro rata basis, by lot or in such other fair and reasonable
manner chosen at the discretion of the Trustee; provided, however, that if a
partial redemption is made with the proceeds of a Public Equity Offering,
selection of the Notes or portion thereof for redemption shall be made by the
Trustee only on a pro rata basis, unless such method is otherwise prohibited.
The Company shall promptly notify the Trustee and the Paying Agent in writing of
the date of listing and the name of the securities exchange if and when the
Notes are listed on a principal national securities exchange. The Trustee shall
make the selection from the Notes outstanding and not previously called for
redemption and shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes in denominations
of $1,000 may be redeemed only in whole. The Trustee may select for redemption
portions (equal to $1,000 or any integral multiple thereof) of the principal of
Notes that have denominations larger than $1,000. Provisions of this Indenture
that apply to Notes called for redemption also apply to portions of Notes called
for redemption.
SECTION 3.03. Notice of Redemption.
At least 30 days but not more than 60 days before a Redemption
Date, the Company shall mail or cause to be mailed a notice of redemption by
first class mail, postage prepaid, to each Holder whose Notes are to be
redeemed, with a copy to the Trustee and any Paying Agent. At the Company's
written request no less than 35 days prior to the Redemption Date (or such
shorter period as may be acceptable to the Trustee), the Trustee shall give the
notice of redemption in the Company's name and at the Company's expense.
Each notice for redemption shall identify the Notes to be
redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price and the amount of accrued interest, if any,
to be paid;
(3) the name and address of the Paying Agent;
(4) the subparagraph of the Notes pursuant to which such redemption is
being made;
(5) that Notes called for redemption must be surrendered to the Paying
Agent to collect the Redemption Price plus accrued interest, if any;
(6) that, unless the Company defaults in making the redemption
payment, interest on Notes called for redemption ceases to accrue on and
after the Redemption Date, and the only remaining right of the Holders of
such Notes is to receive payment of the Redemption Price plus accrued
interest, if any, upon surrender to the Paying Agent of the Notes redeemed;
(7) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the Redemption
Date, and upon surrender of such Note, a new Note or Notes in the aggregate
principal amount equal to the unredeemed portion thereof will be issued;
(8) if fewer than all the Notes are to be redeemed, the aggregate
principal amount of Notes to be redeemed and the aggregate principal amount
of Notes to be outstanding after such partial redemption and, if the
redemption is not made pro rata, the identification of the particular Notes
(or portion thereof) to be redeemed; and
(9) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the Notes.
SECTION 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section
3.03, Notes called for redemption become due and payable on the Redemption Date
and at the Redemption Price plus accrued interest, if any. Upon surrender to the
Trustee or Paying Agent, such Notes called for redemption shall be paid at the
Redemption Price and the amount of accrued interest payable thereon, provided
that if a Note is redeemed on or after a Record Date for an interest payment but
on or prior to the related Interest Payment Date, then any accrued and unpaid
interest shall be paid to the Holder of record at the close of business on such
Record Date. Failure to give notice or any defect in the notice to any Holder
shall not affect the validity of the notice to any other Holder.
Except in connection with a defeasance pursuant to Section
8.02 of this Indenture, at any time prior to the mailing of a notice of
redemption to the Holders pursuant to Section 3.03, the Company may withdraw,
revoke or rescind any notice of redemption delivered to the Trustee without any
continuing obligation to redeem the Notes.
SECTION 3.05. Deposit of Redemption Price.
On or before 9:00 a.m. New York City time on the Redemption
Date, the Company shall deposit with the Paying Agent U.S. Legal Tender
sufficient to pay the Redemption Price plus accrued interest, if any, of all
Notes to be redeemed on that date (other than Notes or portions of Notes called
for redemption which have been delivered by the Company to the Trustee for
cancellation). The Paying Agent shall promptly return to the Company any U.S.
Legal Tender so deposited which is not required for that purpose, except with
respect to monies owed as obligations to the Trustee pursuant to Article Seven.
If the Company complies with the preceding paragraph, then,
unless the Company defaults in the payment of such Redemption Price plus accrued
interest, if any, interest on the Notes to be redeemed will cease to accrue on
and after the applicable Redemption Date, whether or not such Notes are
presented for payment.
SECTION 3.06. Notes Redeemed in Part.
Upon surrender of a Note that is to be redeemed in part, the
Company shall execute and the Trustee shall authenticate for the Holder a new
Note or Notes equal in principal amount to the unredeemed portion of the Note
surrendered.
SECTION 3.07. Optional Redemption.
(a) Except as set forth in the subsection (b) below, the Notes will not be
redeemable at the option of the Company prior to April 1, 2003. Thereafter, the
Notes will be redeemable, at the Company's option, in whole or in part, at any
time or from time to time, at the following redemption prices (expressed in
percentages of principal amount), plus accrued interest to the Redemption Date
(subject to the right of Holders of record on the relevant Record Date to
receive interest due on the relevant Interest Payment Date), if redeemed during
the 12-month period commencing on April 1 of the years set forth below:
Redemption
Period Price
2003 .......................... 104.438%
2004 .......................... 102.958%
2005 .......................... 101.479%
2006 and thereafter ........... 100.000%
(b) In addition, at any time and from time to time prior to April 1, 2001, the
Company may redeem in the aggregate up to 33.3% of the original principal amount
of the Notes (including the original principal amount of any Additional Notes)
with the proceeds of one or more Public Equity Offerings, at a redemption price
(expressed as a percentage of principal amount) of 108.875% plus accrued
interest to the Redemption Date (subject to the right of Holders of record on
the relevant Record Date to receive interest due on the relevant Interest
Payment Date); provided, however, that at least 65% of the aggregate principal
amount of the Notes originally outstanding (including the original principal
amount of any Additional Notes) must remain outstanding after each such
redemption.
In order to effect the foregoing redemption with the proceeds
of any Public Equity Offering, the Company shall make such redemption not more
than 120 days after the consummation of any such Public Equity Offering.
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes.
The Company shall pay or cause to be paid the principal of and
interest on the Notes on the dates and in the manner provided in the Notes and
in this Indenture. An installment of principal of or interest on the Notes shall
be considered paid on the date it is due if the Trustee or Paying Agent (other
than the Company or an Affiliate of the Company) holds on that date U.S. Legal
Tender designated for and sufficient to pay the installment in full and is not
prohibited from paying such money to the Holders pursuant to the terms of this
Indenture.
Notwithstanding anything to the contrary contained in this
Indenture, the Company may, to the extent it is required to do so by law, deduct
or withhold income or other similar taxes imposed by the United States of
America from principal or interest payments hereunder.
SECTION 4.02. Maintenance of Office or Agency.
The Company shall maintain the office or agency required under
Section 2.03. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the address of the
Trustee set forth in Section 13.02.
SECTION 4.03. Corporate Existence.
Except as otherwise permitted by Article Five and Section
4.16, the Company shall do or cause to be done, at its own cost and expense, all
things necessary to preserve and keep in full force and effect its corporate
existence and the corporate existence of each of its Restricted Subsidiaries in
accordance with the respective organizational documents of each of them (as the
same may be amended from time to time) and the material rights (charter and
statutory) and franchises of the Company and each such Restricted Subsidiary;
provided, however, that neither the Company nor any Restricted Subsidiary shall
be required to preserve any right or franchise, or the corporate, partnership or
other existence of any Restricted Subsidiary, if the Board of Directors of the
Company shall reasonably determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its Subsidiaries,
taken as a whole.
SECTION 4.04. Payment of Taxes and Other Claims.
The Company shall pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (i) all material taxes,
assessments and governmental charges (including withholding taxes and any
penalties, interest and additions to taxes) levied or imposed upon it or any of
its Subsidiaries or properties of it or any of its Subsidiaries and (ii) all
lawful claims for labor, materials and supplies that, if unpaid, might by law
become a Lien upon the property of it or any of its Subsidiaries; provided,
however, that the Company shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings properly instituted and diligently conducted for which reserves, to
the extent required under and in accordance with GAAP, have been taken.
SECTION 4.05. Maintenance of Properties and Insurance.
(a) The Company shall, and shall cause each of its Restricted Subsidiaries to,
maintain its material properties in good working order and condition (subject to
ordinary wear and tear) and make all necessary repairs, renewals, replacements,
additions, betterments and improvements thereto and actively conduct and carry
on its business; provided, however, that nothing in this Section 4.05 shall
prevent the Company or any of its Restricted Subsidiaries from discontinuing the
operation and maintenance of any of its properties, if such discontinuance is,
in the reasonable good faith judgment of the Company or the Restricted
Subsidiary, as the case may be, desirable in the conduct of the business of the
Company and its Restricted Subsidiaries, taken as a whole.
(b) The Company shall provide or cause to be provided, for itself and each of
its Restricted Subsidiaries, insurance (including reasonably appropriate
self-insurance consistent with past practice) against loss or damage of the
kinds that, in the good faith judgment of the Board of Directors of the Company,
are adequate and appropriate for the conduct of the business of the Company and
such Restricted Subsidiaries in a prudent manner, with reputable insurers or
with the government of the United States of America or an agency or
instrumentality thereof, in such amounts, with such deductibles, and by such
methods as shall be customary, in the reasonable good faith judgment of the
Board of Directors of the Company, for companies similarly situated in the
industry.
SECTION 4.06. Compliance Certificate; Notice of Default.
(a) The Company shall deliver to the Trustee, within 120 days after the end of
the Company's fiscal year, an Officers' Certificate stating that a review of its
activities and the activities of its Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture and further stating, as to each such Officer
signing such certificate, that to the best of such Officer's knowledge, based on
such review, the Company during such preceding fiscal year has kept, observed,
performed and fulfilled each and every such covenant contained in the Indenture
and no Default or Event of Default occurred during such year and at the date of
such certificate there is no Default or Event of Default that has occurred and
is continuing or, if such signers do know of such Default or Event of Default,
the certificate shall describe the Default or Event of Default and its status
with particularity. The Officers' Certificate shall also notify the Trustee
should the Company elect to change the manner in which it fixes its fiscal year
end.
(b) So long as not contrary to the then-current recommendations of the American
Institute of Certified Public Accountants, the annual financial statements
delivered pursuant to Section 4.08 shall be accompanied by a written report of
the Company's independent accountants (who shall be a firm of established
national reputation) that in conducting their audit of such financial statements
nothing has come to their attention that would lead them to believe that the
Company has violated any provisions of Article Four or Five of this Indenture
or, if any such violation has occurred, specifying the nature and period of
existence thereof, it being understood that such accountants shall not be liable
directly or indirectly to any Person for any failure to obtain knowledge of any
such violation.
(c) (i) If any Default or Event of Default has occurred and is continuing or
(ii) if any Holder seeks to exercise any remedy hereunder with respect to a
claimed Default under this Indenture or the Notes, the Company shall deliver to
the Trustee, at its address set forth in Section 13.02 hereof, by registered or
certified mail or by telegram, telex or facsimile transmission followed by hard
copy by registered or certified mail an Officers' Certificate specifying such
event, notice or other action within five Business Days of its becoming aware of
such occurrence.
SECTION 4.07. Compliance with Laws.
The Company shall comply, and shall cause each of its
Restricted Subsidiaries to comply, with all applicable statutes, rules,
regulations, orders and restrictions of the United States of America, all states
and municipalities thereof, and of any governmental department, commission,
board, regulatory authority, bureau, agency and instrumentality of the
foregoing, in respect of the conduct of their respective businesses and the
ownership of their respective properties, except for such noncompliances as are
not in the aggregate reasonably likely to have a material adverse effect on the
financial condition or results of operations of the Company and its Restricted
Subsidiaries, taken as a whole.
SECTION 4.08 SEC Reports.
(a) So long as the Notes are outstanding, the Company (at its own expense) shall
file with the SEC and shall provide to the Trustee and the Holders within 15
days after it files them with the SEC copies of the quarterly and annual reports
and of the information, documents, and other reports (or copies of such portions
of any of the foregoing as the SEC may by rules and regulations prescribe) filed
pursuant to Section 13 or 15(d) of the Exchange Act (without regard to whether
the Company is subject to the requirements of such Section 13 or 15(d) of the
Exchange Act); provided that (i) the Company shall not be in default of the
provisions of this Section 4.08 by reason of the failure to file reports with
the SEC (which reports are in the reasonable opinion of counsel to the Company
responsive in all material respects to the applicable requirements of the
Exchange Act) solely by reason of the refusal of the SEC to accept the same for
filing and (ii) prior to the consummation of an Exchange Offer and the issuance
of the Exchange Notes, the Company (at its own expense) will mail to the Trustee
and Holders substantially the same information that would have been required by
such Sections within 15 days of when any such document would otherwise have been
required to be filed with the SEC. Upon qualification of this Indenture under
the TIA, the Company shall also comply with the provisions of the TIA section
314(a).
(b) The Company shall provide to any Holder any information reasonably requested
by such Holder concerning the Company (including financial statements) necessary
in order to permit such Holder to sell or transfer Notes in compliance with Rule
144A under the Securities Act.
SECTION 4.09. Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law or any
usury law or other law that would prohibit or forgive the Company from paying
all or any portion of the principal of or interest on the Notes as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of this Indenture; and (to the extent
that it may lawfully do so) the Company hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will suffer
and permit the execution of every such power as though no such law had been
enacted.
SECTION 4.10. Limitation on Restricted Payments.
(a) The Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, (i) declare or pay any dividend or make any distribution
on or in respect of its Capital Stock (including any payment in connection with
any merger or consolidation involving the Company) or to the direct or indirect
holders of its Capital Stock in their capacities as such (except dividends or
distributions payable solely in Capital Stock (other than Disqualified Stock) or
in options, warrants or other rights to purchase its Capital Stock (other than
Disqualified Stock) and except dividends or distributions payable to the Company
or a Restricted Subsidiary (and, if the Restricted Subsidiary making such
dividends or distributions has any stockholders other than the Company or
another Restricted Subsidiary, to such stockholders on no more than a pro rata
basis, measured by value)), (ii) purchase, redeem or otherwise acquire or retire
for value any Capital Stock of the Company, any Restricted Subsidiary or any
other Affiliate of the Company, (iii) purchase, repurchase, redeem, defease or
otherwise acquire or retire for value, prior to scheduled maturity, scheduled
repayment or scheduled sinking fund payment, any Subordinated Obligations or
(iv) make any Restricted Investment (any such dividend, distribution, purchase,
redemption, repurchase, defeasance, other acquisition, retirement or Investment
being herein referred to as a "Restricted Payment") if at the time the Company
or such Restricted Subsidiary makes such Restricted Payment: (1) a Default shall
have occurred and be continuing (or would result therefrom); or (2) the Company
would not be permitted to issue an additional $1.00 of Indebtedness pursuant to
clause (a) under Section 4.13 after giving pro forma effect to such Restricted
Payment; or (3) the aggregate amount of such Restricted Payment and all other
Restricted Payments since March 31, 1998 would exceed the sum of: (A) 50% of the
Consolidated Net Income accrued during the period (treated as one accounting
period) from the beginning of the first full 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 shall be a
deficit, minus 100% of such deficit) and (B) the aggregate Net Cash Proceeds
received by the Company from (x) the issue or sale of its Capital Stock (other
than Disqualified Stock) subsequent to March 31,1998 (other than an issuance or
sale to a Subsidiary or an employee stock ownership plan or similar trust in the
benefit of employees) and (y) the issue or sale (other than an issuance or sale
to a Subsidiary or an employee stock ownership plan or similar trust in the
benefit of employees) after March 31, 1998 of Disqualified Stock or debt
securities that have been converted or exchanged in accordance with their terms
for Capital Stock of the Company (other than Disqualified Stock), in each case
to the extent such proceeds are not used to redeem, repurchase, retire or
otherwise acquire Capital Stock or any Indebtedness of the Company or any
Restricted Subsidiary or to make any Investment pursuant to clause (viii) of the
definition of "Permitted Investment."
(b) The provisions of clauses (2) and (3) of Section (a) shall not prohibit: (1)
any purchase or redemption of Capital Stock or Subordinated Obligations of the
Company made by exchange for, or out of the proceeds of the substantially
concurrent sale or issuance of, Capital Stock of the Company (other than
Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary
or an employee stock ownership plan); provided, however, that the Net Cash
Proceeds from such sale shall be excluded from clause (3)(B) of Section (a)
above; (2) dividends paid within 60 days after the date of declaration if at
such date of declaration such dividend would have complied with this provision;
provided, however, that such dividend shall be deducted in the calculation of
the amount of Restricted Payments available to be made referred to in clause (3)
of Section (a) above; (3) the repurchase of shares of, or options to purchase
shares of, Capital Stock of the Company or any of its Subsidiaries from
employees, former employees, directors or former directors of the Company or any
of its Subsidiaries (or permitted transferees of such employees, former
employees, directors or former directors), pursuant to the terms of the
agreements (including employment agreements) or plans (or amendments thereto)
approved by the Board of Directors under which such individuals purchase or sell
or are granted the option to purchase or sell, shares of such common stock;
provided, however, that the aggregate amount of any repurchases pursuant to this
clause (3) and any purchases pursuant to clause (4) below shall not exceed
$500,000 per year or $3.5 million in the aggregate on or after March 31, 1998;
(4) provided that no Default or Event of Default shall have occurred or be
continuing at the time of such payment or after giving effect thereto, the
purchase by the Company 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 the Company approved by the
Board of Directors; provided, however, that the aggregate amount of any
purchases pursuant to this clause (4) and any repurchases pursuant to clause (3)
above shall not exceed $500,000 per year or $3.5 million in the aggregate on or
after March 31, 1998; (5) the redemption, purchase, retirement or other payoff
of any Subordinated Obligations with the proceeds of any Refinancing
Indebtedness permitted to be incurred pursuant to the terms of clauses (b)(v)
and (v), respectively, of the covenants described under Section 4.13 and Section
4.18; and (6) provided that no Default or Event of Default shall have occurred
or be continuing at the time of such payment or after giving effect thereto,
other Restricted Payments in an aggregate amount not to exceed $10 million;
provided, however, that such payment shall be deducted in the calculation of the
amount of Restricted Payments available to be made referred to in clause (3) of
Section (a) above.
SECTION 4.11. Limitation on Restrictions on Distributions from Restricted
Subsidiaries.
The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, create or permit to exist or become
effective any encumbrance or restriction on the ability of any Restricted
Subsidiary to (i) pay dividends or make any other distributions on its Capital
Stock or with respect to any other interest or participation in, or measured by,
its profits to the Company or a Restricted Subsidiary or pay any Indebtedness or
other obligation owed to the Company or a Restricted Subsidiary, (ii) make any
loans or advances to the Company or any other Restricted Subsidiary or (iii)
transfer any of its property or assets to the Company or any other Restricted
Subsidiary, except for such encumbrances or restrictions existing under or by
reason of (a) the Credit Facility as in effect on March 31, 1998, and any
amendments, restatements, renewals, replacements or refinancings thereof;
provided, however, that such amendments, restatements, renewals, replacements or
refinancings are no more restrictive with respect to such dividend and other
payment restrictions than those contained in the Credit Facility (or, if more
restrictive, than those contained in this Indenture) immediately prior to any
such amendment, restatement, renewal, replacement or refinancing, (b) applicable
law, (c) any instrument governing Indebtedness or Capital Stock of an Acquired
Person acquired by the Company or any of its Restricted Subsidiaries as in
effect at the time of such acquisition (except to the extent such Indebtedness
was incurred in connection with or in contemplation of such acquisition);
provided, however, that (1) such restriction is not applicable to any Person, or
the properties or assets of any Person, other than the Acquired Person, and (2)
the consolidated net income of an Acquired Person 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, (d) by reason of
customary non-assignment provisions in leases or other agreements entered into
the ordinary course of business and consistent with past practices, (e) Purchase
Money Indebtedness for property acquired in the ordinary course of business that
only impose restrictions on the property so acquired, (f) an agreement for the
sale or disposition of the Capital Stock or assets of such Restricted
Subsidiary; provided, however, that such restriction is only applicable to such
Restricted Subsidiary or assets, as applicable, and such sale or disposition
otherwise is permitted under Section 4.17 below; provided, further, however,
that such restriction or encumbrance 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 delivery, or (g) Refinancing
Indebtedness permitted under the Indenture; provided, however, that the
restrictions contained in the agreements governing such Refinancing Indebtedness
are no more restrictive in the aggregate than those contained in the agreements
governing the Indebtedness being refinanced immediately prior to such
refinancing. Notwithstanding the foregoing, neither (a) customary provisions
restricting subletting or assignment of any lease entered into in the ordinary
course of business, consistent with past practice, nor (b) Liens permitted under
the Indenture, shall in and of themselves be considered a restriction on the
ability of the applicable Restricted Subsidiary to transfer such agreements or
assets, as the case may be.
SECTION 4.12. Limitation on Affiliate Transactions.
(a) The Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, conduct any business or enter into any transaction or
series of similar transactions (including the purchase, sale, lease or exchange
of any asset or property or the rendering of any service) with any Affiliate of
the Company (other than any employee stock ownership plan for the benefit of the
Company's or a Restricted Subsidiary's employees) unless the terms of such
business, transaction or series of transactions are (i) set forth in writing,
(ii) as favorable to the Company 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
(iii) a majority of the disinterested members of the Board of Directors have, by
resolution, determined in good faith that such business or transaction or series
of transactions meets the criteria set forth in (ii) above; provided, however,
that if such transaction involves an amount in excess of $10 million, the
Company shall also obtain from a nationally recognized independent investment
banking firm, accounting firm or appraisal firm with experience in evaluating
the terms and conditions of such type of business or transactions an opinion
that such transaction is fair from a financial point of view to the Company or
its Restricted Subsidiary, as the case may be; provided, further, however, that
the provisions of both clause (iii) above and the preceding proviso shall not
apply with respect to any such business, transaction or series of related
transactions between the Company and any Restricted Subsidiary, which business,
transaction or series of transactions is entered into in the ordinary course of
business.
(b) The provisions of the foregoing paragraph (a) shall not prohibit (i) any
Restricted Payment permitted to be made pursuant to the covenant described under
Section 4.10, or any payment or transaction specifically excepted from the
definition of Restricted Payment, (ii) 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
entered into in the ordinary course of business and approved by a majority of
the entire Board of Directors or by a majority of the disinterested members of
the Board of Directors or a majority of the entire board of directors or a
majority of the disinterested members of the board of directors of the relevant
Restricted Subsidiary, (iii) the grant of stock options or similar rights to
employees and directors pursuant to plans approved by a majority of the entire
Board of Directors or by a majority of the disinterested members of the Board of
Directors or a majority of the entire board of directors or a majority of the
disinterested members of the board of directors of the relevant Restricted
Subsidiary, (iv) loans or advances to officers, directors or employees in the
ordinary course of business, (v) the payment of reasonable fees to directors of
the Company and its Restricted Subsidiaries who are not employees of the Company
or its Restricted Subsidiaries, (vi) any Affiliate transaction between the
Company and a Subsidiary Guarantor, between Subsidiary Guarantors, or between
Restricted Subsidiaries which are both not Subsidiary Guarantors, (vii)
indemnification or insurance provided to officers or directors of the Company or
any Subsidiary approved in good faith by the Board of Directors; (viii) payment
of compensation and benefits to directors, officers and employees of the Company
and its Subsidiaries approved in good faith by the Board of Directors; and (ix)
the purchase of or the payment of Indebtedness of or monies owed by the Company
or any of its Restricted Subsidiaries for goods or materials purchased, or
services received, in the ordinary course of business.
SECTION 4.13. Limitation on Indebtedness.
(a) The Company shall not Incur, directly or indirectly, any Indebtedness
(including Acquired Indebtedness) unless, on the date of such Incurrence, and
after giving pro forma effect thereto, (i) no Default or Event of Default shall
have occurred and be continuing or would occur and (ii) the Consolidated Cash
Flow Coverage Ratio at the date of such issuance exceeds 2.0 to 1.0.
(b) Notwithstanding clause (a), the Company may Incur the following
Indebtedness: (i) Indebtedness Incurred pursuant to the Credit Facility,
together with all Indebtedness then outstanding and Incurred pursuant to clause
(i) of Section 4.18 below, not to exceed in outstanding principal amount the
greater of (1) $500 million at any time outstanding and (2) the sum of (x) 80%
of the consolidated book value of the net accounts receivable of the Company and
(y) 50% of the consolidated book value of the inventory of the Company, in each
case determined in accordance with GAAP; (ii) Indebtedness owed to and held by a
Restricted Subsidiary; provided, however, that any subsequent issuance or
transfer of any Capital Stock that results in such Subsidiary ceasing to be a
Restricted Subsidiary, or any transfer of such Indebtedness (other than to a
Restricted Subsidiary) shall be deemed, in each case, to constitute the
Incurrence of such Indebtedness by the Company; (iii) the Notes (other than
Additional Notes); (iv) Indebtedness (other than Indebtedness described in
clause (i), (ii), or (iii) above) outstanding on March 31, 1998 (including the
Existing Notes); (v) any Refinancing Indebtedness in respect of Indebtedness
Incurred pursuant to paragraph (a) or pursuant to clause (iii), (iv) or (viii)
or this clause (v) or pursuant to clause (v) of the covenant described under
Section 4.18 below; (vi) obligations of the Company pursuant to (A) Interest
Rate Protection Agreements in respect of Indebtedness of the Company that is
permitted by the terms of the Indenture to be outstanding to the extent the
notional principal amount of such obligation does not exceed the aggregate
principal amount of the Indebtedness to which such Interest Rate Protection
Agreements relate, (B) Currency Agreement Obligations in respect of foreign
exchange exposures Incurred by the Company in the ordinary course of its
business and (C) commodity agreements of the Company to the extent entered into
in the ordinary course of business to protect the Company from fluctuations in
the prices of raw materials used in its business; (vii) Indebtedness of the
Company consisting of obligations in respect of purchase price adjustments in
connection with the acquisition or disposition of assets by the Company or any
Restricted Subsidiary permitted under the Indenture; (viii) Capital Lease
Obligations, Purchase Money Indebtedness and Acquired Indebtedness (to the
extent not Incurred in connection with, or in anticipation or contemplation of,
the relevant transaction) in an aggregate principal amount, together with the
principal amount of Indebtedness Incurred pursuant to clause (ix) of Section
4.18, not exceeding $15 million at any one given time outstanding; (ix)
performance bonds, surety bonds, insurance obligations or bonds and other
similar bonds or obligations incurred by the Company in the ordinary course of
business consistent with past practice; (x) Floor Plan Guarantees; (xi)
Indebtedness Incurred pursuant to the terms of the outstanding Common Stock
Appreciation Rights, as such terms were in effect on March 31, 1998; and (xii)
Indebtedness in an aggregate principal amount which, together with all other
Indebtedness of the Company then outstanding (other than Indebtedness permitted
by clauses (i) through (xi) of this Section or clause (a)) does not exceed $5
million (less the amount of any Subsidiary Indebtedness and Preferred Stock then
outstanding and Incurred pursuant to clause (xii) of Section 4.18).
(c) Except to the extent that such Indebtedness is permitted to be incurred
pursuant to Sections (a) and (b) above and the provisions of Section 4.18, the
Company shall not, and shall not permit any Restricted Subsidiary to, Incur any
Indebtedness if the proceeds thereof are used, directly or indirectly, to repay,
prepay, redeem, defease, retire, refund or refinance any Subordinated
Obligations unless such Indebtedness shall be subordinated to the Notes or the
relevant Subsidiary Guarantee, as applicable, to at least the same extent as
such Subordinated Obligations.
(d) For purposes of determining compliance with the covenants set forth in this
Section 4.13 and Section 4.18, in the event that an item of Indebtedness meets
the criteria of more than one of the types of Indebtedness described above, the
Company, 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.
(e) For purposes of determining amounts of Indebtedness under the covenants set
forth in this Section 4.13 and Section 4.18, Indebtedness resulting from
security interests granted with respect to Indebtedness otherwise included in
the determination of Indebtedness, and Guarantees (and security interests with
respect thereof) of, or obligations with respect to letters of credit
supporting, Indebtedness otherwise included in the determination of Indebtedness
shall not be included in the determination of Indebtedness.
(f) Indebtedness of any Person which is outstanding at the time such Person
becomes a Restricted Subsidiary of the Company (including upon designation of
any subsidiary or other person as a Restricted Subsidiary) or is merged with or
into or consolidated with the Company or a Restricted Subsidiary of the Company
shall be deemed to have been Incurred at the time such Person becomes such a
Restricted Subsidiary of the Company or merged with or into or consolidated with
the Company or a Restricted Subsidiary of the Company, as applicable.
SECTION 4.14. Limitation on the Sale or Issuance of Capital Stock of
Restricted Subsidiaries.
The Company shall not sell or otherwise dispose of any Capital
Stock of a Restricted Subsidiary, and shall not permit any Restricted
Subsidiary, directly or indirectly, to issue or sell or otherwise dispose of any
of its Capital Stock except (i) to the Company or a Wholly Owned Subsidiary,
(ii) if, immediately after giving effect to such issuance, sale or other
disposition, neither the Company nor any of its Subsidiaries own any Capital
Stock of such Restricted Subsidiary, (iii) Preferred Stock of a Subsidiary
Guarantor, or (iv) directors' qualifying shares.
SECTION 4.15. Limitation on Other Senior Subordinated Debt.
The Company 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 the Company 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, as the case may be.
SECTION 4.16. Change of Control.
(a) Upon a Change of Control, each Holder shall have the right to require
that the Company repurchase all or any part 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 a record date to receive interest on the relevant interest
payment date), in accordance with the terms contemplated in Section 4.16(b). If
at the time of such Change of Control the terms of the Senior Indebtedness of
the Company restrict or prohibit the repurchase of Notes pursuant to this
Section, then prior to the mailing of the notice to Holders provided for in
Section 4.16(b) below but in any event within 90 days following any Change of
Control, the Company shall obtain the requisite consent under the agreements
governing such Senior Indebtedness of the Company to permit the repurchase of
the Notes as provided for in Section 4.16(b).
(b) Within 15 Business Days following any Change of Control, the Company
shall mail a notice to the Trustee and each Holder stating:
(1) that a Change of Control has occurred and that such Holder has the
right to require the Company to purchase 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, each after giving effect to such Change of
Control);
(3) the repurchase 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 the Company, consistent with this
Section, that a Holder must follow in order to have its Notes purchased.
(c) Holders electing to have a Note purchased will be required to surrender
the Note, with an appropriate form (as provided for in Exhibit A or B, as
appropriate) duly completed, to the Company at the address specified in the
notice not later than 3 p.m. New York City time two Business Days prior to the
purchase date. Holders will be entitled to withdraw their election if the
Trustee or the Company receives not later than 3 p.m. New York City time two
Business Day prior to the purchase date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note which was delivered for purchase by the Holder and a
statement that such Holder is withdrawing his election to have such Note
purchased.
(d) On the purchase date, all Notes purchased by the Company under this
Section shall be delivered to the Trustee for cancellation, and the Company
shall pay or cause to be paid the purchase price plus accrued and unpaid
interest, if any, to the Holders entitled thereto.
(e) At the time the Company delivers Notes to the Trustee which are to be
accepted for purchase, the Company shall also deliver an Officers' Certificate
stating that such Notes are to be accepted by the Company pursuant to and in
accordance with the terms of this Section. A Note shall be deemed to have been
accepted for purchase at the time the Trustee, directly or through an agent,
mails or delivers payment therefor to the surrendering Holder.
(f) The Company shall comply in all material respects, 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 repurchase of Notes
pursuant to this Section. To the extent that the provisions of any securities
laws or regulations conflict with provisions of this Section, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Section by virtue thereof.
SECTION 4.17. Limitation on Sales of Assets and Subsidiary Stock.
(a) The Company shall not, and shall not permit any Restricted Subsidiary
to, make any Asset Disposition unless (i) the Company or such Restricted
Subsidiary receives consideration at the time of such Asset Disposition at least
equal to the fair market value, as determined in good faith by the Board of
Directors (including as to the value of all non-cash consideration), of the
shares and assets subject to such Asset Disposition and at least 75% of the
consideration thereof received by the Company or such Restricted Subsidiary, as
the case may be, is in the form of cash or Cash Equivalents, and (ii) an amount
equal to 100% of the Net Available Cash from such Asset Disposition is applied
by the Company (or such Restricted Subsidiary, as the case may be) (A) first,
(x) to the extent the Company elects (or is required by the terms of any Senior
Indebtedness), to prepay, repay or purchase Senior Indebtedness of the Company)
within 360 days of such Asset Disposition, (y) at the Company's election to the
investment by the Company or any Wholly Owned Subsidiary or such Restricted
Subsidiary in long-term assets to replace the assets that were the subject of
such Asset Disposition or a long-term asset that (as determined in good faith by
the Board of Directors) is directly related to the business of the Company and
the Restricted Subsidiaries existing on March 31, 1998, in each case within 360
days from the date of such Asset Disposition, or (z) a combination of the
foregoing purposes within such 360-day period; (B) second, to the extent of the
balance of such Net Available Cash after application in accordance with clauses
(A), to make a pro rata offer to purchase Notes at par (and, to the extent
required by the instrument governing such Indebtedness, any other Senior
Subordinated Indebtedness designated by the Company, at a price no greater than
par) plus accrued and unpaid interest, and (C) third, to the extent of the
balance of such Net Available Cash after application in accordance with clauses
(A) and (B),for general corporate purposes otherwise not prohibited under the
Indenture; provided, however, that in connection with any prepayment, repayment
or purchase of Indebtedness pursuant to clause (A) or (B) above, the Company 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. Notwithstanding the foregoing
provisions of this Section, the Company and its Restricted Subsidiaries shall
not be required to apply any Net Available Cash in accordance with this Section
except to the extent that the aggregate Net Available Cash from all Asset
Dispositions (including any Asset Dispositions made since March 31, 1998) which
are not applied in accordance with this Section exceeds $10 million. Pending
application of Net Available Cash pursuant to this Section, such Net Available
Cash shall be used to temporarily reduce Senior Indebtedness or invested in Cash
Equivalents.
For the purposes of this covenant, the following is deemed to
be cash or Cash Equivalents: the express assumption of Indebtedness (other than
any Indebtedness that is by its terms subordinated to the Notes) of the Company
or any Restricted Subsidiary, but only to the extent that such assumption is
effected on a basis under which there is no further recourse to the Company or
any of the Restricted Subsidiaries with respect to such liabilities
(b) In the event of an Asset Disposition that requires the purchase of
Notes (and other Senior Subordinated Indebtedness of the Company) pursuant to
Section 4.17(a)(ii)(B), the Company shall be required to purchase Notes tendered
pursuant to an offer by the Company for the Notes (and, to the extent required,
other Senior Subordinated Indebtedness of the Company) (the "Offer") 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 of the Company, such lesser price, if any, as may be provided for
by the terms of such Senior Subordinated Indebtedness of the Company) in
accordance with the procedures (including prorating in the event of
oversubscription) set forth in Section 4.17(c). If the aggregate purchase price
of Notes (and, to the extent required, any other Senior Subordinated
Indebtedness of the Company) tendered pursuant to the Offer is less than the Net
Available Cash allotted to the purchase thereof, the Company shall be required
to apply the remaining Net Available Cash in accordance with Section
4.17(a)(ii)(C). The Offer shall remain open for a period of 20 Business Days.
The Company shall not be required to make an Offer to purchase Notes (and other
Senior Subordinated Indebtedness of the Company) pursuant to this Section 4.17
if the Net Available Cash available therefor is less than $10 million (which
lesser amount shall be carried forward for purposes of determining whether such
an Offer is required with respect to the Net Available Cash from any subsequent
Asset Disposition).
(c) (1) Promptly, and in any event within 30 days after the Company
becomes obligated to make an Offer, the Company shall be obligated to
deliver to the Trustee and send, by first-class mail to each Holder, a
written notice stating that the Holder may elect to have his Notes
purchased by the Company either in whole or in part (subject to prorating
as hereinafter described in the event the Offer is oversubscribed) in
integral multiples of $1,000 of principal amount, at the applicable
purchase price. The notice shall specify a purchase date not less than 30
days nor more than 60 days after the date of such notice (the "Purchase
Date") and shall contain such information which the Company in good faith
believes will enable such Holders to make an informed decision.
(2) Not later than the date upon which written notice of an Offer is
delivered to the Trustee as provided above, the Company shall deliver to
the Trustee an Officers' Certificate as to (i) the amount of the Offer (the
"Offer Amount"), (ii) the allocation of the Net Available Cash from the
Asset Dispositions pursuant to which such Offer is being made and (iii) the
compliance of such allocation with the provisions of Section 4.17(a). Upon
the expiration of the period for which the Offer remains open (the "Offer
Period"), the Company shall deliver to the Trustee for cancellation the
Notes or portions thereof which have been properly tendered to and are to
be accepted by the Company. The Trustee shall, on the Purchase Date, mail
or deliver payment to each tendering Holder in the amount of the purchase
price. In the event that the aggregate purchase price of the Notes
delivered by the Company to the Trustee is less than the Offer Amount, the
Trustee shall deliver the excess to the Company immediately after the
expiration of the Offer Period for application in accordance with this
Section.
(3) Holders electing to have a Note purchased shall be required to
surrender the Note, with an appropriate form duly completed, to the Company
at the address specified in the notice not later than 3:00 p.m., New York
City time, two Business Days prior to the Purchase Date. Holders shall be
entitled to withdraw their election if the Trustee or the Company receives
not later than 3:00 p.m., New York City time, two Business Days prior to
the Purchase Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of the Note
which was delivered for purchase by the Holder and a statement that such
Holder is withdrawing his election to have such Note purchased. If at the
expiration of the Offer Period the aggregate principal amount of Notes
surrendered by Holders exceeds the Offer Amount, the Company shall select
the Notes to be purchased on a pro rata basis taking into account any other
tendered Senior Subordinated Indebtedness which is the subject of such
offer (with such adjustments as may be deemed appropriate by the Company so
that only Notes in denominations of $1,000, or integral multiples thereof,
shall be purchased). Holders whose Notes are purchased only in part shall
be issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered.
(4) At the time the Company delivers Notes to the Trustee which are to
be accepted for purchase, the Company shall also deliver an Officers'
Certificate stating that such Notes are to be accepted by the Company
pursuant to and in accordance with the terms of this Section. A Note shall
be deemed to have been accepted for purchase at the time the Trustee,
directly or through an agent, mails or delivers payment therefor to the
surrendering Holder.
(d) The Company 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 repurchase of Notes pursuant to this
Section. To the extent that the provisions of any securities laws or regulations
conflict with provisions of this Section, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under this Section by virtue thereof.
SECTION 4.18. Limitation on Indebtedness and Preferred Stock
of Restricted Subsidiaries.
The Company shall not permit any Restricted Subsidiary to
Incur, directly or indirectly, any Indebtedness or Preferred Stock (except that
a Subsidiary Guarantor shall be permitted to issue Preferred Stock) except: (i)
Indebtedness Incurred pursuant to the Credit Facility, together with the
aggregate amount of all Indebtedness then outstanding and issued pursuant to
clause (b)(i) of Section 4.13 above, not to exceed in outstanding principal
amount the greater of (1) $500 million at any time outstanding and (2) the sum
of (x) 80% of the consolidated book value of the net accounts receivable of the
Company and (y) 50% of the consolidated book value of the inventory of the
Company, in each case determined in accordance with GAAP; (ii) Indebtedness or
Preferred Stock issued to and held by the Company or a Restricted Subsidiary;
provided, however, that (A) any subsequent issuance or transfer of any Capital
Stock that results in any such Subsidiary ceasing to be a Restricted Subsidiary
or (B) any subsequent transfer of such Indebtedness or Preferred Stock (other
than to the Company or a Restricted Subsidiary) shall be deemed, in each case,
to constitute the Incurrence of such Indebtedness or Preferred Stock by the
issuer thereof; (iii) Acquired Indebtedness (to the extent not Incurred in
connection with, or in anticipation or contemplation of, the relevant
transaction) of such Restricted Subsidiary; provided that after giving effect to
the Incurrence of such Acquired Indebtedness, the Company could incur $1.00 of
Indebtedness pursuant to clause (a) under Section 4.13; (iv) Indebtedness or
Preferred Stock (other than any described in clause (i), (ii) or (iii))
outstanding on March 31, 1998 (including Guarantees in respect of the Existing
Notes); (v) Refinancing Indebtedness Incurred in respect of Indebtedness or
Preferred Stock referred to in clause (iii), (iv) or (x) or this clause (v);
provided, however, that to the extent such Refinancing Indebtedness Refinances
Acquired Indebtedness or Preferred Stock of a Restricted Subsidiary that is not
a Wholly Owned Subsidiary, such Refinancing Indebtedness shall be Incurred only
by such Restricted Subsidiary; (vi) Obligations of a Restricted Subsidiary
pursuant to (A) Interest Rate Protection Agreements in respect of Indebtedness
of the Restricted Subsidiary that is permitted by the terms of the Indenture to
be outstanding to the extent the notional principal amount of such obligation
does not exceed the aggregate principal amount of the Indebtedness to which such
Interest Rate Protection Agreements relate, (B) Currency Agreement Obligations
in respect of foreign exchange exposures Incurred by the Restricted Subsidiary
in the ordinary course of its business and (C) commodity agreements of the
Restricted Subsidiary to the extent entered into in the ordinary course of
business to protect the Restricted Subsidiary from fluctuations in the prices of
raw materials used in its business; (vii) Indebtedness consisting of the
Subsidiary Guarantees (other than in respect of Additional Notes, except to the
extent that such Additional Notes were permitted to be issued under Section
4.13); (viii) Indebtedness of any Restricted Subsidiary consisting of
Obligations in respect of purchase price adjustments in connection with the
acquisition or disposition of assets by any Restricted Subsidiary permitted
under the Indenture; (ix) Capital Lease Obligations, Purchase Money Indebtedness
and Acquired Indebtedness (to the extent not Incurred in connection with, or in
anticipation or contemplation of, the relevant transaction) in an aggregate
principal amount not exceeding, together with the principal amount of
Indebtedness Incurred pursuant to clause (viii) of Section 4.13, $15 million at
any one given time outstanding; (x) performance bonds, surety bonds, insurance
obligations or bonds and other similar bonds or obligations incurred by a
Restricted Subsidiary in the ordinary course of business consistent with past
practice; (xi) Floor Plan Guarantees; and (xii) Indebtedness and Preferred Stock
in an aggregate principal amount which, together with any other Indebtedness or
Preferred Stock of Restricted Subsidiaries then outstanding (other than
Indebtedness or Preferred Stock permitted by clauses (i) through (xi) of this
Section) does not exceed $5 million (less the amount of any Indebtedness then
outstanding and Incurred pursuant to clause (b)(xii) of Section 4.13).
SECTION 4.19. Limitation on Liens Securing Subordinated Indebtedness.
The Company 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 the Company or a Restricted
Subsidiary which is expressly by its terms subordinate or junior in right of
payment to any other Indebtedness of the Company 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 the Company 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 the Company or any Restricted Subsidiary in
respect of any Indebtedness of the Company or a Restricted Subsidiary which is
expressly by its terms subordinate or junior in right of payment to any other
Indebtedness of the Company or such Restricted Subsidiary, unless the Notes or
the relevant Subsidiary Guarantee, as the case may be, are equally and ratably
secured for so long as such assumption, guaranty or other liability is so
secured; provided that, if such subordinated Indebtedness which is expressly by
its terms subordinate or junior in right of payment to any other Indebtedness of
the Company 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.
SECTION 4.20. Future Subsidiary Guarantors.
The Company and each Subsidiary Guarantor shall cause each
Restricted Subsidiary of the Company organized or existing under the laws of the
United States, any state thereof or the District of Columbia of the Company
which, after March 31, 1998 (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 this Indenture
(without such future Subsidiary Guarantor being required to execute and deliver
the Subsidiary Guarantee endorsed on the Notes); provided, however, that no
Subsidiary meeting the requirements of this sentence which is an Inactive
Subsidiary shall be required to become a Subsidiary Guarantor hereunder unless
and until such date as such Subsidiary no longer is an Inactive Subsidiary (at
which date such Subsidiary shall, if required by the terms of this sentence,
become a Subsidiary Guarantor). In addition, the Company will not permit any
Restricted Subsidiary that is not a Subsidiary Guarantor to Guarantee any other
Indebtedness of the Company 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, that such Restricted Subsidiary shall not be
required to so Guarantee the payment of the Notes to the extent that such other
Indebtedness does not exceed $1 million individually or, together with any other
Indebtedness of the Company or any Subsidiary Guarantor 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.
SECTION 4.21. Limitation on Designations of Unrestricted Subsidiaries.
(a) The Company may designate any Subsidiary of the Company (other than a
Subsidiary Guarantor) as an "Unrestricted Subsidiary" (a "Designation") only if:
(i) no Default shall have occurred and be continuing at the time of or
after giving effect to such Designation; and
(ii) either (x) the Company's Investment in such Subsidiary does not
exceed $1,000 or (y) the Company 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 Company's Investment in such Subsidiary on such
date.
In the event of any such Designation, the Company shall be
deemed to have made an Investment constituting a Restricted Payment pursuant to
the covenant described under Section 4.10 for all purposes of the Indenture in
the Designation Amount. The Indenture will further provide that the Company
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 Section 4.10.
The Company may revoke any Designation of a Subsidiary as an
Unrestricted Subsidiary (a "Revocation") if:
(i) no Default shall have occurred and be continuing at the time of
and after giving effect to such Revocation; and
(ii) 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 this
Indenture and for all purposes of this Indenture shall be deemed to have
been Incurred at such time.
(b) All Designations and Revocations must be evidenced by an Officers'
Certificate delivered to the Trustee attaching a certified copy of the
resolutions of the Board of Directors giving effect to such Designation or
Revocation, as applicable, and certifying compliance with the foregoing
provisions.
(c) Notwithstanding the foregoing, no Subsidiary that was a Subsidiary
Guarantor as of March 31, 1998 shall be permitted to become an Unrestricted
Subsidiary.
SECTION 4.22. Limitation on Lines of Business.
Neither the Company nor any of its Subsidiaries or
Unrestricted Subsidiaries shall directly or indirectly engage to any substantial
extent in any line or lines of business activity other than that which, in the
reasonable good faith judgement of the Board of Directors, is a Related
Business.
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Merger, Consolidation and Sale of Assets of the Company.
The Company shall not, in a single transaction or a series of
related transactions, consolidate with or merge with or into, or convey,
transfer or lease all or substantially all its assets (computed on a
consolidated basis) to, any Person or group of affiliated Persons, unless: (i)
the resulting, surviving or transferee Person shall be the Company or, if not
the 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 (the
"Successor Company"), and such Successor Company shall expressly assume, by an
indenture supplemental to this Indenture, executed and delivered to the Trustee,
all the obligations of the Company under the Notes and this Indenture (and the
Subsidiary Guarantees shall be confirmed as applying to such Person's
obligations); (ii) at the time of and immediately after giving effect to such
transaction or transactions on a pro forma basis (and treating any Indebtedness
which becomes an obligation of the resulting, surviving or transferee Person or
any Subsidiary as a result of such transaction as having been Incurred by such
Person or such Subsidiary at the time of such transaction), no Default or Event
of Default shall have occurred and be continuing; (iii) immediately after giving
effect to such transaction, the resulting, surviving or transferee Person would
be able to Incur at least $1.00 of Indebtedness pursuant to Section (a) of
Section 4.13; and (iv) the Company shall have delivered to the Trustee an
Officers' Certificate and if a supplemental indenture is required, an Opinion of
Counsel, each stating that such consolidation, merger or transfer and such
supplemental indenture (if any) comply with the Indenture.
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, the Company's interest in which constitutes
all or substantially all of the properties and assets of the Company shall be
deemed to be the transfer of all or substantially all of the properties and
assets of the Company.
Notwithstanding the foregoing, the Company may merge with or
into, or convey, transfer or lease all or substantially all of its assets to,
any Subsidiary Guarantor, and a Subsidiary Guarantor may merge with or into, or
convey, transfer or lease all or substantially all of its assets to, any other
Subsidiary Guarantor or the Company.
SECTION 5.02. Successor Corporation Substituted for the Company.
Upon any consolidation, combination or merger or any transfer
of all or substantially all of the assets of the Company in accordance with the
foregoing, in which the Company is not the continuing corporation, the Successor
Company formed by such consolidation or into which the Company is merged or to
which such conveyance, lease or transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture and the Notes with the same effect as if such surviving entity
had been named as such, and the predecessor company, in the case of a
conveyance, transfer or lease, shall be released from the obligation to pay the
principal of and interest on the Notes.
SECTION 5.03. Merger, Consolidation and Sale of Assets of Any Subsidiary
Guarantor.
The Company will not permit any Subsidiary Guarantor to
consolidate with or merge with or into, or convey, transfer or lease, in one
transaction or a series of transactions, all or substantially all of its assets
to, any Person unless: (i) the resulting, surviving or transferee Person shall
be the Company or a Subsidiary Guarantor or, if not the Company or such a
Subsidiary Guarantor, shall be a corporation organized and existing under the
laws of the jurisdiction under which such Subsidiary was organized or under the
laws of the United States of America, or any State thereof or the District of
Columbia, and such Person shall expressly assume, by executing a Subsidiary
Guarantee, all the obligations of such Subsidiary, if any, under its Subsidiary
Guarantee; (ii) immediately after giving effect to such transaction or
transactions on a pro forma basis (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 or Event of Default shall have occurred and be
continuing; (iii) immediately after giving effect to such transaction, the
Company would be able to Incur at least $1.00 of Indebtedness pursuant to
Section 4.13(a); and (iv) the Company 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 (i), (ii) and (iii) above shall not apply
to any one or more transactions which constitute an (a) Asset Disposition
subject to the applicable provisions of the covenant described under Section
4.17 above or (b) the grant of any Lien on the assets of a Restricted Subsidiary
to secure outstanding Bank Indebtedness, which Lien is permitted by the terms of
the Indenture, or any conveyance or transfer of such assets resulting from an
exercise of remedies in respect of any such Lien.
SECTION 5.04. Successor Corporation Substituted for Subsidiary Guarantor.
Upon any consolidation, combination or merger or any transfer
of all or substantially all of the assets of any Subsidiary Guarantor in
accordance with the foregoing, in which such Subsidiary Guarantor is not the
continuing corporation, the successor Person formed by such consolidation or
into which such Subsidiary Guarantor is merged or to which such conveyance,
lease or transfer is made shall succeed to, and be substituted for, and may
exercise every right and power of, such Subsidiary Guarantor under this
Indenture with the same effect as if such surviving entity had been named as
such, and the predecessor company, in the case of a conveyance, transfer or
lease, shall be released from the obligation to pay the principal of and
interest on the Notes.
<PAGE>
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default.
An "Event of Default" occurs if:
(1) the Company defaults in the payment of interest on any Notes when
the same becomes due and payable (whether or not such payment shall be
prohibited by Article Ten of this Indenture) and the Default continues for
a period of 30 days; or
(2) the Company defaults in the payment of the principal on any Notes
when such principal becomes due and payable (whether or not such payment
shall be prohibited by Article Ten), at maturity, upon optional redemption,
upon required repurchase, upon declaration or otherwise (including the
failure to make a payment to purchase Notes tendered pursuant to a Change
of Control under Section 4.16 or an Offer under Section 4.17); or
(3) the failure by the Company to comply with its obligations under
Section 5.01 above; or
(4) the failure by the Company to comply for 30 days after notice with
any of its obligations under Sections 4.08, 4.10, 4.11, 4.12, 4.13, 4.14,
4.15, 4.16 (other than a failure to purchase the Notes), 4.17 (other than a
failure to purchase the Notes), 4.18, 4.19, 4.20 and 4.21; or
(5) the Company defaults in the observance or performance of any other
covenant, obligation, warranty or agreement contained in this Indenture and
which default continues for a period of 60 days after notice; or
(6) Indebtedness of the Company 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 Indebtedness unpaid or accelerated together with the principal
amount of any other such Indebtedness which is unpaid or which has been
accelerated, exceeds $10.0 million at any time; or
(7) the Company or any Significant Subsidiary of the Company (A)
commences a voluntary case or proceeding under any Bankruptcy Law with
respect to itself, (B) consents to the entry of a judgment, decree or order
for relief against it in an involuntary case or proceeding under any
Bankruptcy Law, (C) consents to the appointment of a Custodian of it or for
substantially all of its property, (D) consents to or acquiesces in the
institution of a bankruptcy or an insolvency proceeding against it, (E)
makes a general assignment for the benefit of its creditors, or (F) takes
any corporate action to authorize or effect any of the foregoing; or
(8) a court of competent jurisdiction enters a judgment, decree or
order for relief in respect of the Company or any Significant Subsidiary of
the Company in an involuntary case or proceeding under any Bankruptcy Law,
which shall (A) approve as properly filed a petition seeking
reorganization, arrangement, adjustment or composition in respect of the
Company or any such Significant Subsidiary, (B) appoint a Custodian of the
Company or any such Significant Subsidiary or for substantially all of its
property or (C) order the winding-up or liquidation of its affairs; and
such judgment, decree or order shall remain unstayed and in effect for a
period of 60 consecutive days; or
(9) any judgment or decree for the payment of money the portion of
which is not covered by insurance is in an aggregate amount in excess of
$10.0 million shall have been rendered against the Company or any of its
Significant Subsidiaries and is not discharged and either (A) an
enforcement proceeding has been commenced by any creditor upon such
judgment or decree or (B) there is a period of 60 days following such
judgment during which such judgment or decree is not discharged, waived or
the execution thereof stayed (including pending appeal); or
(10) 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 this Indenture) or any Subsidiary Guarantor that is a
Significant Subsidiary denies or disaffirms its obligations under its
Subsidiary Guarantee.
However, a default under clause (4), (5) or (9) will not
constitute an Event of Default until the Trustee or the Holders of 25% in
principal amount of the outstanding Notes notify the Company of the default and
the Company does not cure such default within the time specified after receipt
of such notice.
The Company shall deliver to the Trustee, within 30 days after
the occurrence thereof, written notice in the form of an Officers' Certificate
of any Event of Default under clause (6) or (10) and any event which with the
giving of notice or the lapse of time would become an Event of Default under
clause (4), (5) or (9), its status and what action the Company is taking or
proposes to take with respect thereto.
SECTION 6.02. Acceleration.
(a) If an Event of Default (other than an Event of Default specified in
Section 6.01(7) or (8) with respect to the Company) occurs and is continuing,
and has not been waived pursuant to Section 6.04, then the Trustee, by written
notice to the Company, or the Holders of at least 25% in principal amount of
outstanding Notes may declare the principal of and accrued but unpaid interest
on all the Notes to be due and payable by notice in writing to the Company and
the Trustee specifying the respective Event of Default and that it is a "notice
of acceleration". Upon any such declaration, such amount shall be immediately
due and payable provided, however, that for so long as the 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 Senior Credit
Facility Representative of the intention to accelerate the Notes or (ii) the
acceleration of any Indebtedness under the Credit Facility.
(b) If an Event of Default specified in Section 6.01(7) or (8) relating to
the Company occurs and is continuing with respect to the Company, 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.
(c) The Holders of a majority in principal amount of the Notes may, on
behalf of the Holders of all of the Notes, rescind and cancel an acceleration
and its consequences (i) if the rescission would not conflict with any judgment
or decree, (ii) if all existing Events of Default have been cured or waived
except nonpayment of principal or interest that has become due solely because of
the acceleration, (iii) if the Company has paid the Trustee its reasonable
compensation and reimbursed the Trustee for its expenses, disbursements and
advances and (iv) in the event of the cure or waiver of an Event of Default of
the type described in Section 6.01(7) or 6.01(8), the Trustee shall have
received an Officers' Certificate and an Opinion of Counsel that such Event of
Default has been cured or waived. No such rescission shall affect any subsequent
Default or impair any right consequent thereto.
SECTION 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of or interest on the Notes or to enforce the performance
of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Holder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative to the
extent permitted by law.
SECTION 6.04. Waiver of Past Defaults.
Subject to Sections 2.09, 6.07 and 9.02, the Holders of a
majority in principal amount of the then outstanding Notes by notice to the
Trustee may, on behalf of the Holders of all of the Notes, waive an existing
Default or Event of Default and its consequences, except a Default in the
payment of principal of or interest on any Note as specified in clauses (1) and
(2) of Section 6.01. When a Default or Event of Default is waived, it is cured
and ceases to exist for every purpose of this Indenture.
SECTION 6.05. Control by Majority.
Subject to Section 2.09, the Holders of a majority in
principal amount of the then outstanding Notes may direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on it, including, without limitation,
any remedies provided for in Section 6.03. Subject to Section 7.01, however, the
Trustee may refuse to follow any direction that the Trustee reasonably believes
conflicts with any law or this Indenture, that the Trustee reasonably determines
may be unduly prejudicial to the rights of another Holder, or that may involve
the Trustee in personal liability; provided that the Trustee may take any other
action deemed proper by the Trustee which is not inconsistent with such
direction; and provided further, that this provision shall not affect the rights
of the Trustee set forth in Section 7.01(d).
SECTION 6.06. Limitation on Suits.
Subject to Article Seven, if an Event of Default occurs and is
continuing, the Trustee will be under no obligation to exercise any of the
rights or powers under this Indenture at the request or direction of any of the
Holders unless such Holders have offered to the Trustee indemnity or security
against any loss, liability or expense reasonably satisfactory to the Trustee.
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
this Indenture or the Notes unless (i) such Holder has previously given the
Trustee notice that an Event of Default is continuing, (ii) Holders of at least
25% in principal amount of the outstanding Notes have requested the Trustee to
pursue the remedy, (iii) such Holders have offered the Trustee security or
indemnity against any loss, liability or expense reasonably satisfactory to the
Trustee, (iv) the Trustee has not complied with such request within 60 days
after the receipt thereof and the offer of security or indemnity and (v) 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.
SECTION 6.07. Rights of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture, the
right of any Holder to receive payment of principal of and interest on a Note,
on or after the respective due dates expressed in such Note, or to bring suit
for the enforcement of any such payment on or after such respective dates, shall
not be impaired or affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee.
If an Event of Default in payment of principal or interest
specified in clause (1) or (2) of Section 6.01 occurs and is continuing, the
Trustee may recover judgment in its own name and as trustee of an express trust
against the Company or any other obligor on the Notes for the whole amount of
principal and accrued interest remaining unpaid, together with interest on
overdue principal and, to the extent that payment of such interest is lawful,
interest on overdue installments of interest at the rate set forth in Section
4.01 and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents, consultants and counsel.
SECTION 6.09. Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses, taxes,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders allowed in any judicial proceedings relating to the Company or any other
obligor upon the Notes, any of their respective creditors or any of their
respective property and shall be entitled and empowered to collect and receive
any monies or other property payable or deliverable on any such claims and to
distribute the same, and any Custodian in any such judicial proceedings is
hereby authorized by each Holder to make such payments to the Trustee and, if
the Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, taxes, disbursements and advances of the Trustee, its
agents, consultants and counsel, and any other amounts due the Trustee under
Section 7.07. The Company's payment obligations under this Section 6.09 shall be
secured in accordance with the provisions of Section 7.07 hereunder. Nothing
herein contained shall be deemed to authorize the Trustee to authorize or
consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding.
SECTION 6.10. Priorities.
If the Trustee collects any money or property pursuant to this
Article Six, it shall pay out the money in the following order:
First: to the Trustee for amounts due under Section 7.07;
Second: if the Holders are forced to proceed against the
Company directly without the Trustee, to Holders for their collection
costs;
Third: to Holders for amounts due and unpaid on the Notes for
principal and interest, ratably, without preference or priority of
any kind, according to the amounts due and payable on the Notes for
principal and interest, respectively; and
Fourth: to the Company or any other obligor on the Notes, as
their interests may appear, or as a court of competent jurisdiction
may direct.
The Trustee, upon prior notice to the Company, may fix a
record date and payment date for any payment to Holders pursuant to this Section
6.10.
SECTION 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a
Holder pursuant to Section 6.07, or a suit by a Holder or Holders of more than
10% in principal amount of the outstanding Notes.
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture and
use the same degree of care and skill in its exercise thereof as a prudent
person would exercise or use under the circumstances in the conduct of his own
affairs.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties as are specifically set
forth in this Indenture and no covenants or obligations shall be implied in this
Indenture against the Trustee.
(2) In the absence of bad faith on its part, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture. However, the Trustee shall
examine the certificates and opinions to determine whether or not they conform
to the requirements of this Indenture.
(c) Notwithstanding anything to the contrary herein contained, the Trustee
may not be relieved from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that: (1)
(1) This paragraph does not limit the effect of paragraph (b) of this
Section 7.01.
(2) The Trustee shall not be liable for any error of judgment made in good
faith by a Trust Officer, unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action it takes or
omits to take in good faith in accordance with a direction received by it
pursuant to Section 6.02, 6.04 or 6.05.
(d) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder or in the exercise of any of its rights or powers
if it shall have reasonable grounds for believing that repayment of such funds
or adequate indemnity against such risk or liability is not assured to it.
(e) Whether or not herein expressly provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (a),
(b), (c) and (d) of this Section 7.01.
(f) The Trustee shall not be liable for interest on any money or assets
received by it except as the Trustee may agree in writing with the Company.
Assets held in trust by the Trustee need not be segregated from other assets
except to the extent required by law.
SECTION 7.02. Rights of Trustee.
Subject to Section 7.01:
(a) The Trustee may rely and shall be fully protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, note or other
paper or document reasonably believed by it to be genuine and to have been
signed or presented by the proper Person. The Trustee need not investigate any
fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may consult with
counsel and may require an Officers' Certificate, an Opinion of Counsel or both,
which shall conform to Sections 13.04 and 13.05. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on such
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or indirectly or by or through
agents or attorneys and the Trustee shall not be responsible for the misconduct
or negligence of any agent or attorney appointed with due care.
(d) The Trustee shall not be liable for any action that it takes or omits
to take in good faith which it reasonably believes to be authorized or within
its rights or powers; provided, however that the Trustee's conduct does not
constitute wilful misconduct, negligence or bad faith.
(e) The Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement, instrument,
opinion, notice, request, direction, consent, order, bond, debenture, or other
paper or document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit, and, if
the Trustee shall determine to make such further inquiry or investigation, it
shall be entitled, upon reasonable notice to the Company, to examine the books,
records, and premises of the Company, personally or by agent or attorney and to
consult with the officers and representatives of the Company, including the
Company's accountants and attorneys.
(f) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request, order or direction of
any of the Holders pursuant to the provisions of this Indenture, unless such
Holders shall have offered to the Trustee security or indemnity satisfactory to
the Trustee against the costs, expenses and liabilities which may be incurred by
it in compliance with such request, order or direction.
(g) The Trustee shall not be required to give any bond or surety in respect
of the performance of its powers and duties hereunder.
(h) The Trustee may determine (i) the execution by any Holder of any
instrument in writing, (ii) the date of such execution or (iii) the authority of
any Person executing the same, in any manner the Trustee deems sufficient and in
accordance with such reasonable rules as the Trustee may determine.
(i) The Trustee may consult with counsel, and the advice or opinion of
counsel with respect to legal matters relating to this Indenture and the Notes
shall be full and complete authorization and protection from liability in
respect to any action taken, omitted or suffered by it hereunder in good faith
and in accordance with the advice or opinion of such counsel.
SECTION 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may otherwise deal with the Company, any
Subsidiary of the Company, or their respective Affiliates with the same rights
it would have if it were not Trustee. However, if the Trustee acquires any
conflicting interest within the meaning of Section 3.10(b) of the TIA, it must
eliminate such conflict within 90 days, apply to the SEC for permission to
continue as trustee or resign. Any Agent may do the same with like rights.
However, the Trustee must comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer.
The Offering Memorandum and the recitals contained herein and
in the Notes shall be taken as statements of the Company and the Trustee assumes
no responsibility for their correctness. The Trustee makes no representation as
to the validity or adequacy of this Indenture or the Notes, and it shall not be
accountable for the Company's use of the proceeds from the Notes, and it shall
not be responsible for any statement of the Company in this Indenture or the
Notes other than the Trustee's certificate of authentication.
SECTION 7.05. Notice of Default.
If a Default occurs and is continuing and if it is known to
the Trustee, the Trustee shall mail to each Holder notice of the Default within
90 days after such Default occurs. Except in the case of a Default in payment of
principal of, or interest on, any Note, including an accelerated payment and the
failure to make payment on the purchase date pursuant to a Change in Control
under Section 4.16 or on the Purchase Date pursuant to an Offer under Section
4.17 and, except in the case of a failure to comply with Article Five hereof,
the Trustee may withhold the notice if and so long as its board of directors,
the executive committee of its board of directors or a committee of its Trust
Officers in good faith reasonably determines that withholding the notice is in
the best interest of the Holders. In addition, the Company shall deliver to the
Trustee, within 120 days after the end of each fiscal year, a certificate
regarding knowledge of the Company's compliance with all covenants and
conditions under this Indenture. The Company also shall deliver to the Trustee
pursuant to Section 6.01, within 30 days after the occurrence thereof, written
notice of any event which would constitute certain Defaults, their status and
what action the Company is taking or proposes to take in respect thereof.
SECTION 7.06. Reports by Trustee to Holders.
Within 60 days after each May 15, beginning with the May 15 following the
date of this Indenture, the Trustee shall, to the extent that any of the events
described in TIA section 313(a) occurred within the previous twelve months, but
not otherwise, mail to each Holder a brief report dated as of such date that
complies with TIA section 313(a). The Trustee also shall comply with TIA section
313(b) and (c).
The Company shall promptly notify the Trustee if the Notes become listed
on, or delisted from, any stock exchange and the Trustee shall comply with TIA
section 313(d).
SECTION 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time
reasonable compensation for its services. The Trustee's compensation shall not
be limited by any law on compensation of a trustee of an express trust. The
Company shall reimburse the Trustee upon request for all reasonable fees and
expenses, including out-of-pocket expenses incurred or made by it in connection
with the performance of its duties under this Indenture. Such expenses shall
include the reasonable fees and expenses of the Trustee's agents, consultants,
experts and counsel, except such disbursements, advances and expenses as may be
attributable to its negligence and bad faith.
The Company shall indemnify the Trustee and its agents,
employees, stockholders and directors and officers for, and hold them harmless
against, any loss, liability or expense incurred by them, arising out of or in
connection with the administration of this trust including the reasonable costs
and expenses of defending themselves against any claim or liability in
connection with the exercise or performance of any of their rights, powers or
duties hereunder. The Company need not reimburse any expense or indemnify
against any loss, liability or expense Incurred by the Trustee through the
Trustee's own willful misconduct, negligence or bad faith. The Trustee shall
notify the Company promptly of any claim asserted against the Trustee for which
it may seek indemnity. At the Trustee's sole discretion, the Company shall
defend the claim and the Trustee shall cooperate and may participate in the
defense; provided that any settlement of a claim shall be approved in writing by
the Trustee. Alternatively, the Trustee may at its option have separate counsel
of its own choosing and the Company shall pay the reasonable fees and expenses
of such counsel; provided that the Company will not be required to pay such fees
and expenses if it assumes the Trustee's defense and there is no conflict of
interest between the Company and the Trustee in connection with such defense as
reasonably determined by the Trustee. The Company need not pay for any
settlement made without its written consent. The Company need not reimburse any
expense or indemnify against any loss or liability to the extent incurred by the
Trustee through its negligence, bad faith or willful misconduct.
To secure the Company's payment obligations in this Section
7.07, the Trustee shall have a lien prior to the Notes on all assets or money
held or collected by the Trustee, in its capacity as Trustee, except assets or
money held in trust to pay principal of or interest on particular Notes. The
Trustee's right to receive payment of any amounts due under this Section 7.07
shall not be subordinate to any other liability or indebtedness of the Company
(even though the Notes may be subordinate to such other liability or
indebtedness).
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(7) or (8) occurs, such expenses and
the compensation for such services are intended to constitute expenses of
administration under any Bankruptcy Law; provided, however, that this shall not
affect the Trustee's rights as set forth in the preceding paragraph or Section
6.10.
SECTION 7.08. Replacement of Trustee.
The Trustee may resign at any time by so notifying the Company
in writing at least 30 days prior to the date of the proposed resignation. The
Holders of a majority in principal amount of the outstanding Notes may remove
the Trustee by so notifying the Company and the Trustee and may appoint a
successor Trustee. The Company may remove the Trustee if:
(A) the Trustee fails to comply with Section 7.10;
(B) the Trustee is adjudged bankrupt or insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy
Law;
(C) a receiver or other public officer takes charge of the Trustee or its
property; or
(D) the Trustee becomes incapable of acting.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
If the Trustee resigns or is removed as Trustee or if a vacancy exists in
the office of Trustee for any reason, the Company shall notify each Holder of
such event and shall promptly appoint a successor Trustee. Within one year after
the successor Trustee takes office, the Holders of a majority in principal
amount of the Notes may appoint a successor Trustee to replace the successor
Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Immediately after that, the retiring
Trustee shall transfer all property held by it as Trustee to the successor
Trustee, subject to the lien provided in Section 7.07, the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. A successor Trustee shall mail notice of its succession to each
Holder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in principal amount of the then outstanding Notes may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 7.10, any Holder may petition
any court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section 7.08,
the Company's obligations under Section 7.07 shall continue for the benefit of
the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee; provided that such
corporation shall be otherwise qualified and eligible under this Article Seven.
If at the time such successor or successors by merger,
conversion, consolidation or transfer of assets to the Trustee shall succeed to
the trust created by this Indenture any of the Notes shall have been
authenticated but not delivered, any successor to the Trustee may adopt a
certificate of authentication of any predecessor Trustee, and deliver such Notes
so authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Trustee may authenticate such Notes either
in the name of any predecessor hereunder or in the name of the successor to the
Trustee; and in all such cases such certificates shall have the full force which
it is anywhere in the Notes or in this Indenture provided that the certificate
of the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA sections 310(a)(1), (2) and (5). The Trustee (or, in the
case of a corporation included in a bank holding company system, the related
bank holding company) shall have a combined capital and surplus of at least $50
million as set forth in its most recent published annual report of condition. In
addition, if the Trustee is a corporation included in a bank holding company
system, the Trustee, independently of such bank holding company, shall meet the
capital requirements of TIA section 310(a)(2). The Trustee shall comply with TIA
section 310(b); provided, however, that there shall be excluded from the
operation of TIA section 310(b)(1) any indenture or indentures under which other
securities, or certificates of interest or participation in other securities, of
the Company are outstanding, if the requirements for such exclusion set forth in
TIA section 310(b)(1) are met. The provisions of TIA section 310 shall apply to
the Company, as obligor of the Notes.
SECTION 7.11. Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA section 311(a), excluding any creditor
relationship listed in TIA section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA section 311(a) to the extent indicated therein.
ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. Discharge of Liability on Notes; Defeasance.
(a) When (i) the Company delivers to the Trustee all outstanding Notes
(other than Notes replaced pursuant to Section 2.07) for cancellation or (ii)
all outstanding Notes have become due and payable at maturity or will be due and
payable within 60 days as a result of the mailing of a notice of redemption
pursuant to Article 3 hereof, in each case, and the Company irrevocably deposits
with the Trustee funds sufficient to pay at maturity or upon redemption all
outstanding Notes, including interest thereon to maturity or such redemption
date (other than Notes replaced pursuant to Section 2.07), and if in either case
the Company pays all other sums payable hereunder by the Company, then this
Indenture shall, subject to Section 8.01(c), cease to be of further effect. The
Trustee shall acknowledge satisfaction and discharge of this Indenture on demand
of the Company accompanied by an Officers' Certificate and an Opinion of Counsel
as to the satisfaction of all conditions to such satisfaction and discharge of
this Indenture and at the cost and expense of the Company.
(b) Subject to Sections 8.01(c) and 8.02, the Company at any time may
terminate (i) all its obligations under the Notes and this Indenture ("legal
defeasance option") or (ii) its obligations under Sections 4.10 through 4.22 and
the operation of Section 6.01(4) and the limitations contained in clause (iii)
of the first paragraph of each Section 5.01 and Section 5.03 ("covenant
defeasance option"). The Company may exercise its legal defeasance option
notwithstanding its prior exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option, payment of the Notes
may not be accelerated because of an Event of Default. If the Company exercises
its covenant defeasance option, payment of the Notes may not be accelerated
because of an Event of Default specified in Section 6.01(4) or because of the
failure of the Company to comply with clause (iii) of the first paragraph of
each Section 5.01 and Section 5.03. If the Company exercises its legal
defeasance option or its covenant defeasance option, each Subsidiary Guarantor,
if any, shall be released from all its obligations under its Subsidiary
Guarantee.
Upon satisfaction of the conditions set forth herein and upon request of
the Company, the Trustee shall acknowledge in writing the discharge of those
obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's obligations in
Sections 2.03, 2.04, 2.05, 2.07, 2.08, 7.07, 7.08, 8.05, 8.06 and the Appendix
shall survive until the Notes have been paid in full. Thereafter, the Company's
obligations in Sections 7.07, 8.05 and 8.06 shall survive.
SECTION 8.02. Conditions to Defeasance.
The Company may exercise its legal defeasance option or its
covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee money
or U.S. Government Obligations for the payment of principal of, interest
and premium, if any, on the Notes to maturity or redemption (including, in
the case of payment of principal, interest and premium, if any, to
redemption, under arrangements reasonably satisfactory to the Trustee
providing for redemption pursuant to irrevocable instructions delivered to
the Trustee prior to 60 days before a Redemption Date), as the case may be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent public accountants or a
nationally recognized investment banking firm expressing their opinion that
the payments of principal and interest when due and without reinvestment on
the deposited U.S. Government Obligations plus any deposited money without
investment will provide cash at such times and in such amounts as will be
sufficient to pay principal, premium, if any, and interest when due on all
outstanding Notes to maturity or redemption, as the case may be;
(3) (x) no Default or Event of Default with respect to the Notes shall
have occurred and be continuing on the date of such deposit and (y) no
Event of Default under Section 6.01(7) or (8) shall occur at any time in
the period ending on the 123rd day after the date of such deposit (it being
understood that the condition set forth in the preceding clause (y) is a
condition subsequent which shall not be deemed satisfied until the
expiration of such 123-day period, but in the case of the covenant
defeasance, the covenants which are defeased under Section 8.01(b) will
cease to be in effect unless an Event of Default under Section 6.01(7) or
(8) occurs during such period);
(4) the Company delivers to the Trustee an Officers' Certificate
stating that the deposit was not made by the Company with the intent of
preferring the Holders over any other creditors of the Company or with the
intent of defeating, hindering, delaying or defrauding any other creditors
of the Company and the deposit is not prohibited under any Designated
Senior Indebtedness;
(5) neither the deposit nor the defeasance shall result in a default
or event of default under any other material agreement to which the Company
is a party or by which the Company is bound and neither the deposit nor the
defeasance shall be prohibited by Article 10;
(6) the Company delivers to the Trustee an Opinion of Counsel to the
effect that the trust resulting from the deposit does not constitute, or is
qualified as, a regulated investment company under the Investment Company
Act of 1940;
(7) in the case of the legal defeasance option, the Company shall have
delivered to the Trustee an Opinion of Counsel stating that (i) the Company
has received from, or there has been published by, the Internal Revenue
Service a ruling, or (ii) since the date of this Indenture there has been a
change in the applicable Federal income tax law, in either case to the
effect that, and based thereon such Opinion of Counsel shall confirm that,
the Noteholders will not recognize income, gain or loss for Federal income
tax purposes as a result of such defeasance and will be subject to Federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such defeasance had not occurred;
(8) in the case of the covenant defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Noteholders will not recognize income, gain or loss for Federal income tax
purposes as a result of such covenant defeasance and will be subject to
Federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such covenant defeasance had not
occurred; and
(9) the Company delivers to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that all conditions precedent to the
defeasance and discharge of the Notes as contemplated by this Article 8
have been complied with.
Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Notes at a future date in
accordance with Article Three.
SECTION 8.03. Application of Trust Money.
The Trustee shall hold in trust money or U.S. Government
Obligations deposited with it pursuant to this Article Eight. It shall apply the
deposited money and the money from U.S. Government Obligations through the
Paying Agent and in accordance with this Indenture to the payment of principal
of and interest on the Notes. Money and securities so held in trust are not
subject to Article 10.
SECTION 8.04. Repayment to Company.
The Trustee and the Paying Agent shall promptly turn over to
the Company, upon delivery of an Officers' Certificate stating that such payment
does not violate the terms of this Indenture, any excess money or securities
held by them at any time, subject to Section 7.07.
Subject to any applicable abandoned property law, the Trustee
and the Paying Agent shall pay to the Company upon its written request any money
held by them for the payment of principal or interest that remains unclaimed for
two years, and, thereafter, Noteholders entitled to the money must look to the
Company for payment as general creditors.
SECTION 8.05. Indemnity for Government Obligations.
The Company shall pay and shall indemnify the Trustee against
any tax, fee or other charge imposed on or assessed against deposited U.S.
Government Obligations or the principal and interest received on such U.S.
Government Obligations.
SECTION 8.06. Reinstatement.
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 the
Company under the Indenture will be revived and no such defeasance will be
deemed to have occurred.
If the Trustee or Paying Agent is unable to apply any U.S.
Legal Tender or U.S. Government Obligations in accordance with this Article
Eight by reason of any legal proceeding or by reason of any order or judgment of
any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, the Company's obligations under this Indenture and
the Notes shall be revived and reinstated as though no deposit had occurred
pursuant to this Article Eight until such time as the Trustee or Paying Agent is
permitted to apply all such U.S. Legal Tender or U.S. Government Obligations in
accordance with this Article 8; provided, however, that, if the Company has made
any payment of interest on or principal of any Notes because of the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the U.S.
Legal Tender or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders.
The Company, when authorized by a Board Resolution, and the
Trustee, together, may amend or supplement this Indenture or the Notes without
notice to or consent of any Holder:
(1) to cure any ambiguity, omission, defect or inconsistency; provided
that such amendment or supplement does not, in the reasonable opinion of
the Trustee, adversely affect the rights of any Holder in any material
respect;
(2) to comply with Article Five;
(3) 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);
(4) to comply with any requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA;
(5) to make any change that would provide any additional benefit or
rights to the Holders or that does not adversely affect the rights of any
Holder; or to surrender any right or power conferred upon the Company;
(6) to add Guarantees with respect to the Notes;
(7) to secure the Notes; or
(8) to make any other change that does not, in the reasonable opinion
of the Trustee, adversely affect in any material respect the rights of any
Holders hereunder;
provided that the Company has delivered to the Trustee an Opinion of Counsel
stating that such amendment or supplement complies with the provisions of this
Section 9.01.
After an amendment, supplement or waiver under this Section
9.01 becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amendment, supplement or
waiver.
SECTION 9.02. With Consent of Holders.
Subject to Section 6.07, the Company, when authorized by a
Board Resolution, and the Trustee, together, with the written consent of the
Holder or Holders of at least a majority in aggregate principal amount of the
then outstanding Notes, may amend or supplement this Indenture or the Notes,
without notice to any other Holders. Subject to Section 6.07, the Holder or
Holders of at least a majority in aggregate principal amount of the then
outstanding Notes may waive compliance by the Company with any provision of this
Indenture or the Notes without notice to any other Holder. No amendment,
supplement or waiver, including a waiver pursuant to Section 6.04, shall,
without the consent of each Holder of each Note affected thereby:
(1) reduce the 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 Notes;
(3) reduce the principal of or change or have the effect of changing
the Stated Maturity of any Note, or change the date on which any Notes may
be subject to repurchase, or reduce the premium payable upon the redemption
of any Note or change the time at which any Note may be redeemed in
accordance with Article 3, or alter the provisions (including definitions)
set forth in Section 4.16 in a manner adverse to the Holders;
(4) make any Notes payable in money or payable in a place other than
that stated in the Notes;
(5) make any change in Section 6.04 or Section 6.07 or the second
sentence of this Section;
(6) amend, modify, change or waive any provision of this Section 9.02;
(7) modify Articles Ten or Twelve or the definitions used in Articles
Ten or Twelve to adversely affect the Holders of the Notes; or
(8) make any change in any Subsidiary Guarantee that would adversely
affect the Holders.
It shall not be necessary for the consent of the Holders under this Section
to approve the particular form of any proposed amendment, supplement or waiver,
but it shall be sufficient if such consent approves the substance thereof.
After an amendment, supplement or waiver under this Section 9.02 becomes
effective, the Company shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such amendment, supplement or waiver.
SECTION 9.03. Effect on Senior Indebtedness.
No amendment of this Indenture shall adversely affect the
rights of any holder of Senior Indebtedness of the Company or any Restricted
Subsidiary under Article Ten or Twelve of this Indenture, without the consent of
such holder (or its Representative).
SECTION 9.04. Compliance with TIA.
If at the time of an amendment to the Indenture or the Notes,
this Indenture shall be qualified under the TIA, every amendment, waiver or
supplement of this Indenture or the Notes shall comply with the TIA as then in
effect.
SECTION 9.05. Revocation and Effect of Consents.
Until an amendment, waiver or supplement becomes effective, a
consent to it by a Holder is a continuing consent by the Holder and every
subsequent Holder of a Note or portion of a Note that evidences the same debt as
the consenting Holder's Note, even if notation of the consent is not made on any
Note. Subject to the following paragraph, any such Holder or subsequent Holder
may revoke the consent as to such Holder's Note or portion of such Note by
notice to the Trustee or the Company received before the date the amendment,
supplement or waiver becomes effective.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to consent to any
amendment, supplement or waiver, which record date shall be (i) the later of 30
days prior to the first solicitation of such consent or the date of the most
recent list of Holders furnished to the Trustee prior to such solicitation
pursuant to Section 2.05 above or (ii) such other date as the Company may
designate. If a record date is fixed, then notwithstanding the last sentence of
the immediately preceding paragraph, those Persons who were Holders at such
record date (or their duly designated proxies), and only those Persons, shall be
entitled to revoke any consent previously given, whether or not such Persons
continue to be Holders after such record date. No such consent shall be valid or
effective for more than 180 days after such record date.
After an amendment, supplement or waiver becomes effective, it
shall bind every Holder, unless it makes a change described in any of clauses
(1) through (8) of Section 9.02, in which case, the amendment, supplement or
waiver shall bind only each Holder of a Note who has consented to it and every
subsequent Holder of a Note or portion of a Note that evidences the same debt as
the consenting Holder's Note; provided that, without the consent of a Holder,
any such waiver shall not impair or affect the right of such Holder to receive
payment of principal of and interest on a Note, on or after the respective due
dates expressed in such Note, or to bring suit for the enforcement of any such
payment on or after such respective dates.
SECTION 9.06. Notation on or Exchange of Notes.
If an amendment, supplement or waiver changes the terms of a
Note, the Trustee may require the Holder of such Note to deliver it to the
Trustee. The Trustee may place an appropriate notation on the Note about the
changed terms and return it to the Holder. Alternatively, if the Company or the
Trustee so determines, the Company in exchange for the Note shall issue and the
Trustee shall authenticate a new Note that reflects the changed terms. Any such
notation or exchange shall be made at the sole cost and expense of the Company.
Failure to make the appropriate notation or to issue a new Note shall not affect
the validity of such amendment, supplement or waiver.
SECTION 9.07. Trustee To Sign Amendments, Etc.
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article Nine; provided that the Trustee may, but
shall not be obligated to, execute any such amendment, supplement or waiver
which affects the Trustee's own rights, duties or immunities under this
Indenture. The Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel and an Officers' Certificate
each stating that the execution of any amendment, supplement or waiver
authorized pursuant to this Article Nine is authorized or permitted by this
Indenture. Such Opinion of Counsel shall not be an expense of the Trustee.
SECTION 9.08. Payment for Consent.
Neither the Company nor any Affiliate of the Company shall,
directly or indirectly, pay or cause to be paid any consideration, whether by
way of interest, fee or otherwise, to any Holder for or as an inducement to any
consent, waiver or amendment of any of the terms or provisions of this Indenture
or the Notes, unless such consideration is offered to be paid to all Holders
that so consent, waive or agree to amend in the time frame set forth in
solicitation documents relating to such consent, waiver or agreement.
ARTICLE TEN
SUBORDINATION
SECTION 10.01 Notes Subordinated to Senior Indebtedness.
The Company covenants and agrees, and each Holder of the
Notes, by its acceptance thereof, likewise covenants and agrees, that all Notes
shall be issued subject to the provisions of this Article Ten; and each Person
holding any Note, whether upon original issue or upon transfer, assignment or
exchange thereof, accepts and agrees that the payment of all Obligations on the
Notes by the Company shall, to the extent and in the manner herein set forth, be
subordinated and junior in right of payment to the prior payment in full in cash
of all Senior Indebtedness of the Company; that the subordination is for the
benefit of, and shall be enforceable directly by, the holders of Senior
Indebtedness of the Company, and that each holder of Senior Indebtedness of the
Company whether now outstanding or hereafter created, incurred, assumed or
guaranteed shall be deemed to have acquired Senior Indebtedness of the Company
in reliance upon the covenants and provisions contained in this Indenture and
the Notes. Only Indebtedness of the Company that is Senior Indebtedness of the
Company will rank senior to the Notes in accordance with the provisions of the
Indenture. The Notes will in all respects rank pari passu with all other Senior
Subordinated Indebtedness of the Company. Unsecured Indebtedness is not deemed
to be subordinated or junior to secured Indebtedness merely because it is
unsecured. The terms of the subordination provisions described in this Article
Ten shall not apply to payments from money or the proceeds of U.S. Government
Obligations in trust by the Trustee for the payment of principal and interest on
the Notes pursuant to the provisions described in Article Eight unless such
payments were in violation of Designated Senior Indebtedness.
SECTION 10.02. No Payment on Notes in Certain Circumstances.
(a) The Company may not, and no other Person on behalf of the Company may
pay principal of, premium (if any) or interest on the Notes or make any other
payments with respect to the Notes or make any deposit pursuant to the
provisions described under Article Eight above and may not repurchase, redeem or
otherwise retire any Notes (collectively, "pay the Notes") if (i) any amount of
principal, interest or other payments due under any Designated Senior
Indebtedness of the Company has not been paid when due beyond any applicable
grace period whether at maturity, upon redemption, by declaration or otherwise
or (ii) any other default on Designated Senior Indebtedness of the Company
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 in writing and any such acceleration has been rescinded or such
Designated Senior Indebtedness has been paid in full, after which the Company
shall resume making any and all required payments in respect of the Notes,
including any missed payments. However, the Company may pay the Notes without
regard to the foregoing if the Company and the Trustee receive written notice
approving such payment from the Representative of the Designated Senior
Indebtedness of the Company with respect to which either of the events set forth
in clause (i) or (ii) of the immediately preceding sentence has occurred and is
continuing, after which the Company shall resume making any and all required
payments in respect of the Notes, including any missed payments. During the
continuance of any default (other than a default described in clause (i) or (ii)
of the second preceding sentence) with respect to any Designated Senior
Indebtedness of the Company pursuant to which the maturity thereof may be
accelerated either immediately without further notice (except such notice as may
be required to effect such acceleration) or upon the expiration of any
applicable grace periods, the Company may not pay the Notes for a period (a
"Payment Blockage Period") commencing upon the receipt by the Trustee (with a
copy to the Company) of written notice (a "Blockage Notice") of such default
from the Representative of the holders of such Designated Senior Indebtedness of
the Company specifying an election to effect a Payment Blockage Period and
ending 179 days thereafter (or earlier if such Payment Blockage Period is
terminated (A) by written notice to the Trustee and the Company from the Person
or Persons who gave such Blockage Notice (solely as evidenced by written notice
to the Trustee by the Representative of such Designated Senior Indebtedness
which notice shall be promptly delivered), (B) because the default giving rise
to such Blockage Notice is no longer continuing or (C) because such Designated
Senior Indebtedness of the Company has been repaid in full). Notwithstanding the
provisions described in the immediately preceding sentence (but subject to the
provisions contained in the first sentence of this paragraph), unless the
holders of such Designated Senior Indebtedness of the Company or the
Representative of such holders has accelerated the maturity of such Designated
Senior Indebtedness of the Company, the Company may resume payments on the Notes
after the end of such Payment Blockage Period, including any missed payments.
The Notes shall not be subject to more than one Payment Blockage Period in any
consecutive 360-day period, irrespective of the number of defaults with respect
to Designated Senior Indebtedness of the Company during such period. No default
which exists or was continuing on the date of commencement of any Blockage
Period with respect to the Designated Senior Indebtedness of the Company shall
be, or be made, the basis for the commencement of a second Blockage Period by
the Representative of such Designated Senior Indebtedness of the Company whether
or not within a period of 360 consecutive days unless such default shall have
been cured or waived in writing for a period of not less than 90 consecutive
days. (It being acknowledged that any subsequent action, or any breach of any
financial covenants for a period commencing after the date of commencement of
such Blockage Period that, in either case, would give rise to a default pursuant
to any provisions under which a default previously existed or was continuing
shall constitute a new default for this purpose.)
(b) If, notwithstanding the foregoing, any payment shall be received by the
Trustee or any Holder when such payment is prohibited by Section 10.02(a), such
payment shall be held in trust for the benefit of, and shall be paid over or
delivered to, the holders of such Senior Indebtedness of the Company (pro rata
to such holders on the basis of the respective amount of such Senior
Indebtedness of the Company held by such holders) or their respective
Representatives, as their respective interests may appear. The Trustee shall be
entitled to rely on information regarding amounts then due and owing on the
Senior Indebtedness of the Company, if any, received from the holders of Senior
Indebtedness of the Company (or their Representatives) or, if such information
is not received from such holders or their Representatives, from the Company and
only amounts included in the information provided to the Trustee shall be paid
to the holders of Senior Indebtedness of the Company.
The provisions of this Section shall not apply to any payment with respect
to which Section 10.03 would be applicable.
Nothing contained in this Article Ten shall limit the right of the Trustee
or the Holders of Notes to take any action to accelerate the maturity of the
Notes pursuant to Section 6.02 or to pursue any rights or remedies hereunder;
provided that all Senior Indebtedness of the Company thereafter due or declared
to be due shall first be paid in full in cash before the Holders are entitled to
receive any payment of any kind or character with respect to Obligations on the
Notes.
SECTION 10.03. Payment Over of Proceeds upon Dissolution, Etc.
(a) Upon any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, to creditors upon any
total or partial liquidation, dissolution, winding-up, reorganization,
assignment for the benefit of creditors or marshaling of assets of the Company
or in a bankruptcy, reorganization, insolvency, receivership or other similar
proceeding relating to the Company or its property, whether voluntary or
involuntary, all Obligations due or to become due upon all Senior Indebtedness
of the Company shall first be paid in full in cash, or such payment duly
provided for to the satisfaction of the holders of Senior Indebtedness of the
Company, before any payment or distribution of any kind or character is made on
account of any Obligations on the Notes, or for the acquisition of any of the
Notes for cash or property or otherwise. Upon any total or partial liquidation,
dissolution, winding-up, reorganization, assignment for the benefit of creditors
or marshaling of assets of the Company or in a bankruptcy, reorganization,
insolvency, receivership or other similar proceeding, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, to which the Holders of the Notes or the Trustee under
this Indenture would be entitled, except for the provisions hereof, shall be
paid by the Company or by any receiver, trustee in bankruptcy, liquidating
trustee, agent or other Person making such payment or distribution, or by the
Holders or by the Trustee under this Indenture if received by them, directly to
the holders of Senior Indebtedness of the Company (pro rata to such holders on
the basis of the respective amounts of Senior Indebtedness of the Company held
by such holders) or their respective Representatives, or to the trustee or
trustees under any indenture pursuant to which any of such Senior Indebtedness
of the Company may have been issued, as their respective interests may appear,
for application to the payment of Senior Indebtedness of the Company remaining
unpaid until all such Senior Indebtedness of the Company has been paid in full
in cash after giving effect to any concurrent payment, distribution or provision
therefor to or for the holders of Senior Indebtedness of the Company.
(b) To the extent any payment of Senior Indebtedness of the Company
(whether by or on behalf of the Company, as proceeds of security or enforcement
of any right of setoff or otherwise) is declared to be fraudulent or
preferential, set aside or required to be paid to any receiver, trustee in
bankruptcy, liquidating trustee, agent or other similar Person under any
bankruptcy, insolvency, receivership, fraudulent conveyance or similar law,
then, if such payment is recovered by, or paid over to, such receiver, trustee
in bankruptcy, liquidating trustee, agent or other similar Person, the Senior
Indebtedness of the Company or part thereof originally intended to be satisfied
shall be deemed to be reinstated and outstanding as if such payment had not
occurred.
(c) If, notwithstanding the foregoing, any payment or distribution of
assets of the Company of any kind or character, whether in cash, property or
securities, shall be received by any Holder or the Trustee when such payment or
distribution is prohibited by this Section 10.03, such payment or distribution
shall be held in trust for the benefit of, and shall be paid over or delivered
to, the holders of Senior Indebtedness of the Company (pro rata to such holders
on the basis of the respective amount of Senior Indebtedness of the Company held
by such holders) or their respective Representatives, or to the trustee or
trustees under any indenture pursuant to which any of such Senior Indebtedness
of the Company may have been issued, as their respective interests may appear,
for application to the payment of Senior Indebtedness of the Company remaining
unpaid until all such Senior Indebtedness of the Company has been paid in full
in cash, after giving effect to any concurrent payment, distribution or
provision therefor to or for the holders of such Senior Indebtedness of the
Company.
(d) The consolidation of the Company with, or the merger of the Company
with or into, another corporation or the liquidation or dissolution of the
Company following the conveyance or transfer of all or substantially all of its
assets, to another corporation upon the terms and conditions provided in Article
Five hereof and as long as permitted under the terms of the Senior Indebtedness
of the Company shall not be deemed a dissolution, winding-up, liquidation or
reorganization for the purposes of this Section if such other corporation shall,
as a part of such consolidation, merger, conveyance or transfer, assume the
Company's obligations hereunder in accordance with Article Five hereof.
SECTION 10.04. Payments May Be Paid Prior to Dissolution.
Nothing contained in this Article Ten or elsewhere in this
Indenture shall prevent (i) the Company, except under the conditions described
in Sections 10.02 and 10.03, from making payments at any time for the purpose of
making payments of principal of and interest on the Notes, or from depositing
with the Trustee any moneys for such payments, or (ii) in the absence of actual
knowledge by the Trustee that a given payment would be prohibited by Section
10.02 or 10.03, the application by the Trustee of any moneys deposited with it
for the purpose of making such payments of principal of, and interest on, the
Notes to the Holders entitled thereto unless at least two Business Days prior to
the date upon which such payment would otherwise become due and payable a Trust
Officer shall have actually received the written notice provided for in the
third sentence of Section 10.02(a) or in Section 10.07 (provided that,
notwithstanding the foregoing, such application shall otherwise be subject to
the provisions of the first sentence of Section 10.02(a), 10.02(b) and Section
10.03). The Company shall give prompt written notice to the Trustee of any
dissolution, winding-up, liquidation or reorganization of the Company.
SECTION 10.05. Subrogation.
Subject to the payment in full in cash of all Senior
Indebtedness of the Company, the Holders of the Notes shall be subrogated to the
rights of the holders of Senior Indebtedness of the Company to receive payments
or distributions of cash, property or securities of the Company applicable to
the Senior Indebtedness of the Company until the Notes shall be paid in full;
and, for the purposes of such subrogation, no such payments or distributions to
the holders of the Senior Indebtedness of the Company by or on behalf of the
Company or by or on behalf of the Holders by virtue of this Article Ten which
otherwise would have been made to the Holders shall, as between the Company and
the Holders of the Notes, be deemed to be a payment by the Company to or on
account of the Senior Indebtedness of the Company, it being understood that the
provisions of this Article Ten are and are intended solely for the purpose of
defining the relative rights of the Holders of the Notes, on the one hand, and
the holders of the Senior Indebtedness of the Company, on the other hand. If any
payment or distribution to which the Holders would otherwise have been entitled
but for the application of the provisions of this Article Ten, shall have been
applied, pursuant to the provisions of this Article Ten, to the payment of
amounts payable under Senior Indebtedness of the Company, then the Holders shall
be entitled to receive from the holders of such Senior Indebtedness any payments
or distributions received by such holders of Senior Indebtedness in excess of
the amount sufficient to pay all amounts payable under or in respect of such
Senior Indebtedness in full in cash.
SECTION 10.06. Obligations of the Company Unconditional
Nothing contained in this Article Ten or elsewhere in this
Indenture or in the Notes is intended to or shall impair, as among the Company,
its creditors other than the holders of Senior Indebtedness of the Company, and
the Holders, the obligation of the Company, which is absolute and unconditional,
to pay to the Holders the principal of and any interest on the Notes as and when
the same shall become due and payable in accordance with their terms, or is
intended to or shall affect the relative rights of the Holders and creditors of
the Company other than the holders of the Senior Indebtedness of the Company,
nor shall anything herein or therein prevent the Holder of any Note or the
Trustee on its behalf from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if any,
in respect of cash, property or securities of the Company received upon the
exercise of any such remedy.
SECTION 10.07. Notice to Trustee.
The Company shall give prompt written notice to the Trustee of
any fact known to the Company which would prohibit the making of any payment to
or by the Trustee in respect of the Notes pursuant to the provisions of this
Article Ten. Regardless of anything to the contrary contained in this Article
Ten or elsewhere in this Indenture, the Trustee shall not be charged with
knowledge of the existence of any default or event of default with respect to
any Senior Indebtedness of the Company or of any other facts which would
prohibit the making of any payment to or by the Trustee unless and until the
Trustee shall have received notice in writing from the Company, or from a holder
of Senior Indebtedness of the Company or a Representative therefor and, prior to
the receipt of any such written notice, the Trustee shall be entitled to assume
(in the absence of actual knowledge to the contrary) that no such facts exist.
If the Trustee determines in good faith that any evidence is
required with respect to the right of any Person as a holder of Senior
Indebtedness of the Company to participate in any payment or distribution
pursuant to this Article Ten, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amounts of
Senior Indebtedness of the Company held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and any other
facts pertinent to the rights of such Person under this Article Ten, and if such
evidence is not furnished the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.
SECTION 10.08. Reliance on Judicial Order or Certificate of Liquidating
Agent.
Upon any payment or distribution of assets of the Company
referred to in this Article Ten, the Trustee, subject to the provisions of
Article Seven hereof, and the Holders of the Notes shall be entitled to rely
upon any order or decree made by any court of competent jurisdiction in which
any insolvency, bankruptcy, receivership, dissolution, winding-up, liquidation,
reorganization or similar case or proceeding is pending so long as such order
gives effect to the provisions of this Article Ten, or upon a certificate of the
receiver, trustee in bankruptcy, liquidating trustee, receiver, assignee for the
benefit of creditors, agent or other person making such payment or distribution,
delivered to the Trustee or the Holders of the Notes, for the purpose of
ascertaining the persons entitled to participate in such payment or
distribution, the holders of the Senior Indebtedness of the Company and other
Indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article Ten.
SECTION 10.09. Trustee's Relation to Senior Indebtedness.
The Trustee and any agent of the Company or the Trustee shall
be entitled to all the rights set forth in this Article Ten with respect to any
Senior Indebtedness of the Company which may at any time be held by it in its
individual or any other capacity to the same extent as any other holder of
Senior Indebtedness of the Company and nothing in this Indenture shall deprive
the Trustee or any such agent of any of its rights as such holder.
With respect to the holders of Senior Indebtedness of the
Company, the Trustee undertakes to perform or to observe only such of its
covenants and obligations as are specifically set forth in this Article Ten, and
no implied covenants or obligations with respect to the holders of Senior
Indebtedness of the Company shall be read into this Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness of the Company.
Whenever a distribution is to be made or a notice given to
holders or owners of Senior Indebtedness of the Company, the distribution may be
made and the notice may be given to their Representative, if any.
SECTION 10.10. Subordination Rights Not Impaired by Acts or Omissions of
the Company or Holders of Senior Indebtedness.
No right of any present or future holders of any Senior
Indebtedness of the Company to enforce subordination as provided herein shall at
any time in any way be prejudiced or impaired by any act or failure to act on
the part of the Company or by any act or failure to act, in good faith, by any
such holder, or by any noncompliance by the Company with the terms of this
Indenture, regardless of any knowledge thereof which any such holder may have or
otherwise be charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness of the Company may, at any time
and from time to time, without the consent of or notice to the Trustee, without
incurring responsibility to the Trustee or the Holders of the Notes and without
impairing or releasing the subordination provided in this Article Ten or the
obligations hereunder of the Holders of the Notes to the holders of the Senior
Indebtedness of the Company, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, Senior Indebtedness of the Company, or otherwise amend or supplement in
any manner Senior Indebtedness of the Company, or any instrument evidencing the
same or any agreement under which Senior Indebtedness of the Company is
outstanding; (ii) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Indebtedness of the Company;
(iii) release any Person liable in any manner for the payment or collection of
Senior Indebtedness of the Company; and (iv) exercise or refrain from exercising
any rights against the Company and any other Person.
SECTION 10.11. Noteholders Authorize Trustee To Effectuate
Subordination of Notes.
Each Holder of Notes by its acceptance of them authorizes and
expressly directs the Trustee on its behalf to take such action as may be
necessary or appropriate to effectuate, as between the holders of Senior
Indebtedness of the Company and the Holders of Notes, the subordination provided
in this Article Ten, and appoints the Trustee its attorney-in-fact for such
purposes, including, in the event of any dissolution, winding-up, liquidation or
reorganization of the Company (whether in bankruptcy, insolvency, receivership,
reorganization or similar proceedings or upon an assignment for the benefit of
creditors or otherwise) tending towards liquidation of the business and assets
of the Company, the filing of a claim for the unpaid balance of its Notes and
accrued interest in the form required in those proceedings.
If the Trustee does not file a proper claim or proof of debt
in the form required in such proceeding prior to 30 days before the expiration
of the time to file such claim or claims, then the holders of the Senior
Indebtedness of the Company or their Representative are or is hereby authorized
to have the right to file and are or is hereby authorized to file an appropriate
claim for and on behalf of the Holders of said Notes. Nothing herein contained
shall be deemed to authorize the Trustee or the holders of Senior Indebtedness
of the Company or their Representative to authorize or consent to or accept or
adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of any Holder
thereof, or to authorize the Trustee or the holders of Senior Indebtedness of
the Company or their Representative to vote in respect of the claim of any
Holder in any such proceeding.
SECTION 10.12 This Article Ten Not To Prevent Events of Default.
The failure to make a payment on account of principal of or
interest on the Notes by reason of any provision of this Article Ten will not be
construed as preventing the occurrence of an Event of Default.
Nothing contained in this Article Ten shall limit the right of
the Trustee or the Holders to take any action or accelerate the maturity of the
Notes pursuant to Article Six or to pursue any rights or remedies hereunder or
under applicable law, subject to the rights, if any, under this Article Ten of
the holders from time to time, of Senior Indebtedness of the Company.
SECTION 10.13. Trustee's Compensation Not Prejudiced.
Nothing in this Article Ten will apply to amounts due to the
Trustee pursuant to other sections in this Indenture
SECTION 10.14. Acceleration of Payment of Notes.
If payment of the Notes is accelerated because of an Event of
Default, the Company or the Trustee shall promptly notify the holders of
Designated Senior Indebtedness of the Company or the Representative of such
holders of the acceleration (in the case of the Trustee, only to the extent of
its actual knowledge of such holders or the Representative of such holders).
ARTICLE ELEVEN
GUARANTEES
SECTION 11.01. Unconditional Guarantee.
Each of the Subsidiary Guarantors hereby unconditionally
jointly and severally guarantees (such guarantee to be referred to herein as the
"Subsidiary Guarantee") to each Holder of a Note authenticated and delivered by
the Trustee and to the Trustee and its successors and assigns, that: (i) the
principal of and interest on the Notes will be promptly paid in full when due,
subject to any applicable grace period, whether at maturity, by acceleration or
otherwise and interest on the overdue principal, if any, and interest on any
interest, to the extent lawful, of the Notes and all other obligations of the
Company to the Holders or the Trustee under the Indenture or the Notes will be
promptly paid in full or performed, all in accordance with the terms hereof and
thereof; and (ii) in case of any extension of time of payment or renewal of any
Notes or of any such other obligations, the same will be promptly paid in full
when due or performed in accordance with the terms of the extension or renewal,
subject to any applicable grace period, whether at stated maturity, by
acceleration or otherwise.
Each Subsidiary Guarantor further agrees that, as between such
Subsidiary Guarantor on one hand, and the Holders and the Trustee on the other
hand, (x) the maturity of the obligations guaranteed hereby may be accelerated
as provided in Article Six for the purposes of the Subsidiary Guaranty,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (y) in the
event of any acceleration of such obligations as provided in Article Six, such
obligations (whether or not due and payable) shall forthwith become due and
payable by such Subsidiary Guarantor for the purposes of the Subsidiary
Guaranty.
Each of the Subsidiary Guarantors hereby agrees that its
obligations hereunder shall be unconditional, irrespective of the validity,
regularity or enforceability of the Notes or this Indenture, the absence of any
action to enforce the same, any waiver or consent by any Holder of the Notes
with respect to any provisions hereof or thereof, the recovery of any judgment
against the Company, any action to enforce the same or any other circumstance
which might otherwise constitute a legal or equitable discharge or defense of a
guarantor. Each of the Subsidiary Guarantors hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Company, any right to require a proceeding first
against the Company, protest, notice and all demands whatsoever and covenants
that the Subsidiary Guarantee will not be discharged except by complete
performance of the obligations contained in the Notes, this Indenture and in the
Subsidiary Guarantee. If any Noteholder or the Trustee is required by any court
or otherwise to return to the Company, any Subsidiary Guarantor, or any
custodian, trustee, liquidator or other similar official acting in relation to
the Company or any Subsidiary Guarantor, any amount paid by the Company or such
Subsidiary Guarantor to the Trustee or such Noteholder, the Subsidiary
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect. Each of the Subsidiary Guarantors hereby agrees that, in the
event of default in the payment of principal (or premium, if any) or interest on
such Notes, whether at their Stated Maturity, by acceleration, called for
redemption, purchase or otherwise, legal proceedings may be instituted by the
Trustee on behalf of, or by, the Holder of such Notes, subject to the terms and
conditions set forth in this Indenture, directly against each of the Subsidiary
Guarantors to enforce the Subsidiary Guarantee without first proceeding against
the Company. Each Subsidiary Guarantor agrees that if, after the occurrence and
during the continuance of an Event of Default, the Trustee or any Holders are
prevented by applicable law from exercising their respective rights to
accelerate the maturity of the Notes, to collect interest on the Notes, or to
enforce any other right or remedy with respect to the Notes, the Subsidiary
Guarantors agree to pay to the Trustee for the account of the Holders, upon
demand therefor, the amount that would otherwise have been due and payable had
such rights and remedies been permitted to be exercised by the Trustee or any of
the Holders.
SECTION 11.02. Subordination of Subsidiary Guarantee.
The obligations of each Subsidiary Guarantor to the Holders of
the Notes and to the Trustee pursuant to the Subsidiary Guarantee and this
Indenture are expressly subordinate and subject in right of payment to the prior
payment in full of all Senior Indebtedness of such Subsidiary Guarantor, to the
extent and in the manner provided in Article Twelve.
SECTION 11.03. Severability.
In case any provision of the Subsidiary Guarantee shall be
invalid, illegal or unenforceable, the validity, legality, and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 11.04. Release of Subsidiary Guarantor from the Subsidiary Guarantee.
Upon the sale or disposition (whether by merger, stock
purchase, asset sale or otherwise) of a Subsidiary Guarantor (or all or
substantially all of its assets) to an entity which is not the Company or a
Subsidiary or Affiliate of the Company and which sale or disposition is
otherwise in compliance with the terms of this Indenture or pursuant to a
foreclosure on the capital stock of such Subsidiary Guarantor in accordance with
the Credit Facility, such Subsidiary Guarantor shall be deemed released from all
obligations under this Article Eleven without any further action required on the
part of the Trustee or any Holder.
The Trustee shall deliver an appropriate instrument evidencing
such release upon receipt of a request by the Company accompanied by an
Officers' Certificate certifying as to the compliance with this Section 11.04.
SECTION 11.05. Limitation on Amount Guaranteed; Contribution by Subsidiary
Guarantors.
(a) Anything contained in this Indenture or the Subsidiary Guaranty to the
contrary notwithstanding, if any Fraudulent Transfer Law (as hereinafter
defined) is determined by a court of competent jurisdiction to be applicable to
the obligations of any Subsidiary Guarantor under the Subsidiary Guarantee, such
obligations of such Subsidiary Guarantor under the Subsidiary Guarantee shall be
limited to a maximum aggregate amount equal to the largest amount that would not
render its obligations under the Subsidiary Guarantee subject to avoidance as a
fraudulent transfer or conveyance under Section 548 of Title 11 of the United
States Code or any applicable provisions of comparable state law (collectively,
the "Fraudulent Transfer Laws"), in each case after giving effect to all other
liabilities of such Subsidiary Guarantor, contingent or otherwise, that are
relevant under the Fraudulent Transfer Laws (specifically excluding, however,
any liabilities of such Subsidiary Guarantor (x) in respect of intercompany
Indebtedness to Company or other Affiliates of Company to the extent that such
Indebtedness would be discharged in an amount equal to the amount paid by such
Subsidiary Guarantor under the Subsidiary Guaranty and (y) under any Guarantee
of Subordinated Indebtedness which Guarantee contains a limitation as to maximum
amount similar to that set forth in this subsection 11.05(a), pursuant to which
the liability of such Subsidiary Guarantor under the Subsidiary Guarantee is
included in the liabilities taken into account in determining such maximum
amount) and after giving effect as assets to the value (as determined under the
applicable provisions of the Fraudulent Transfer Laws) of any rights to
subrogation, reimbursement, indemnification or contribution of such Subsidiary
Guarantor pursuant to applicable law or pursuant to the terms of any agreement
(including without limitation any such right of contribution under subsection
11.05(b)).
(b) The Subsidiary Guarantors together desire to allocate among themselves
in a fair and equitable manner, their obligations arising under the Subsidiary
Guarantee. Accordingly, if any payment or distribution is made on any date by
any Subsidiary Guarantor under the Subsidiary Guarantee (a "Funding Subsidiary
Guarantor") that exceeds its Fair Share (as defined below) as of such date, that
Funding Subsidiary Guarantor shall be entitled to a contribution from each of
the other Subsidiary Guarantors in the amount of such other Subsidiary
Guarantor's Fair Share Shortfall (as defined below) as of such date, with the
result that all such contributions will cause each Subsidiary Guarantor's
Aggregate Payments (as defined below) to equal its Fair Share as of such date.
"Fair Share" means, with respect to a Subsidiary Guarantor as of any date of
determination, an amount equal to (i) the ratio of (x) the Adjusted Maximum
Amount (as defined below) with respect to such Subsidiary Guarantor to (y) the
aggregate of the Adjusted Maximum Amounts with respect to all Subsidiary
Guarantors, multiplied by (ii) the aggregate amount paid or distributed on or
before such date by all Funding Subsidiary Guarantors under the Subsidiary
Guarantee in respect of the obligations guarantied. "Fair Share Shortfall"
means, with respect to a Subsidiary Guarantor as of any date of determination,
the excess, if any, of the Fair Share of such Subsidiary Guarantor over the
Aggregate Payments of such Subsidiary Guarantor. "Adjusted Maximum Amount"
means, with respect to a Subsidiary Guarantor as of any date of determination,
the maximum aggregate amount of the obligations of such Subsidiary Guarantor
under the Subsidiary Guarantee, determined as of such date in accordance with
subsection 11.05(a); provided that, solely for purposes of calculating the
Adjusted Maximum Amount with respect to any Subsidiary Guarantor for purposes of
this subsection 11.05(b), any assets or liabilities of such Subsidiary Guarantor
arising by virtue of any rights to subrogation, reimbursement or indemnification
or any rights to or obligations of contribution hereunder shall not be
considered as assets or liabilities of such Subsidiary Guarantor. "Aggregate
Payments" means, with respect to a Subsidiary Guarantor as of any date of
determination, an amount equal to (i) the aggregate amount of all payments and
distributions made on or before such date by such Subsidiary Guarantor in
respect of the Subsidiary Guarantee (including, without limitation, in respect
of this subsection 11.05(b) minus (ii) the aggregate amount of all payments
received on or before such date by such Subsidiary Guarantor from the other
Subsidiary Guarantors as contributions under this subsection 11.05(b)). The
amounts payable as contributions hereunder shall be determined as of the date on
which the related payment or distribution is made by the applicable Funding
Subsidiary Guarantor. The allocation among Subsidiary Guarantors of their
obligations as set forth in this subsection 11.05(b) shall not be construed in
any way to limit the liability of any Subsidiary Guarantor under this Indenture
or under the Subsidiary Guaranty.
SECTION 11.06. Waiver of Subrogation.
Until payment in full is made of the Notes and all other
obligations of the Company to the Holders or the Trustee hereunder and under the
Notes, each Subsidiary Guarantor hereby irrevocably waives any claim or other
rights which it may now or hereafter acquire against the Company that arise from
the existence, payment, performance or enforcement of such Subsidiary
Guarantor's obligations under the Subsidiary Guarantee and this Indenture,
including without limitation, any right of subrogation, reimbursement,
exoneration, indemnification, and any right to participate in any claim or
remedy of any Holder of Notes against the Company, whether or not such claim,
remedy or right arises in equity, or under contract, statute or common law,
including, without limitation, the right to take or receive from the Company,
directly or indirectly, in cash or other property or by set-off or any other
manner, payment or security on account of such claim or other rights. If any
amount shall be paid to any Subsidiary Guarantor in violation of the preceding
sentence and the Notes shall not have been paid in full, such amount shall have
been deemed to have been paid to such Subsidiary Guarantor for the benefit of,
and held in trust for the benefit of, the Holders of the Notes, and shall
forthwith be paid to the Trustee for the benefit of such Holders to be credited
and applied upon the Notes, whether matured or unmatured, in accordance with the
terms of this Indenture. Each Subsidiary Guarantor acknowledges that it will
receive direct and indirect benefits from the financing arrangements
contemplated by this Indenture and that the waiver set forth in this Section
11.06 is knowingly made in contemplation of such benefits.
SECTION 11.07. Execution of Subsidiary Guarantee.
To evidence its guarantee to the Noteholders set forth in this
Article Eleven, each Subsidiary Guarantor hereby agrees to execute the
Subsidiary Guarantee in substantially the form included in Exhibits A and
Exhibit B, which shall be endorsed on such Note ordered to be authenticated and
delivered by the Trustee. Each Subsidiary Guarantor hereby agrees that the
Subsidiary Guarantee set forth in this Article Eleven shall remain in full force
and effect notwithstanding any failure to endorse on each Note a notation of the
Subsidiary Guarantee. The Subsidiary Guarantee shall be signed on behalf of each
Subsidiary Guarantor by one Officer of such Subsidiary Guarantor (each of whom
shall, in each case, have been duly authorized by all requisite corporate
actions) prior to the authentication of the Note on which it is endorsed, and
the delivery of such Note by the Trustee, after the authentication thereof
hereunder, shall constitute due delivery of the Subsidiary Guarantee on behalf
of such Subsidiary Guarantor. Such signatures upon the Subsidiary Guarantee may
be by manual or facsimile signature of such officers and may be imprinted or
otherwise reproduced on the Subsidiary Guarantee, and in case any such Officer
who shall have signed the Subsidiary Guarantee shall cease to be such officer
before the Note on which the Subsidiary Guarantee is endorsed shall have been
authenticated and delivered by the Trustee or disposed of by the Company, such
Note nevertheless may be authenticated and delivered or disposed of as though
the person who signed the Subsidiary Guarantee had not ceased to be such Officer
of such Subsidiary Guarantor.
SECTION 11.08. Waiver of Stay, Extension or Usury Laws.
Each Subsidiary Guarantor jointly and severally covenants (to
the extent that it may lawfully do so) that it will not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law or any usury law or other law that would prohibit or
forgive such Subsidiary Guarantor from performing the Subsidiary Guarantee as
contemplated herein, wherever enacted, now or at any time hereafter in force, or
which may affect the covenants or the performance of this Indenture; and (to the
extent that it may lawfully do so) each Subsidiary Guarantor hereby expressly
waives all benefit or advantage of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
SECTION 11.09. Effectiveness of Subsidiary Guarantee.
The Subsidiary Guarantee shall remain in full force and effect
and continue to be effective should any petition be filed by or against the
Company for liquidation or reorganization, should the Company become insolvent
or make an assignment for the benefit of creditors or should a receiver or
trustee be appointed for all or any significant part of the Company's assets,
and shall, to the fullest extent permitted by law, continue to be effective or
be reinstated, as the case may be, if at any time payment and performance of the
Notes, is, pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by any obligee on the Notes, whether as a
"voidable preference," "fraudulent transfer," or otherwise, all as though such a
payment or performance had not been made. If any payments, or any part thereof,
is rescinded, reduced, restored or returned, the Notes shall, to the fullest
extent permitted by law, be reinstituted and deemed reduced only by such amount
paid and not so rescinded, reduced, restored or returned.
ARTICLE TWELVE
SUBORDINATION OF GUARANTEE OBLIGATIONS
SECTION 12.01. Subsidiary Guarantee Obligations Subordinated to Senior
Indebtedness of Subsidiary Guarantors.
Each Subsidiary Guarantor covenants and agrees, and each
Holder of the Notes, by its acceptance thereof, likewise covenants and agrees,
that any payment of obligations by each Subsidiary Guarantor in respect of the
Subsidiary Guarantee (its "Subsidiary Guarantee Obligations") shall be made
subject to the provisions of this Article Twelve, and each Person holding any
Note, whether upon original issue or upon transfer, assignment or exchange
thereof, accepts and agrees that the payment of all such Subsidiary Guarantor's
Subsidiary Guarantee Obligations shall, to the extent and in the manner herein
set forth, be subordinated and junior in right of payment to the prior payment
in full in cash of all Obligations in respect of such Subsidiary Guarantor's
Senior Indebtedness, including principal, premium (if any) or interest
(including post-petition interest) thereon, that the subordination is for the
benefit of, and shall be enforceable directly by, the holders of such Subsidiary
Guarantor's Senior Indebtedness, and that each holder of any Subsidiary
Guarantor's Senior Indebtedness whether now outstanding or hereafter created,
incurred, assumed or guaranteed shall be deemed to have acquired such Subsidiary
Guarantor's Senior Indebtedness in reliance upon the covenants and provisions
contained in this Indenture and the Notes. Only Indebtedness of a Subsidiary
Guarantor that is Senior Indebtedness of such Subsidiary Guarantor will rank
senior to the Subsidiary Guarantee of such Subsidiary Guarantor in accordance
with the provisions of the Indenture. A Subsidiary Guarantee will in all
respects rank pari passu with all other Senior Subordinated Indebtedness of the
Subsidiary Guarantor to which it relates. Unsecured Indebtedness is not deemed
to be subordinated or junior to secured Indebtedness merely because it is
unsecured.
SECTION 12.02. No Payment on Notes in Certain Circumstances.
(a) No Subsidiary Guarantor may, and no other Person on behalf of such
Subsidiary Guarantor may, make any payment with respect to the Subsidiary
Guarantee or make any deposit pursuant to Article Eight above (collectively,
"pay the Subsidiary Guarantee") if (i) any amount of principal, interest or
other payments due under any Designated Senior Indebtedness of such Subsidiary
Guarantor or the Company has not been paid when due beyond any applicable grace
period whether at maturity, upon redemption, by declaration or otherwise or (ii)
any other default on Designated Senior Indebtedness of such Subsidiary Guarantor
or the Company 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 in writing and any such acceleration has been rescinded or
such Designated Senior Indebtedness has been paid in full, after which such
Subsidiary Guarantor shall resume making any and all required payments in
respect of the Subsidiary Guaranty, including any missed payments. However, a
Subsidiary Guarantor may pay the Subsidiary Guarantee without regard to the
foregoing if such Subsidiary Guarantor and the Trustee receive written notice
approving such payment from the Representative of the Designated Senior
Indebtedness guaranteed by such Subsidiary Guarantor with respect to which
either of the events set forth in clause (i) or (ii) of the immediately
preceding sentence has occurred and is continuing, after which such Subsidiary
Guarantor shall resume making any and all required payments in respect of the
Subsidiary Guaranty, including any missed payments. During the continuance of
any default (other than a default described in clause (i) or (ii) of the second
preceding sentence) with respect to any Designated Senior Indebtedness of a
Subsidiary Guarantor or the Company pursuant to which the maturity thereof may
be accelerated either immediately without further notice (except such notice as
may be required to effect such acceleration) or upon the expiration of any
applicable grace periods, such Subsidiary Guarantor may not pay the Subsidiary
Guarantee for a period (a "Payment Blockage Period") commencing upon the receipt
by the Trustee (with a copy to such Subsidiary Guarantor) of written notice (a
"Blockage Notice") of such default from the Representative of the holders of
such Designated Senior Indebtedness of such Subsidiary Guarantor or the Company
specifying an election to effect a Payment Blockage Period and ending 179 days
thereafter (or earlier if such Payment Blockage Period is terminated (A) by
written notice to the Trustee and such Subsidiary Guarantor from the Person or
Persons who gave such Blockage Notice (solely as evidenced by written notice to
the Trustee by the Representative of such Designated Senior Indebtedness which
notice shall be promptly delivered), (B) because the default giving rise to such
Blockage Notice is no longer continuing or (C) because such Designated Senior
Indebtedness of such Subsidiary Guarantor and the related Designated Senior
Indebtedness of the Company has been repaid in full). Notwithstanding the
provisions described in the immediately preceding sentence (but subject to the
provisions contained in the first sentence of this paragraph), unless the
holders of such Designated Senior Indebtedness of such Subsidiary Guarantor or
the Company or the Representative of such holders has accelerated the maturity
of such Designated Senior Indebtedness of such Subsidiary Guarantor or the
Company, such Subsidiary Guarantor may resume payments on the Subsidiary
Guarantee after the end of such Payment Blockage Period including any missed
payments. The Subsidiary Guarantee shall not be subject to more than one Payment
Blockage Period in any consecutive 360-day period, irrespective of the number of
defaults with respect to Designated Senior Indebtedness guaranteed by such
Subsidiary Guarantor during such period. No default which exists or was
continuing on the date of commencement of any Blockage Period with respect to
the Designated Senior Indebtedness of a Subsidiary Guarantor or the Company
under this Section 12.02 shall be, or shall be made, the basis for the
commencement of a second Blockage Period by the Representative of such
Designated Senior Indebtedness of such Subsidiary Guarantor whether or not
within a period of 360 consecutive days unless such default shall have been
cured or waived in writing for a period of not less than 90 consecutive days (it
being acknowledged that any subsequent action, or any breach of any financial
covenants for a period commencing after the date of commencement of such
Blockage Period that, in either case, would give rise to a default pursuant to
any provisions under which a default previously existed or was continuing shall
constitute a new default for this purpose).
(b) If, notwithstanding the foregoing, any payment shall be received by the
Trustee or any Holder when such payment is prohibited by Section 12.02(a), such
payment shall be held in trust for the benefit of, and shall be paid over or
delivered to, the holders of such Subsidiary Guarantor's Senior Indebtedness
(pro rata to such holders on the basis of the respective amount of such
Subsidiary Guarantor's Senior Indebtedness held by such holders) or their
respective Representatives, as their respective interests may appear. The
Trustee shall be entitled to rely on information regarding amounts then due and
owing on such Subsidiary Guarantor's Senior Indebtedness, if any, received from
the holders of such Subsidiary Guarantor's Senior Indebtedness (or their
Representatives) or, if such information is not received from such holders or
their Representatives, from such Subsidiary Guarantor and only amounts included
in the information provided to the Trustee shall be paid to the holders of such
Subsidiary Guarantor's Senior Indebtedness.
The provisions of this Section shall not apply to any payment with respect
to which Section 12.03 would be applicable.
Nothing contained in this Article Twelve shall limit the right of the
Trustee or the Holders of Notes to take any action to accelerate the maturity of
the Notes pursuant to Section 6.02 or to pursue any rights or remedies
hereunder; provided that all Senior Indebtedness of the Company thereafter due
or declared to be due shall first be paid in full in cash or before the Holders
are entitled to receive any payment of any kind or character with respect to
Obligations on the Notes.
SECTION 12.03. Payment Over of Proceeds upon Dissolution, Etc.
(a) Upon any payment or distribution of assets of any Subsidiary Guarantor
of any kind or character, whether in cash, property or securities, to creditors
upon any total or partial liquidation, dissolution, winding-up, reorganization,
assignment for the benefit of creditors or marshaling of assets of such
Subsidiary Guarantor or in a bankruptcy, reorganization, insolvency,
receivership or other similar proceeding relating to such Subsidiary Guarantor
or its property, whether voluntary or involuntary, all Obligations due or to
become due upon all of such Subsidiary Guarantor's Senior Indebtedness shall
first be paid in full in cash, or such payment duly provided for to the
satisfaction of the holders of such Subsidiary Guarantor's Senior Indebtedness,
before any payment or distribution of any kind or character is made on account
of any Obligations with respect to the Subsidiary Guarantee of such Subsidiary
Guarantor, or for the acquisition of such Subsidiary Guarantee for cash or
property or otherwise. Upon any such total or partial liquidation, dissolution,
winding-up, reorganization, assignment for the benefit of creditors or
marshaling of assets of such Subsidiary Guarantor or in a bankruptcy,
reorganization, insolvency, receivership or other similar proceeding, any
payment or distribution of assets of such Subsidiary Guarantor of any kind or
character, whether in cash, property or securities, to which the Holders of the
Notes or the Trustee under this Indenture would be entitled, except for the
provisions hereof, shall be paid by such Subsidiary Guarantor or by any
receiver, trustee in bankruptcy, liquidating trustee, agent or other Person
making such payment or distribution, or by the Holders or by the Trustee under
this Indenture if received by them, directly to the holders of such Subsidiary
Guarantor's Senior Indebtedness (pro rata to such holders on the basis of the
respective amounts of such Subsidiary Guarantor's Senior Indebtedness held by
such holders) or their respective Representatives, or to the trustee or trustees
under any indenture pursuant to which any of such Subsidiary Guarantor's Senior
Indebtedness may have been issued, as their respective interests may appear, for
application to the payment of such Subsidiary Guarantor's Senior Indebtedness
remaining unpaid until all such Subsidiary Guarantor's Senior Indebtedness has
been paid in full in cash after giving effect to any concurrent payment,
distribution or provision therefor to or for the holders of such Subsidiary
Guarantor's Senior Indebtedness.
(b) To the extent any payment of any Subsidiary Guarantor's Senior
Indebtedness (whether by or on behalf of such Subsidiary Guarantor, as proceeds
of security or enforcement of any right of setoff or otherwise) is declared to
be fraudulent or preferential, set aside or required to be paid to any receiver,
trustee in bankruptcy, liquidating trustee, agent or other similar Person under
any bankruptcy, insolvency, receivership, fraudulent conveyance or similar law,
then, if such payment is recovered by, or paid over to, such receiver, trustee
in bankruptcy, liquidating trustee, agent or other similar Person, such
Subsidiary Guarantor's Senior Indebtedness or part thereof originally intended
to be satisfied shall be deemed to be reinstated and outstanding as if such
payment had not occurred.
(c) If, notwithstanding the foregoing, any payment or distribution of
assets of any Subsidiary Guarantor of any kind or character, whether in cash,
property or securities, shall be received by any Holder or the Trustee when such
payment or distribution is prohibited by this Section 12.03, such payment or
distribution shall be held in trust for the benefit of, and shall be paid over
or delivered to, the holders of such Subsidiary Guarantor's Senior Indebtedness
(pro rata to such holders on the basis of the respective amount of such
Subsidiary Guarantor's Senior Indebtedness held by such holders) or their
respective Representatives, or to the trustee or trustees under any indenture
pursuant to which any of such Subsidiary Guarantor's Senior Indebtedness may
have been issued, as their respective interests may appear, for application to
the payment of such Subsidiary Guarantor's Senior Indebtedness remaining unpaid
until all such Subsidiary Guarantor's Senior Indebtedness has been paid in full
in cash, after giving effect to any concurrent payment, distribution or
provision therefor to or for the holders of such Subsidiary Guarantor's Senior
Indebtedness.
(d) The consolidation of any Subsidiary Guarantor with, or the merger of
any Subsidiary Guarantor with or into, another corporation or the liquidation or
dissolution of any Subsidiary Guarantor following the conveyance or transfer of
all or substantially all of its assets, to another corporation upon the terms
and conditions provided in Article Five hereof and as long as permitted under
the terms of such Subsidiary Guarantor's Senior Indebtedness shall not be deemed
a dissolution, winding-up, liquidation or reorganization for the purposes of
this Section if such other corporation shall, as a part of such consolidation,
merger, conveyance or transfer, assume such Subsidiary Guarantor's obligations
hereunder in accordance with Article Five hereof.
SECTION 12.04. Payments May Be Paid Prior to Dissolution.
Nothing contained in this Article Twelve or elsewhere in this
Indenture shall prevent (i) any Subsidiary Guarantor, except under the
conditions described in Sections 12.02 and 12.03, from making payments at any
time for the purpose of making payments in respect of this Subsidiary Guarantee,
or from depositing with the Trustee any moneys for such payments, or (ii) in the
absence of actual knowledge by the Trustee that a given payment would be
prohibited by Section 12.02 or 12.03, the application by the Trustee of any
moneys deposited with it for the purpose of making such payments to the Holders
entitled thereto unless at least two Business Days prior to the date upon which
such payment would otherwise become due and payable a Trust Officer shall have
actually received the written notice provided for in the third sentence of
Section 12.02(a) or in Section 12.07 (provided that, notwithstanding the
foregoing, such application shall otherwise be subject to the provisions of the
first sentence of Section 12.02(a), 12.02(b) and Section 12.03). Each Subsidiary
Guarantor shall give prompt written notice to the Trustee of any dissolution,
winding-up, liquidation or reorganization of such Subsidiary Guarantor.
SECTION 12.05. Subrogation.
Subject to the payment in full in cash of all Subsidiary
Guarantor Senior Indebtedness, the Holders of the Obligations of any Subsidiary
Guarantor shall be subrogated to the rights of the holders of such Subsidiary
Guarantor's Senior Indebtedness to receive payments or distributions of cash,
property or securities of such Subsidiary Guarantor applicable to such
Subsidiary Guarantor's Senior Indebtedness until the Obligations of such
Subsidiary Guarantor under the Subsidiary Guarantee shall be paid in full; and,
for the purposes of such subrogation, no such payments or distributions to the
holders of such Subsidiary Guarantor's Senior Indebtedness by or on behalf of
such Subsidiary Guarantor or by or on behalf of the Holders by virtue of this
Article Twelve which otherwise would have been made to the Holders shall, as
between such Subsidiary Guarantor and the Holders of such Subsidiary Guarantor's
Obligations, be deemed to be a payment by such Subsidiary Guarantor to or on
account of such Subsidiary Guarantor's Senior Indebtedness, it being understood
that the provisions of this Article Twelve are and are intended solely for the
purpose of defining the relative rights of the Holders of such Subsidiary
Guarantor's Obligations, on the one hand, and the holders of such Subsidiary
Guarantor's Senior Indebtedness, on the other hand.
If any payment or distribution to which the Holders would
otherwise have been entitled but for the application of the provisions of this
Article Twelve shall have been applied, pursuant to the provisions of this
Article Twelve, to the payment of amounts payable under Senior Indebtedness of
any Subsidiary Guarantor, then the Holders shall be entitled to receive from the
holders of such Senior Indebtedness any payments or distributions received by
such holders of Senior Indebtedness in excess of the amount sufficient to pay
all amounts payable under or in respect of such Senior Indebtedness in full in
cash.
SECTION 12.06. Obligations of Subsidiary Guarantor Unconditional.
Nothing contained in this Article Twelve or elsewhere in this
Indenture or in the Notes is intended to or shall impair, as among the
Subsidiary Guarantors, their respective creditors other than the holders of such
Subsidiary Guarantor's Senior Indebtedness, and the Holders, the obligation of
such Subsidiary Guarantor, which is absolute and unconditional, to pay to the
Holders the Subsidiary Guarantee Obligations as and when the same shall become
due and payable in accordance with their terms, or is intended to or shall
affect the relative rights of the Holders and creditors of such Subsidiary
Guarantor other than the holders of such Subsidiary Guarantor's Senior
Indebtedness, nor shall anything herein or therein prevent the Holder of any
Note or the Trustee on its behalf from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, subject to the
rights, if any, in respect of cash, property or securities of such Subsidiary
Guarantor received upon the exercise of any such remedy.
SECTION 12.07. Notice to Trustee.
Each Subsidiary Guarantor shall give prompt written notice to
the Trustee of any fact known to such Subsidiary Guarantor which would prohibit
the making of any payment to or by the Trustee in respect of the Subsidiary
Guarantee or the Notes pursuant to the provisions of this Article Twelve.
Regardless of anything to the contrary contained in this Article Twelve or
elsewhere in this Indenture, the Trustee shall not be charged with knowledge of
the existence of any default or event of default with respect to any Subsidiary
Guarantor's Senior Indebtedness or of any other facts which would prohibit the
making of any payment to or by the Trustee unless and until the Trustee shall
have received notice in writing from such Subsidiary Guarantor or from a holder
of such Subsidiary Guarantor's Senior Indebtedness or a Representative therefor,
and, prior to the receipt of any such written notice, the Trustee shall be
entitled to assume (in the absence of actual knowledge to the contrary) that no
such facts exist.
If the Trustee determines in good faith that any evidence is
required with respect to the right of any Person as a holder of such Subsidiary
Guarantor's Senior Indebtedness to participate in any payment or distribution
pursuant to this Article Twelve, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amounts of such
Subsidiary Guarantor's Senior Indebtedness held by such Person, the extent to
which such Person is entitled to participate in such payment or distribution and
any other facts pertinent to the rights of such Person under this Article
Twelve, and if such evidence is not furnished the Trustee may defer any payment
to such Person pending judicial determination as to the right of such Person to
receive such payment.
SECTION 12.08. Reliance on Judicial Order or Certificate of Liquidating
Agent.
Upon any payment or distribution of assets of any Subsidiary
Guarantor referred to in this Article Twelve, the Trustee, subject to the
provisions of Article Seven hereof, and the Holders of the Notes shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction in which any insolvency, bankruptcy, receivership, dissolution,
winding-up, liquidation, reorganization or similar case or proceeding is pending
so long as such order gives effect to the provisions of this Article Twelve, or
upon a certificate of the receiver, trustee in bankruptcy, liquidating trustee,
receiver, assignee for the benefit of creditors, agent or other person making
such payment or distribution, delivered to the Trustee or the Holders of the
Notes, for the purpose of ascertaining the persons entitled to participate in
such payment or distribution, the holders of each Subsidiary Guarantor's Senior
Indebtedness and other Indebtedness of any Subsidiary Guarantor, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article Twelve.
SECTION 12.09 Trustee's Relation to Subsidiary Guarantor's Senior
Indebtedness.
The Trustee, any agent of the Trustee and any agent of any
Subsidiary Guarantor shall be entitled to all the rights set forth in this
Article Twelve with respect to the respective Subsidiary Guarantor's Senior
Indebtedness which may at any time be held by it in its individual or any other
capacity to the same extent as any other holder of the respective Subsidiary
Guarantor's Senior Indebtedness and nothing in this Indenture shall deprive the
Trustee or any such agent of any of its rights as such holder.
With respect to the holders of the respective Subsidiary
Guarantor's Senior Indebtedness, the Trustee undertakes to perform or to observe
only such of its covenants and obligations as are specifically set forth in this
Article Twelve, and no implied covenants or obligations with respect to the
holders of the respective Subsidiary Guarantor's Senior Indebtedness shall be
read into this Indenture against the Trustee. The Trustee shall not be deemed to
owe any fiduciary duty to the holders of any Subsidiary Guarantor's Senior
Indebtedness.
Whenever a distribution is to be made or a notice given to
holders or owners of any Subsidiary Guarantor's Senior Indebtedness, the
distribution may be made and the notice may be given to their Representative, if
any.
SECTION 12.10. Subordination Rights Not Impaired by Acts or Omissions of
Subsidiary Guarantors or Holders of Subsidiary Guarantors'
Senior Indebtedness.
No right of any present or future holders of any Subsidiary
Guarantor's Senior Indebtedness to enforce subordination as provided herein
shall at any time in any way be prejudiced or impaired by any act or failure to
act on the part of such Subsidiary Guarantor or by any act or failure to act, in
good faith, by any such holder, or by any noncompliance by such Subsidiary
Guarantor with the terms of this Indenture, regardless of any knowledge thereof
which any such holder may have or otherwise be charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of any Subsidiary Guarantor's Senior Indebtedness may, at
any time and from time to time, without the consent of or notice to the Trustee,
without incurring responsibility to the Trustee or the Holders of the Notes and
without impairing or releasing the subordination provided in this Article Twelve
or the obligations hereunder of the Holders of the Notes to the holders of such
Subsidiary Guarantor's Senior Indebtedness, do any one or more of the following:
(i) change the manner, place or terms of payment or extend the time of payment
of, or renew or alter, such Subsidiary Guarantor's Senior Indebtedness, or
otherwise amend or supplement in any manner such Subsidiary Guarantor's Senior
Indebtedness, or any instrument evidencing the same or any agreement under which
such Subsidiary Guarantor's Senior Indebtedness is outstanding; (ii) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing such Subsidiary Guarantor's Senior Indebtedness; (iii)
release any Person liable in any manner for the payment or collection of such
Subsidiary Guarantor's Senior Indebtedness; and (iv) exercise or refrain from
exercising any rights against such Subsidiary Guarantor and any other Person.
SECTION 12.11. Noteholders Authorize Trustee To Effectuate Subordination
of Notes.
Each Holder of Notes by its acceptance of them authorizes and
expressly directs the Trustee on its behalf to take such action as may be
necessary or appropriate to effectuate, as between the holders of each
Subsidiary Guarantor's Senior Indebtedness and the Holders of Notes, the
subordination provided in this Article Twelve, and appoints the Trustee its
attorney-in-fact for such purposes, including, in the event of any dissolution,
winding-up, liquidation or reorganization of such Subsidiary Guarantor (whether
in bankruptcy, insolvency, receivership, reorganization or similar proceedings
or upon an assignment for the benefit of creditors or otherwise) tending towards
liquidation of the business and assets of such Subsidiary Guarantor, the filing
of a claim for the unpaid balance of its Notes and accrued interest in the form
required in those proceedings.
If the Trustee does not file a proper claim or proof of debt
in the form required in such proceeding prior to 30 days before the expiration
of the time to file such claim or claims, then the holders of each Subsidiary
Guarantor's Senior Indebtedness or their Representative are or is hereby
authorized to have the right to file and are or is hereby authorized to file an
appropriate claim for and on behalf of the Holders of said Notes. Nothing herein
contained shall be deemed to authorize the Trustee or the holders of any
Subsidiary Guarantor's Senior Indebtedness or their respective Representatives
to authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee or the holders of
any Subsidiary Guarantor's Senior Indebtedness or their Representatives to vote
in respect of the claim of any Holder in any such proceeding.
SECTION 12.12. This Article Twelve Not To Prevent Events of Default.
The failure to make a payment on account of Obligations of any
Subsidiary Guarantor by reason of any provision of this Article Twelve will not
be construed as preventing the occurrence of an Event of Default. Nothing
contained in this Article Twelve shall limit the right of the Trustee or the
Holders to take any action or accelerate the maturity of the Notes pursuant to
Article Six or to pursue any rights or remedies hereunder or under applicable
law, subject to the rights, if any, under this Article Twelve of the holders
from time to time, of Senior Indebtedness of any Subsidiary Guarantor.
ARTICLE THIRTEEN
MISCELLANEOUS
SECTION 13.01. TIA Controls.
If any provision of this Indenture limits, qualifies, or
conflicts with another provision which is required to be included in this
Indenture by the TIA, the required provision shall control.
SECTION 13.02. Notices.
Any notices or other communications required or permitted
hereunder shall be in writing, and shall be sufficiently given if made by hand
delivery, by commercial courier service, by telex, by telecopier or registered
or certified mail, postage prepaid, return receipt requested, addressed as
follows:
if to the Company or any Subsidiary Guarantor:
Terex Corporation
500 Post Road East
Westport, CT 06880
Facsimile No.: (203) 227-1647
Telephone: (203) 222-7170
Attn: General Counsel
with a copy to:
Robinson, Silverman, Pearce Aronsohn
& Berman LLP
1290 Avenue of the Americas
New York, NY 10104
Facsimile No.: (212) 541-1360
Telephone: (212) 541-2000
Attn: Stuart A. Gordon, Esq.
if to the Trustee:
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
Facsimile No.: (212) 852-1625
Telephone No.: (212) 852-1000
Attn: Corporate Trust Department
if to the Senior Credit Facility Representative:
Credit Suisse First Boston
Eleven Madison Avenue - 20th Floor
New York, NY 10010
Facsimile No.: (212) 325-8304
Telephone No.: (212) 325-2000
Attn: Syndication/Agency Department
Each of the Company, the Subsidiary Guarantors, the Trustee,
and the Senior Credit Facility Representative by written notice to each other
such Person may designate additional or different addresses for notices to such
Person. Any notice or communication to the Company, the Subsidiary Guarantors,
the Trustee and the Senior Credit Facility Representative shall be deemed to
have been given or made as of the date so delivered if personally delivered;
when receipt is confirmed if delivered by commercial courier service; when
receipt is acknowledged, if faxed; and five (5) calendar days after mailing if
sent by registered or certified mail, postage prepaid (except that a notice of
change of address shall not be deemed to have been given until actually received
by the addressee).
Any notice or communication mailed to a Holder shall be mailed
to him by first class mail or other equivalent means at his address as it
appears on the registration books of the Registrar and shall be sufficiently
given to him if so mailed within the time prescribed.
Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to other Holders. If
a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
SECTION 13.03. Communications by Holders with Other Holders.
Holders may communicate pursuant to the TIA section 312(b)
with other Holders with respect to their rights under this Indenture or the
Notes. The Company, the Subsidiary Guarantors, the Trustee, the Registrar and
any other Person shall have the protection of the TIA section 312(c).
SECTION 13.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee
to take or refrain from taking any action under this Indenture, the Company
shall furnish to the Trustee:
(1) an Officers' Certificate, in form and substance satisfactory to
the Trustee, stating that, in the opinion of the signers, all conditions
precedent to be performed by the Company, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent to be performed by the Company, if
any, provided for in this Indenture relating to the proposed action have
been complied with.
SECTION 13.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture, other than the Officers'
Certificate required by Section 4.06, shall include:
(1) a statement that the Person making such certificate or opinion has
read such covenant or condition and the definitions relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has made such
examination or investigation as is reasonably necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(4) a statement as to whether or not, in the opinion of each such
Person, such condition or covenant has been complied with;
provided, that with respect to matters of fact, an Opinion of
Counsel may rely on an Officers' Certificate or a certificate of an appropriate
public official.
SECTION 13.06. Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules in accordance with the
Trustee's customary practices for action by or at a meeting of Holders. The
Paying Agent or Registrar may make reasonable rules for its functions.
SECTION 13.07. Legal Holidays.
A "Legal Holiday" used with respect to a particular place of
payment is a Saturday, a Sunday or a day on which banking institutions in New
York, New York or at such place of payment are not required to be open. If a
payment date is a Legal Holiday at such place, payment may be made at such place
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue for the intervening period.
SECTION 13.08. Governing Law.
THIS INDENTURE AND THE NOTES (AND THE SUBSIDIARY GUARANTEES
RELATING THERETO) SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE
STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS. EACH OF THE
PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE
OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
INDENTURE.
SECTION 13.09 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Company or any of its Subsidiaries or of any other
Person. Any such indenture, loan or debt agreement may not be used to interpret
this Indenture.
SECTION 13.10. No Recourse Against Others.
No past, present or future director, officer, employee,
stockholder or incorporator, as such, of the Company, any Subsidiary Guarantor
or of the Trustee shall have any liability for any obligations of the Company
under the Notes or this Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. Each Holder by accepting a Note
waives and releases all such liability. Such waiver and release are part of the
consideration for the issuance of the Notes.
SECTION 13.11. Successors.
All agreements of the Company and the Subsidiary Guarantors in
this Indenture and the Notes shall bind their respective successors. All
agreements of the Trustee in this Indenture shall bind its successors.
SECTION 13.12. Duplicate Originals.
All parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together shall represent
the same agreement.
SECTION 13.13. Severability.
In case any one or more of the provisions in this Indenture or
in the Notes shall be held invalid, illegal or unenforceable, in any respect for
any reason, the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions shall not in any way be
affected or impaired thereby, it being intended that all of the provisions
hereof shall be enforceable to the full extent permitted by law.
The Table of Contents, Cross-Reference Table and Headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part of this Indenture and shall
in no way modify or restrict any of the terms of provisions hereof.
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, all as of the date first written above.
Issuer:
TEREX CORPORATION
By:/s/ Eric I Cohen
-------------------
Name: Eric I Cohen
Title: Senior Vice President
Subsidiary Guarantors:
KOEHRING CRANES, INC.
By:/s/ Eric I Cohen
-------------------
Name: Eric I Cohen
Title: Vice President
PAYHAULER CORP.
By:/s/ Eric I Cohen
-------------------
Name: Eric I Cohen
Title: Vice President
PPM CRANES, INC.
By:/s/ Eric I Cohen
-------------------
Name: Eric I Cohen
Title: Vice President
<PAGE>
TEREX AERIALS, INC.
By:/s/ Eric I Cohen
-------------------
Name: Eric I Cohen
Title: Vice President
TEREX CRANES, INC.
By:/s/ Eric I Cohen
-------------------
Name: Eric I Cohen
Title: Vice President
TEREX MINING EQUIPMENT, INC.
By:/s/ Eric I Cohen
-------------------
Name: Eric I Cohen
Title: Vice President
TEREX-RO CORPORATION
By:/s/ Eric I Cohen
-------------------
Name: Eric I Cohen
Title: Vice President
TEREX-TELELECT, INC.
By:/s/ Eric I Cohen
-------------------
Name: Eric I Cohen
Title: Vice President
<PAGE>
THE AMERICAN CRANE CORPORATION
By:/s/ Eric I Cohen
-------------------
Name: Eric I Cohen
Title: Vice President
O&K ORENSTEIN & KOPPEL, INC.
By:/s/ Eric I Cohen
-------------------
Name: Eric I Cohen
Title: Vice President
<PAGE>
Trustee:
UNITED STATES TRUST COMPANY OF
NEW YORK, as Trustee
By:/s/ John Guiliano
-------------------
Name: John Guiliano
Title: Vice President
<PAGE>
XII
RULE 144A/REGULATION S APPENDIX
FOR OFFERINGS TO QUALIFIED INSTITUTIONAL BUYERS PURSUANT
TO RULE 144A AND TO CERTAIN PERSONS IN OFFSHORE
TRANSACTIONS IN RELIANCE ON REGULATION S
PROVISIONS RELATING TO INITIAL NOTES,
PRIVATE EXCHANGE NOTES
AND EXCHANGE NOTES
1. Definitions.
1.1 Definitions.
For the purposes of this Appendix the following terms shall
have the meanings indicated below, provided that all capitalized terms used but
not defined shall have the meanings given such terms in the Indenture:
"Depositary" means The Depository Trust Company, its nominees
and their respective successors and assigns.
"Exchange Notes" means (i) the 8-7/8% Series D Senior
Subordinated Notes due 2008 to be issued pursuant to this Indenture in
connection with a Registered Exchange Offer pursuant to a Registration Rights
Agreement and (ii) Additional Notes, if any, issued in the form of 8-7/8% Series
D or other series of Senior Subordinated Notes due 2008 pursuant to a
registration statement filed with the SEC under the Securities Act.
"Initial Purchasers" means (i) with respect to the Initial
Notes issued on March 9, 1999, Credit Suisse First Boston Corporation and CIBC
Oppenheimer Corp. and (ii) with respect to each issuance of Additional Notes,
the Persons purchasing such Additional Notes under the related Purchase
Agreement.
"Initial Notes" means (i) $100,000,000 principal amount of
8-7/8% Series C Senior Subordinated Notes due 2008, issued on March 9, 1999 and
(ii) Additional Notes, if any, issued in the form of 8-7/8% Series C or other
series of Senior Subordinated Notes due 2008 in a transaction exempt from the
registration requirements of the Securities Act.
"Private Exchange" means the offer by the Company, pursuant to
a Registration Rights Agreement, to the Initial Purchasers to issue and deliver
to each Initial Purchaser, in exchange for the Initial Notes held by the Initial
Purchaser as part of its initial distribution, a like aggregate principal amount
of Private Exchange Notes.
"Private Exchange Notes" means the 8-7/8% Senior Subordinated
Private Exchange Notes due 2008, if any, to be issued pursuant to this Indenture
to the Initial Purchasers in a Private Exchange.
"Purchase Agreement" means (i) with respect to the Initial
Notes issued on March 9, 1999, the Purchase Agreement dated March 4, 1999, among
the Company, the Subsidiary Guarantors and the initial purchasers named therein
and (ii) with respect to each issuance of Additional Notes, the purchase
agreement or underwriting agreement among the Company, the Subsidiary Guarantors
and the Persons purchasing such Additional Notes.
"QIB" means a "qualified institutional buyer" as defined in
Rule 144A.
"Registered Exchange Offer" means the offer by the Company,
pursuant to a Registration Rights Agreement, to certain Holders of Initial
Notes, to issue and deliver to such Holders, in exchange for such Initial Notes,
a like aggregate principal amount of Exchange Notes registered under the
Securities Act.
"Registration Rights Agreement" means (i) with respect to the
Initial Notes issued on March 9, 1999, the Registration Rights Agreement dated
March 9, 1999 among the Company, the Subsidiary Guarantors and the initial
purchasers named therein, and (ii) with respect to each issuance of Additional
Notes issued in a transaction exempt from the registration requirements of the
Securities Act, the registration rights agreement, if any, among the Company,
the guarantors thereunder and the Persons purchasing such Additional Notes under
the related Purchase Agreement.
"Securities" means the Initial Notes, the Exchange Notes and
the Private Exchange Notes, treated as a single class.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Custodian" means the custodian with respect to a
Global Security (as appointed by the Depositary), or any successor person
thereto and shall initially be the Trustee.
"Shelf Registration Statement" means the shelf registration
statement issued by the Company, in connection with the offer and sale of
Initial Notes, Exchange Notes or Private Exchange Notes, pursuant to a
Registration Rights Agreement.
"Transfer Restricted Securities" means Securities that bear or
are required to bear the legend set forth in Section 2.3(b) hereto.
<PAGE>
1.2 Other Definitions
Term Defined in Section:
"Agent Members".................................... 2.1(b)
"Global Security".................................. 2.1(a)
"Regulation S"..................................... 2.1(a)
"Rule 144A"........................................ 2.1(a)
2. The Securities.
2.1 Form and Dating.
On March 9, 1999, $100,000,000 of the Initial Notes are being
offered and sold by the Company pursuant to the Purchase Agreement.
(a) Global Securities. Initial Notes offered and sold to a QIB in reliance
on Rule 144A under the Securities Act ("Rule 144A") or in reliance on Regulation
S under the Securities Act ("Regulation S"), in each case as provided in the
Purchase Agreement, and Additional Notes, if any, issued in the form of Exchange
Notes, shall be issued initially in the form of one or more permanent global
Securities in definitive, fully registered form without interest coupons with
the global securities legend and restricted securities legend set forth in
Exhibit 1 hereto (each, a "Global Security"), which shall be deposited on behalf
of the purchasers of the Initial Notes or Additional Notes, as applicable,
represented thereby with the Trustee as custodian for the Depositary (or with
such other custodian as the Depositary may direct), and registered in the name
of the Depositary or a nominee of the Depositary, duly executed by the Company
and authenticated by the Trustee as hereinafter provided. The aggregate
principal amount of the Global Securities may from time to time be increased or
decreased by adjustments made on the records of the Trustee and the Depositary
or its nominee as hereinafter provided.
(b) Book-Entry Provisions. This Section 2.1(b) shall apply only to a Global
Security deposited with or on behalf of the Depositary.
The Company shall execute and the Trustee shall, in accordance with this
Section 2.1(b), authenticate and deliver initially one or more Global Securities
that (a) shall be registered in the name of the Depositary for such Global
Security or Global Securities or the nominee of such Depositary and (b) shall be
delivered by the Trustee to such Depositary or pursuant to such Depositary's
instructions or held by the Trustee as custodian for the Depositary.
Members of, or participants in, the Depositary ("Agent Members") shall have
no rights under this Indenture with respect to any Global Security held on their
behalf by the Depositary or by the Trustee as the custodian of the Depositary or
under such Global Security, and the Depositary may be treated by the Company,
the Trustee and any agent of the Company or the Trustee as the absolute owner of
such Global Security for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Trustee or any agent of the
Company or the Trustee from giving effect to any written certification, proxy or
other authorization furnished by the Depositary or impair, as between the
Depositary and its Agent Members, the operation of customary practices of such
Depositary governing the exercise of the rights of a holder of a beneficial
interest in any Global Security.
(c) Certificated Securities. Except as provided in this Section 2.1 or
Section 2.3 or 2.4 of this Appendix, owners of beneficial interests in Global
Securities will not be entitled to receive physical delivery of certificated
Securities.
2.2 Authentication. The Trustee shall authenticate and deliver: (1) On
March 9, 1999, $100.0 million 8-7/8% Series C Senior Subordinated Notes due
2008, (2) any Additional Notes for original issue in an aggregate principal
amount specified in the written order of the Company pursuant to Section 2.02 of
the Indenture and (3) Exchange Notes or Private Exchange Notes for issue in a
Registered Exchange Offer or a Private Exchange, respectively, in exchange for a
like principal amount of Initial Notes, in each case upon a written order of the
Company in the form of an Officers' Certificate. Such order shall specify the
amount of the Securities to be authenticated and the date on which the original
issue of Notes is to be authenticated and whether the Securities are to be
Initial Notes, Exchange Notes or Private Exchange Notes and in the case of an
issuance of Additional Notes pursuant to Section 2.15 of the Indenture, shall
certify, among other things that such issuance will not be prohibited by Section
4.13 of the Indenture.
2.3 Transfer and Exchange.
(a) Transfer and Exchange of Global Securities.
(i) The transfer and exchange of Global Securities or
beneficial interests therein shall be effected through the Depositary,
in accordance with this Indenture (including applicable restrictions on
transfer set forth herein, if any) and the procedures of the Depositary
therefor. A transferor of a beneficial interest in a Global Security
shall deliver to the Registrar a written order given in accordance with
the Depositary's procedures containing information regarding the
participant account of the Depositary to be credited with a beneficial
interest in the Global Security. The Registrar shall, in accordance
with such instructions instruct the Depositary to credit to the account
of the Person specified in such instructions a beneficial interest in
the Global Security and to debit the account of the Person making the
transfer the beneficial interest in the Global Security being
transferred.
(ii) Notwithstanding any other provisions of this Appendix
(other than the provisions set forth in Section 2.4 of this Appendix),
a Global Security may not be transferred as a whole except by the
Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or by
the Depositary or any such nominee to a successor Depositary or a
nominee of such successor Depositary.
(iii) In the event that a Global Security is exchanged for
Securities in definitive registered form pursuant to Section 2.4 of
this Appendix or Section 2.10 of this Indenture, prior to the
consummation of a Registered Exchange Offer or the effectiveness of a
Shelf Registration Statement with respect to such Securities, such
Securities may be exchanged only in accordance with such procedures as
are substantially consistent with the provisions of this Section 2.3
(including the certification requirements set forth on the reverse of
the Initial Notes intended to ensure that such transfers comply with
Rule 144A or Regulation S, as the case may be) and such other
procedures as may from time to time be adopted by the Company.
(b) Legend.
(i) Except as permitted by the following paragraphs (ii),
(iii) and (iv), each Security certificate evidencing Initial Notes and
Private Exchange Notes (and all Securities issued in exchange therefor
or in substitution thereof, other than Exchange Notes) shall bear a
legend in substantially the following form:
"THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES
SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THIS NOTE
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT
THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM
THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY
RULE 144A THEREUNDER.
THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE ISSUER
THAT (A) THIS NOTE MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY (i) INSIDE THE UNITED STATES TO A PERSON WHOM
THE SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (ii)
OUTSIDE THE UNITED STATES IN A TRANSACTION IN ACCORDANCE WITH
RULE 904 UNDER THE SECURITIES ACT, (iii) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED
BY RULE 144 THEREUNDER (IF AVAILABLE) OR (iv) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN
EACH OF CASES (i) THROUGH (iv) IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES,
AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE
RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE."
(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by a
Global Security) pursuant to Rule 144 under the Securities Act, the
Registrar shall permit the Holder thereof to exchange such Transfer
Restricted Security for a certificated Security that does not bear the
legend set forth above and rescind any restriction on the transfer of
such Transfer Restricted Security, if the Holder certifies in writing
to the Registrar that its request for such exchange was made in
reliance on Rule 144 (such certification to be in the form set forth on
the reverse of the Security).
(iii) After a transfer of any Initial Notes or Private
Exchange Notes during the period of the effectiveness of a Shelf
Registration Statement with respect to such Initial Notes or Private
Exchange Notes, as the case may be, all requirements pertaining to
legends on such Initial Notes or such Private Exchange Notes will cease
to apply, but the requirements requiring such Initial Notes or such
Private Exchange Notes issued to certain Holders be issued in global
form will continue to apply, and Initial Notes or Private Exchange
Notes in global form without legends will be available to the
transferee of the Holder of such Initial Notes or Private Exchange
Notes upon exchange of such transferring Holder's Initial Notes or
Private Exchange Notes or directions to transfer such Holder's interest
in the Global Security, as applicable.
(iv) Upon the consummation of a Registered Exchange Offer with
respect to the Initial Notes pursuant to which Holders of such Initial
Notes are offered Exchange Notes in exchange for their Initial Notes,
all requirements pertaining to such Initial Notes that Initial Notes
issued to certain Holders be issued in global form will continue to
apply and Initial Notes in global form with the restricted securities
legend set forth in Exhibit 1 hereto will be available to Holders of
such Initial Notes that do not exchange their Initial Notes, and
Exchange Notes in global form without the restricted securities legend
set forth in Exhibit 1 hereto will be available to Holders that
exchange such Initial Notes in such Registered Exchange Offer.
(v) Upon the consummation of a Private Exchange with respect
to the Initial Notes pursuant to which Holders of such Initial Notes
are offered Private Exchange Notes in exchange for their Initial Notes,
all requirements pertaining to such Initial Notes that Initial Notes
issued to certain Holders be issued in global form will still apply,
and Private Exchange Notes in global form with the restricted
securities legend set forth in Exhibit 1 hereto will be available to
Holders that exchange such Initial Notes in such Private Exchange.
(c) Cancellation or Adjustment of Global Security. At such
time as all beneficial interests in a Global Security have either been exchanged
for certificated Securities, redeemed, repurchased or canceled, such Global
Security shall be returned to the Depositary for cancellation or retained and
canceled by the Trustee. At any time prior to such cancellation, if any
beneficial interest in a Global Security is exchanged for certificated
Securities, redeemed, repurchased or canceled, the principal amount of
Securities represented by such Global Security shall be reduced and an
adjustment shall be made on the books and records of the Trustee (if it is then
the Securities Custodian for such Global Security) with respect to such Global
Security, by the Trustee or the Securities Custodian, to reflect such reduction.
(d) Obligations with Respect to Transfers and Exchanges of
Securities.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate certificated
Securities and Global Securities at the Registrar's or any
co-registrar's request.
(ii) No service charge shall be made for any registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to cover any transfer tax, assessments, or similar
governmental charge payable in connection therewith (other than any
such transfer taxes, assessments or similar governmental charge payable
upon exchange or transfer pursuant to Sections 2.10, 3.06, 4.16, 4.17
and Section 9.06 of this Indenture).
(iii) The Registrar or any co-registrar shall not be required
to register the transfer of or exchange of (a) any certificated
Security selected for redemption in whole or in part pursuant to
Article III of this Indenture, except the unredeemed portion of any
certificated Security being redeemed in part, or (b) any Security for a
period beginning 15 Business Days before the mailing of a notice of an
offer to repurchase or redeem Securities or 15 Business Days before an
Interest Payment Date.
(iv) Prior to the due presentation for registration of
transfer of any Security, the Company, the Trustee, the Paying Agent,
the Registrar or any co-registrar may deem and treat the person in
whose name a Security is registered as the absolute owner of such
Security for the purpose of receiving payment of principal of and
interest on such Security and for all other purposes whatsoever,
whether or not such Security is overdue, and none of the Company, the
Trustee, the Paying Agent, the Registrar or any co-registrar shall be
affected by notice to the contrary.
(v) All Securities issued upon any transfer or exchange
pursuant to the terms of this Indenture shall evidence the same debt
and shall be entitled to the same benefits under this Indenture as the
Securities surrendered upon such transfer or exchange.
(e) No Obligation of the Trustee.
(i) The Trustee shall have no responsibility or obligation to
any beneficial owner of a Global Security, a member of, or a
participant in the Depositary or other Person with respect to the
accuracy of the records of the Depositary or its nominee or of any
participant or member thereof, with respect to any ownership interest
in the Securities or with respect to the delivery to any participant,
member, beneficial owner or other Person (other than the Depositary) of
any notice (including any notice of redemption) or the payment of any
amount, under or with respect to such Securities. All notices and
communications to be given to the Holders and all payments to be made
to Holders under the Securities shall be given or made only to or upon
the order of the registered Holders (which shall be the Depositary or
its nominee in the case of a Global Security). The rights of beneficial
owners in any Global Security shall be exercised only through the
Depositary subject to the applicable rules and procedures of the
Depositary. The Trustee may rely and shall be fully protected in
relying upon information furnished by the Depositary with respect to
its members, participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer
imposed under this Indenture or under applicable law with respect to
any transfer of any interest in any Security (including any transfers
between or among Depositary participants, members or beneficial owners
in any Global Security) other than to require delivery of such
certificates and other documentation or evidence as are expressly
required by, and to do so if and when expressly required by, the terms
of this Indenture, and to examine the same to determine substantial
compliance as to form with the express requirements hereof.
2.4 Certificated Securities,
(a) A Global Security deposited with the Depositary or with
the Trustee as custodian for the Depositary pursuant to Section 2.1 shall be
transferred to the beneficial owners thereof in the form of certificated
Securities in an aggregate principal amount equal to the principal amount of
such Global Security, in exchange for such Global Security, only if such
transfer complies with Section 2.3 and (i) the Depositary notifies the Company
that it is unwilling or unable to continue as Depositary for such Global
Security or if at any time such Depositary ceases to be a "clearing agency"
registered under the Exchange Act and a successor depositary is not appointed by
the Company within 90 days of such notice, or (ii) an Event of Default has
occurred and is continuing or (iii) the Company, in its sole discretion,
notifies the Trustee in writing that it elects to cause the issuance of
certificated Securities under this Indenture.
(b) Any Global Security that is transferable to the beneficial
owners thereof pursuant to this Section shall be surrendered by the Depositary
to the Trustee, to be so transferred, in whole or from time to time in part,
without charge, and the Trustee shall authenticate and deliver, upon such
transfer of each portion of such Global Security, an equal aggregate principal
amount of certificated Securities of authorized denominations. Any portion of a
Global Security transferred pursuant to this Section shall be executed,
authenticated and delivered only in denominations of $1,000 and any integral
multiple thereof and registered in such names as the Depositary shall direct.
Any certificated Initial Note delivered in exchange for an interest in the
Global Security shall, except as otherwise provided by Section 2.3(b), bear the
restricted securities legend set forth in Exhibit 1 hereto.
(c) Subject to the provisions of Section 2.4(b), the
registered Holder of a Global Security may grant proxies and otherwise authorize
any Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Indenture or the Securities.
(d) In the event of the occurrence of either of the events
specified in Section 2.4(a) above, the Company will promptly make available to
the Trustee a reasonable supply of certificated Securities in definitive, fully
registered form without interest coupons.
<PAGE>
EXHIBIT 1
TO RULE 144A/REGULATION S
APPENDIX
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN,
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN THIS INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[Restricted Securities Legend]
THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE
"SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF
THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF
THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE ISSUER THAT (A) THIS NOTE
MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (i) INSIDE THE
UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (ii) OUTSIDE THE UNITED
STATES IN A TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(iii) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (iv) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (i) THROUGH
(iv) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED
TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS
REFERRED TO IN (A) ABOVE.
<PAGE>
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
<TABLE>
<CAPTION>
The following increases or decreases in this Global Security
have been made:
<S> <C> <C> <C> <C>
Amount of decrease Amount of increase Principal Amount of Signature of
in Principal Amount in Principal Amount this Global Security authorized officer
of this Global of this Global following such decrease of Trustee or
Date of Exchange Security Security or increase Securities Custodian
</TABLE>
<PAGE>
EXHIBIT A
FORM OF INITIAL NOTE
CUSIP No.:
TEREX CORPORATION
8-7/8% [SERIES C] SENIOR SUBORDINATED NOTE DUE 2008
No. $
TEREX CORPORATION, a Delaware corporation (the "Company,"
which term includes any successor entity), for value received promises to pay to
_______ or registered assigns, the principal sum of ______ Dollars, on April 1,
2008.
Interest Payment Dates: April 1 and October 1
Record Dates: March 15 and September 15
Reference is made to the further provisions of this Note
contained herein, which will for all purposes have the same effect as if set
forth at this place.
[This Note was issued on ____ with original issue discount
("OID") for federal income tax purposes. The total OID on this
Note, stated as a percentage of the original principal amount,
is __%; the yield to maturity of this Note, based on
semiannual compounding, is __%.]
IN WITNESS WHEREOF, the Company has caused this Note to be
signed manually or by facsimile by its duly authorized officers and a facsimile
of its corporate seal to be affixed hereto or imprinted hereon.
TEREX CORPORATION
By:________________________
Name:
Title:
By:________________________
Name:
Dated: ____________ Title:
<PAGE>
Certificate of Authentication
This is one of the 8-7/8% [Series C] Senior Subordinated Notes due 2008 referred
to in the within-mentioned Indenture.
UNITED STATES TRUST COMPANY
OF NEW YORK,
as Trustee
Dated: ____________ By:_____________________________
Authorized Signatory
<PAGE>
(REVERSE OF SECURITY)
8-7/8% [SERIES C] SENIOR SUBORDINATED NOTE DUE 2008
1. Interest. TEREX CORPORATION, a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at the
rate per annum shown above; [provided, however, that if a Registration Default
(as defined in the Registration Rights Agreement) occurs, additional interest
will accrue on this Note at a rate of 0.50% per annum, from and including the
date on which any such Registration Default shall occur to but excluding the
date on which all Registration Defaults have been cured, calculated on the
principal amount of this Note as of the date on which such interest is payable.
Such interest is payable in addition to any other interest payable from time to
time with respect to this Note. The Trustee will not be deemed to have notice of
a Registration Default until it shall have received actual notice of such
Registration Default.]1 Interest on the Notes will accrue from the most recent
date on which interest has been paid or, if no interest has been paid, from
[March __, 1999] [date of issuance of Additional Notes]. The Company will pay
interest semi-annually in arrears on each Interest Payment Date, commencing
[April 1, 1999] [first interest payment date after issuance of Additional
Notes]. Interest will be computed on the basis of a 360-day year of twelve
30-day months.
The Company shall pay interest on overdue principal at the
rate borne by the Notes plus 1% per annum and on overdue installments of
interest (without regard to any applicable grace periods) at such higher rate to
the extent lawful.
2. Method of Payment. The Company shall pay interest on the
Notes (except defaulted interest) to the Persons who are the registered Holders
at the close of business on the Record Date immediately preceding the Interest
Payment Date even if the Notes are cancelled on registration of transfer or
registration of exchange after such Record Date. Holders must surrender Notes to
a Paying Agent to collect principal payments. The Company shall pay principal
and interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts ("U.S. Legal Tender"). However,
the Company may pay principal and interest by its check payable in such U.S.
Legal Tender. The Company may deliver any such interest payment to the Paying
Agent or to a Holder at the Holder's registered address.
3. Paying Agent and Registrar. Initially, United States Trust
Company of New York, a New York banking corporation (the "Trustee"), will act as
Paying Agent and Registrar. The Company may change any Paying Agent, Registrar
or co-Registrar without notice to the Holders.
__________________________
1 To be included in the Initial Notes issued on the Issue Date and, to the
extent applicable, any Additional Notes issued in the form of Initial Notes.
<PAGE>
4. Indenture and Subsidiary Guarantee. The Company issued the
Notes under an Indenture, dated as of March 9, 1999 (the "Indenture"), among the
Company, the Subsidiary Guarantors named therein and the Trustee. This Note is
one of a duly authorized issue of Initial Notes of the Company designated as its
8-7/8% [Series C] Senior Subordinated Notes due 2008. The Company shall be
entitled to issue Additional Notes pursuant to Section 2.15 of the Indenture;
provided, that such issuance is not prohibited by Section 4.13 of the Indenture.
The Initial Notes issued on March 9, 1999, any Additional Notes, and any Private
Exchange Notes and Exchange Notes issued pursuant to the Indenture are treated
as a single class of securities under the Indenture. Capitalized terms herein
are used as defined in the Indenture unless otherwise defined herein. The terms
of the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code "
77aaa-77bbbb) (the "TIA"), as in effect on the date of the Indenture.
Notwithstanding anything to the contrary herein, the Notes are subject to all
such terms, and Holders of Notes are referred to the Indenture and the TIA Act
for a statement of them. The Notes are general unsecured obligations of the
Company. Payment on each Note is guaranteed on a senior subordinated basis by
the Subsidiary Guarantors pursuant to Article Eleven of the Indenture. To the
extent of any conflict between the terms of the Notes and the Indenture, the
applicable terms of the Indenture shall govern.
5. Subordination. The Notes are subordinated in right of
payment, in the manner and to the extent set forth in the Indenture, to the
prior payment in full in cash of all Senior Indebtedness of the Company, whether
outstanding on the date of the Indenture or thereafter created, incurred,
assumed or guaranteed. Each Holder by his acceptance hereof agrees to be bound
by such provisions and authorizes and expressly directs the Trustee, on his
behalf, to take such action as may be necessary or appropriate to effectuate the
subordination provided for in the Indenture and appoints the Trustee his
attorney-in-fact for such purposes.
6. Redemption.
(a) Optional Redemption. Except as set forth in the following
paragraph, the Notes will not be redeemable at the option of the Company prior
to April 1, 2003. Thereafter, the Notes will be redeemable, at the Company's
option, in whole or in part, at any time or from time to time, upon not less
than 30 nor more than 60 days' prior notice mailed by first-class mail to each
Holder's registered address, at the following redemption prices (expressed in
percentages of principal amount), plus accrued interest to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date), if redeemed during
the 12-month period commencing on April 1 of the years set forth below:
Redemption
Period Price
2003 .................................... 104.438%
2004 .................................... 102.958%
2005 .................................... 101.479%
2006 and thereafter ..................... 100.000%
(b) Optional Redemption Upon Public Equity Offerings. In
addition, at any time and from time to time prior to April 1, 2001, the Company
may redeem in the aggregate up to 33.3% of the original principal amount of the
Notes (including the original principal amount of any Additional Notes) with the
proceeds of one or more Public Equity Offerings, at a redemption price
(expressed as a percentage of principal amount) of 108.875% plus accrued
interest to the redemption date (subject to the right of Holders of record on
the relevant record date to receive interest due on the relevant interest
payment date); provided, however, that at least 65% of the aggregate principal
amount of the Notes originally outstanding (including the original principal
amount of any Additional Notes) must remain outstanding after each such
redemption.
In order to effect the foregoing redemption with the proceeds
of any Public Equity Offering, the Company shall make such redemption not more
than 120 days after the consummation of any such Public Equity Offering.
7. Notice of Redemption. Notice of redemption will be mailed
at least 30 days but not more than 60 days before the Redemption Date to each
Holder of Notes to be redeemed at such Holder's registered address. Notes in
denominations of $1,000 may be redeemed only in whole. Notes in denominations
larger than $1,000 may be redeemed in part but only in multiples of $1,000.
Except as set forth in the Indenture, if monies for the
redemption of the Notes called for redemption shall have been deposited with the
Paying Agent for redemption on such Redemption Date, then, unless the Company
defaults in the payment of such Redemption Price plus accrued and unpaid
interest, if any, the Notes called for redemption will cease to bear interest
from and after such Redemption Date and the only right of the Holders of such
Notes will be to receive payment of the Redemption Price plus accrued and unpaid
interest, if any.
8. Offers to Purchase. Sections 4.16 and 4.17 of the Indenture
provide that, in the event of certain Asset Dispositions (as defined in the
Indenture) and upon the occurrence of a Change of Control (as defined in the
Indenture), and subject to further limitations contained therein, the Company
will make an offer to purchase certain amounts of the Notes in accordance with
the procedures set forth in the Indenture.
[9. Registration Rights. Pursuant to the Registration Rights
Agreement (as defined in the Indenture), the Company will be obligated to
consummate an exchange offer pursuant to which the Holder of this Note shall
have the right to exchange this Note for the Company's 8-7/8% [Series D] Senior
Subordinated Notes due 2008 in the form of Exchange Notes, which shall have been
registered under the Securities Act, or the Company's 8-7/8% Senior Subordinated
Private Exchange Notes due 2008 (the "Private Exchange Notes"), in each case in
like principal amount and having terms identical in all material respects to the
Initial Notes. The Holders of the Initial Notes shall be entitled to receive
certain additional interest payments if such exchange offer is not consummated
and upon certain other conditions, all pursuant to and in accordance with the
terms of the Registration Rights Agreement. The Company shall notify the Trustee
of the amount of any such payments.]2
10. Denominations; Transfer; Exchange. The Notes are in
registered form, without coupons, in denominations of $1,000 and integral
multiples of $1,000. A Holder shall register the transfer of or exchange of
Notes in accordance with the Indenture. The Registrar may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and to pay certain transfer taxes or similar governmental charges payable in
connection therewith as permitted by the Indenture. The Registrar need not
register the transfer of or exchange of any Notes or portions thereof selected
for redemption (except, in the case of Notes to be redeemed in part, the portion
of such Notes not to be redeemed) or any Note for a period beginning 15 Business
Days before the mailing of a notice of an offer to repurchase or a notice of
redemption or 15 Business Days before any Interest Payment Date.
11. Persons Deemed Owners. The registered Holder of a Note
shall be treated as the owner of it for all purposes.
12. Unclaimed Money. If money for the payment of principal or
interest remains unclaimed for two years, the Trustee and the Paying Agent will
pay the money back to the Company (subject to any applicable abandoned property
law). After that, all liability of the Trustee and such Paying Agent with
respect to such money shall cease.
13. Discharge Prior to Redemption or Maturity. If the Company
at any time deposits with the Trustee U.S. Legal Tender or U.S. Government
Obligations sufficient to pay the principal of and interest on the Notes to
redemption or maturity and complies with the other provisions of the Indenture
relating thereto, the Company will be discharged from certain provisions of the
Indenture and the Notes (including certain covenants, but excluding its
obligation to pay the principal of and interest on the Notes).
14. Amendment; Supplement; Waiver. Subject to certain
exceptions, the Indenture or the Notes may be amended or supplemented with the
written consent of the Holders of at least a majority in aggregate principal
amount of the Notes then outstanding, and any existing Default or Event of
Default or noncompliance with any provision may be waived with the written
consent of the Holders of a majority in aggregate principal amount of the Notes
then outstanding. Without notice to or consent of any Holder, the parties
thereto may amend or supplement the Indenture or the Notes to, among other
things, cure any ambiguity, omission, defect or inconsistency, provide for
uncertificated Notes in addition to or in place of certificated Notes, or comply
with Article Five of the Indenture or make any other change that does not
adversely affect in any material respect the rights of any Holder of a Note.
15. Restrictive Covenants. The Indenture imposes certain
limitations on the ability of the Company and its Restricted Subsidiaries to,
among other things, incur additional Indebtedness, make payments in respect of
its Capital Stock or certain Indebtedness, enter into transactions with
Affiliates, create dividend or other payment restrictions affecting
Subsidiaries, merge or consolidate with any other Person, sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
assets or adopt a plan of liquidation. Such limitations are subject to a number
of important qualifications and exceptions. The Company must annually report to
the Trustee on compliance with such limitations.
_____________________
2 To be included in the Initial Notes issued on the Issue Date and, to the
extent applicable, any Addtional Notes issued in the form of Initial Notes.
<PAGE>
16. Successors. When a successor assumes, in accordance with
the Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor will be released from those obligations.
17. Defaults and Remedies. If an Event of Default occurs and
is continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of Notes then outstanding may declare all the Notes to be due and payable
in the manner, at the time and with the effect provided in the Indenture.
Certain events of bankruptcy and insolvency are Events of Default which will
result in the Notes being due and payable immediately upon the occurrence of
such Events of Default. Holders of Notes may not enforce the Indenture or the
Notes except as provided in the Indenture. The Trustee is not obligated to
enforce the Indenture or the Notes unless it has received indemnity reasonably
satisfactory to it. The Indenture permits, subject to certain limitations
therein provided, Holders of a majority in aggregate principal amount of the
Notes then outstanding to direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders of Notes notice of any continuing
Default or Event of Default (except a Default in payment of principal or
interest) if it determines that withholding notice is in their interest.
18. Trustee Dealings with Company. The Trustee under the
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Notes and may otherwise deal with the Company, its Subsidiaries or
their respective Affiliates as if it were not the Trustee.
19. No Recourse Against Others. No past, present or future
stockholder, director, officer, employee or incorporator, as such, of the
Company or any Subsidiary Guarantor shall have any liability for any obligation
of the Company under the Notes or the Indenture or for any claim based on, in
respect of or by reason of, such obligations or their creation. Each Holder of a
Note by accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Notes.
20. Authentication. This Note shall not be valid until the
Trustee or Authenticating Agent manually signs the certificate of authentication
on this Note.
21. Governing Law. The Laws of the State of New York shall
govern this Note and the Indenture (and the Subsidiary Guarantees relating
thereto), without regard to principles of conflict of laws.
22. Abbreviations and Defined Terms. Customary abbreviations
may be used in the name of a Holder of a Note or an assignee, such as: TEN COM
(= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
23. CUSIP Numbers. Pursuant to a recommendation promulgated by
the Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Notes as a convenience to the Holders
of the Notes. No representation is made as to the accuracy of such numbers as
printed on the Notes and reliance may be placed only on the other identification
numbers printed hereon.
24. Indenture. Each Holder, by accepting a Note, agrees to be
bound by all of the terms and provisions of the Indenture, as the same may be
amended from time to time.
[25. Holders' Compliance with Registration Rights Agreement.
Each Holder of a Note, by acceptance hereof, acknowledges and agrees to the
provisions of the Registration Rights Agreement, including, without limitation,
the obligations of the Holders with respect to a registration and the
indemnification of the Company to the extent provided therein.]3
The Company will furnish to any Holder of a Note upon written
request and without charge a copy of the Indenture. Requests may be made to:
TEREX CORPORATION, 500 Post Road East, Westport, CT 06880, Attn: Secretary.
_____________________
3 To be included in the Initial Notes issued on the Issue Date and, to the
extent applicable, any Additional Notes issued in the form of Initial Notes.
<PAGE>
[FORM OF NOTATION ON NOTE RELATING TO SUBSIDIARY GUARANTEE]
SUBSIDIARY GUARANTEE
Koehring Cranes, Inc., Payhauler Corp., PPM Cranes, Inc.,
Terex Aerials, Inc., Terex Cranes, Inc., Terex Mining Equipment, Inc., Terex-RO
Corporation, Terex-Telelect, Inc., The American Crane Corporation and O&K
Orenstein & Koppel, Inc. (collectively, the "Subsidiary Guarantors"), have each
jointly and severally unconditionally guaranteed on a senior subordinated basis
(such guarantee by each Subsidiary Guarantor being referred to herein as the
"Subsidiary Guarantee") (i) the due and punctual payment of the principal of and
interest on the Notes, subject to any applicable grace period, whether at
maturity, by acceleration or otherwise, the due and punctual payment of interest
on the overdue principal and interest, if any, on the Notes, to the extent
lawful, and the due and punctual performance of all other obligations of the
Company to the Holders or the Trustee all in accordance with the terms set forth
in Article Eleven of the Indenture and (ii) in case of any extension of time of
payment or renewal of any Notes or any of such other obligations, that the same
will be promptly paid in full when due or performed in accordance with the terms
of the extension or renewal, whether at stated maturity, subject to any
applicable grace period, by acceleration or otherwise.
The obligations of each Subsidiary Guarantor to the Holders of
Notes and to the Trustee pursuant to the Subsidiary Guarantee and the Indenture
are expressly set forth and are senior subordinated obligations of each
Subsidiary Guarantor, to the extent and in the manner provided, in Articles
Eleven and Twelve of the Indenture, and reference is hereby made to such
Indenture for the precise terms of the Subsidiary Guarantee therein made.
No stockholder, officer, director, employee or incorporator,
as such, past, present or future, of each Subsidiary Guarantor shall have any
liability under the Subsidiary Guarantee by reason of his or its status as such
stockholder, officer, director, employee or incorporator.
The Subsidiary Guarantee shall not be valid or obligatory for
any purpose until the certificate of authentication on the Notes upon which the
Subsidiary Guarantee is noted shall have been executed by the Trustee under the
Indenture by the manual signature of one of its authorized officers.
KOEHRING CRANES, INC.
By:________________________
Name:
Title:
<PAGE>
PAYHAULER CORP.
By:________________________
Name:
Title:
PPM CRANES, INC.
By:________________________
Name:
Title:
TEREX AERIALS, INC.
By:________________________
Name:
Title:
TEREX CRANES, INC.
By:________________________
Name:
Title:
<PAGE>
TEREX MINING EQUIPMENT, INC.
By:________________________
Name:
Title:
TEREX-RO CORPORATION
By:________________________
Name:
Title:
TEREX-TELELECT, INC.
By:________________________
Name:
Title:
THE AMERICAN CRANE CORPORATION
By:________________________
Name:
Title:
O&K ORENSTEIN & KOPPEL, INC.
By:________________________
Name:
Title:
<PAGE>
ASSIGNMENT FORM
If you the Holder want to assign this Note, fill in the form
below and have your signature guaranteed:
I or we assign and transfer this Note to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint ______________________________________________, agent to
transfer this Note on the books of the Company. The agent may substitute another
to act for him.
Date:_____________________ Signed:______________________________________________
(Sign exactly as your name
appears on the other side
of this Note)
Signature Guarantee:_______________________
(Signature must be guaranteed by an "eligible guarantor
institution," that is, a bank, stockbroker, savings and loan association or
credit union meeting the requirements of the Registrar, which requirements
include membership or participation in the Securities Transfer Agents Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Registrar in addition to, or in substitution for, STAMP, all
in accordance with the Securities Exchange Act of 1934, as amended).
In connection with any transfer of this Note occurring prior
to the date which is the earlier of (i) the date of the declaration by the SEC
of the effectiveness of a registration statement under the Securities Act of
1933, as amended (the "Securities Act") covering resales of this Note (which
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) [two years from date of original issuance], the undersigned
confirms that it has not utilized any general solicitation or general
advertising in connection with the transfer and that this Note is being
transferred:
<PAGE>
[Check One]
(1)__ to the Company or a subsidiary thereof; or
(2)__ pursuant to and in compliance with Rule 144A under the Securities Act;
or
(3)__ outside the United States to a "foreign person" in compliance with Rule
904 of Regulation S under the Securities Act; or
(4)__ pursuant to the exemption from registration provided by Rule 144 under
the Securities Act; or
(5)__ pursuant to an effective registration statement under the Securities
Act; or
(6)__ pursuant to another available exemption from the registration
requirements of the Securities Act.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Notes evidenced by this certificate in the name of any person other than the
registered Holder thereof; provided that if box (3), (4) or (6) is checked, the
Company or the Trustee may require, prior to registering any such transfer of
the Notes, in its sole discretion, such legal opinions, certifications and other
information as the Trustee or the Company has reasonably requested to confirm
that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act.
<PAGE>
If none of the foregoing boxes is checked, the Trustee or Registrar shall not be
obligated to register this Note in the name of any person other than the Holder
hereof unless and until the conditions to any such transfer of registration set
forth herein and in the Appendix to the Indenture shall have been satisfied.
Dated:________________________ Signed:__________________________________________
(Sign exactly as name
appears on the other side
of this Security)
Signature Guarantee:____________________________________________________________
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing
this Note for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated:______________________ ____________________________________________
NOTICE: To be executed by
an executive officer
<PAGE>
[OPTION OF HOLDER TO ELECT PURCHASE]
If you want to elect to have this Note purchased by the
Company pursuant to Section 4.16 or Section 4.17 of the Indenture, check the
appropriate box:
Section 4.16 [ ]
Section 4.17 [ ]
If you want to elect to have only part of this Note purchased
by the Company pursuant to Section 4.16 or Section 4.17 of the Indenture, state
the amount you elect to have purchased:
$________________________
Dated: __________________ ____________________________________
NOTICE: The signature on this
assignment must correspond with
the name as it appears upon the
face of the within Note in
every particular without alteration
or enlargement or any change
whatsoever and be guaranteed by the
endorser's bank or broker.
Signature Guarantee:__________________________
(Signature must be guaranteed by an "eligible guarantor
institution," that is, a bank, stockbroker, savings and loan association or
credit union meeting the requirements of the Registrar, which requirements
include membership or participation in the Securities Transfer Agents Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Registrar in addition to, or in substitution for, STAMP, all
in accordance with the Securities Exchange Act of 1934, as amended).
<PAGE>
EXHIBIT B
FORM OF EXCHANGE NOTE AND PRIVATE EXCHANGE NOTE
CUSIP No.:__________
TEREX CORPORATION
8-7/8% [SERIES D] SENIOR SUBORDINATED [PRIVATE EXCHANGE] NOTE DUE 2008
No. $
TEREX CORPORATION, a Delaware corporation (the "Company,"
which term includes any successor entity), for value received promises to pay
______ to or registered assigns, the principal sum of ______ Dollars, on April
1, 2008.
Interest Payment Dates: April 1 and October 1
Record Dates: March 15 and September 15
Reference is made to the further provisions of this Note
contained herein, which will for all purposes have the same effect as if set
forth at this place.
[This note was issued on ____ with original issue discount
("OID") for federal income tax purposes. The total OID on this
note, stated as a percentage of the original principal amount,
is __%; the yield to maturity of this note, based on
semiannual compounding, is __%.]
IN WITNESS WHEREOF, the Company has caused this Note to be
signed manually or by facsimile by its duly authorized officers and a facsimile
of its corporate seal to be affixed hereto or imprinted hereon.
TEREX CORPORATION
By:________________________
Name:
Title:
By:________________________
Name:
Dated: ________________ Title:
<PAGE>
Certificate of Authentication
This is one of the 8-7/8% [Series D] Senior Subordinated
[Private Exchange] Notes due 2008 referred to in the within-mentioned Indenture.
UNITED STATES TRUST COMPANY
OF NEW YORK,
as Trustee
Dated:__________________________ By:________________________________________
Authorized Signatory
[If the Note is to be issued in global form add the Global Securities Legend
from Exhibit 1 to the Appendix and the attachment from such Exhibit 1 captioned
"[TO BE ATTACHED TO GLOBAL SECURITIES] - SCHEDULE OF INCREASES OR DECREASES IN
GLOBAL SECURITY".]
[If the Note is a Private Exchange Note issued in a Private Exchange to an
Initial Purchaser holding an unsold portion of its initial allotment, add the
restricted securities legend from Exhibit 1 to Appendix A and replace the
Assignment Form with that included in Exhibit A.]
<PAGE>
(REVERSE OF SECURITY)
8-7/8% [SERIES D] SENIOR SUBORDINATED [PRIVATE EXCHANGE] NOTE DUE 2008
1. Interest. TEREX CORPORATION, a Delaware corporation (the "Company"), promises
to pay interest on the principal amount of this Note at the rate per annum shown
above; [provided, however, that if a Registration Default (as defined in the
Registration Rights Agreement) occurs, additional cash interest will accrue on
this Note at a rate of 0.50% per annum from and including the date on which any
such Registration Default shall occur to but excluding the date on which all
Registration Defaults have been cured, calculated on the principal amount of
this Note as of the date on which such interest is payable. Such interest is
payable in addition to any other interest payable from time to time with respect
to this Note. The Trustee will not be deemed to have notice of a Registration
Default until it shall have received actual notice of such Registration
Default].4 Interest on the Notes will accrue from [the most recent date on which
interest has been paid on the Initial Note in exchange for which this [Exchange
Note] [Private Exchange Note] was issued] [date of issuance of Additional
Notes]. The Company will pay interest semi-annually in arrears on each Interest
Payment Date, commencing [April 1, 1999] [first interest payment date after
issuance of Additional Notes]. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal at the
rate borne by the Notes plus 1% per annum and on overdue installments of
interest (without regard to any applicable grace periods) at such higher rate to
the extent lawful.
2. Method of Payment. The Company shall pay interest on the
Notes (except defaulted interest) to the Persons who are the registered Holders
at the close of business on the Record Date immediately preceding the Interest
Payment Date even if the Notes are cancelled on registration of transfer or
registration of exchange after such Record Date. Holders must surrender Notes to
a Paying Agent to collect principal payments. The Company shall pay principal
and interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts ("U.S. Legal Tender"). However,
the Company may pay principal and interest by its check payable in such U.S.
Legal Tender. The Company may deliver any such interest payment to the Paying
Agent or to a Holder at the Holder's registered address.
3. Paying Agent and Registrar. Initially, United States Trust
Company of New York, a New York banking corporation (the "Trustee"), will act as
Paying Agent and Registrar. The Company may change any Paying Agent, Registrar
or co-Registrar without notice to the Holders.
_____________________
4 Insert if at the time of issuance of the Exchange Note or Private Exchange
Note (as the case may be) neither the Registered Exchange Offer has been
consummated nor a Shelf Registration Statement has been declared effective
in accordance with a Registration Rights Agreement.
<PAGE>
4. Indenture and Guarantee. The Company issued the Notes under
an Indenture, dated as of March 9, 1999 (the "Indenture"), among the Company,
the Subsidiary Guarantors named therein and the Trustee. [This Note is one of a
duly authorized issue of Exchange Notes of the Company designated as its 8-7/8%
[Series D] Senior Subordinated Notes due 2008.] [This Note is one of a duly
authorized issue of Private Exchange Notes of the Company designated as its
8-7/8% Senior Subordinated Private Exchange Notes due 2008.] The Company shall
be entitled to issue Additional Notes pursuant to Section 2.15 of the Indenture;
provided, that such issuance is not prohibited by Section 4.13 of the Indenture.
The Initial Notes issued on March 9, 1999, any Additional Notes, and any Private
Exchange Notes and Exchange Notes issued pursuant to the Indenture are treated
as a single class of securities under the Indenture. Capitalized terms herein
are used as defined in the Indenture unless otherwise defined herein. The terms
of the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the TIA of 1939 (15 U.S. Code " 77aaa-77bbbb) (the
"TIA"), as in effect on the date of the Indenture. Notwithstanding anything to
the contrary herein, the Notes are subject to all such terms, and Holders of
Notes are referred to the Indenture and the TIA for a statement of them. The
Notes are general unsecured obligations of the Company. Payment on each Note is
guaranteed on a senior subordinated basis by the Subsidiary Guarantors pursuant
to Article Eleven of the Indenture. To the extent of any conflict between the
terms of the Notes and the Indenture, the applicable terms of the Indenture
shall govern.
5. Subordination. The Notes are subordinated in right of
payment, in the manner and to the extent set forth in the Indenture, to the
prior payment in full in cash of all Senior Indebtedness of the Company, whether
outstanding on the date of the Indenture or thereafter created, incurred,
assumed or guaranteed. Each Holder by his acceptance hereof agrees to be bound
by such provisions and authorizes and expressly directs the Trustee, on his
behalf, to take such action as may be necessary or appropriate to effectuate the
subordination provided for in the Indenture and appoints the Trustee his
attorney-in-fact for such purposes.
6. Redemption.
(a) Optional Redemption. Except as set forth in the following
paragraph, the Notes will not be redeemable at the option of the Company prior
to April 1, 2003. Thereafter, the Notes will be redeemable, at the Company's
option, in whole or in part, at any time or from time to time, upon not less
than 30 nor more than 60 days' prior notice mailed by first-class mail to each
Holder's registered address, at the following redemption prices (expressed in
percentages of principal amount), plus accrued interest to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date), if redeemed during
the 12-month period commencing on April 1 of the years set forth below:
Redemption
Period Price
2003 ............................... 104.438%
2004 ............................... 102.958%
2005 ............................... 101.479%
2006 and thereafter ................ 100.000%
(b) Optional Redemption Upon Public Equity Offerings. In
addition, at any time and from time to time prior to April 1, 2001, the Company
may redeem in the aggregate up to 33.3% of the original principal amount of the
Notes (including the original principal amount of any Additional Notes) with the
proceeds of one or more Public Equity Offerings, at a redemption price
(expressed as a percentage of principal amount) of 108.875% plus accrued
interest to the redemption date (subject to the right of Holders of record on
the relevant record date to receive interest due on the relevant interest
payment date); provided, however, that at least 65% of the aggregate principal
amount of the Notes originally outstanding (including the original principal
amount of any Additional Notes) must remain outstanding after each such
redemption.
In order to effect the foregoing redemption with the proceeds
of any Public Equity Offering, the Company shall make such redemption not more
than 120 days after the consummation of any such Public Equity Offering.
7. Notice of Redemption. Notice of redemption will be mailed
at least 30 days but not more than 60 days before the Redemption Date to each
Holder of Notes to be redeemed at such Holder's registered address. Notes in
denominations of $1,000 may be redeemed only in whole. Notes in denominations
larger than $1,000 may be redeemed in part but only in multiples of $1,000.
Except as set forth in the Indenture, if monies for the
redemption of the Notes called for redemption shall have been deposited with the
Paying Agent for redemption on such Redemption Date, then, unless the Company
defaults in the payment of such Redemption Price plus accrued and unpaid
interest, if any, the Notes called for redemption will cease to bear interest
from and after such Redemption Date and the only right of the Holders of such
Notes will be to receive payment of the Redemption Price plus accrued and unpaid
interest, if any.
8. Offers to Purchase. Sections 4.16 and 4.17 of the Indenture
provide that, in the event of certain Asset Dispositions (as defined in the
Indenture) and upon the occurrence of a Change of Control (as defined in the
Indenture), and subject to further limitations contained therein, the Company
will make an offer to purchase certain amounts of the Notes in accordance with
the procedures set forth in the Indenture.
9. Denominations; Transfer; Exchange. The Notes are in
registered form, without coupons, in denominations of $1,000 and integral
multiples of $1,000. A Holder shall register the transfer of or exchange of
Notes in accordance with the Indenture. The Registrar may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and to pay certain transfer taxes or similar governmental charges payable in
connection therewith as permitted by the Indenture. The Registrar need not
register the transfer of or exchange of any Notes or portions thereof selected
for redemption (except, in the case of Notes to be redeemed in part, the portion
of such Notes not to be redeemed) or any Note for a period beginning 15 Business
Days before the mailing of a notice of an offer to repurchase or a notice of
redemption or 15 Business Days before any Interest Payment Date.
10. Persons Deemed Owners. The registered Holder of a Note
shall be treated as the owner of it for all purposes.
11. Unclaimed Money. If money for the payment of principal or
interest remains unclaimed for two years, the Trustee and the Paying Agent will
pay the money back to the Company (subject to any applicable abandoned property
law). After that, all liability of the Trustee and such Paying Agent with
respect to such money shall cease.
12. Discharge Prior to Redemption or Maturity. If the Company
at any time deposits with the Trustee U.S. Legal Tender or U.S. Government
Obligations sufficient to pay the principal of and interest on the Notes to
redemption or maturity and complies with the other provisions of the Indenture
relating thereto, the Company will be discharged from certain provisions of the
Indenture and the Notes (including certain covenants, but excluding its
obligation to pay the principal of and interest on the Notes).
13. Amendment; Supplement; Waiver. Subject to certain
exceptions, the Indenture or the Notes may be amended or supplemented with the
written consent of the Holders of at least a majority in aggregate principal
amount of the Notes then outstanding, and any existing Default or Event of
Default or noncompliance with any provision may be waived with the written
consent of the Holders of a majority in aggregate principal amount of the Notes
then outstanding. Without notice to or consent of any Holder, the parties
thereto may amend or supplement the Indenture or the Notes to, among other
things, cure any ambiguity, omission, defect or inconsistency, provide for
uncertificated Notes in addition to or in place of certificated Notes, or comply
with Article Five of the Indenture or make any other change that does not
adversely affect in any material respect the rights of any Holder of a Note.
14. Restrictive Covenants. The Indenture imposes certain
limitations on the ability of the Company and its Restricted Subsidiaries to,
among other things, incur additional Indebtedness, make payments in respect of
its Capital Stock or certain Indebtedness, enter into transactions with
Affiliates, create dividend or other payment restrictions affecting
Subsidiaries, merge or consolidate with any other Person, sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
assets or adopt a plan of liquidation. Such limitations are subject to a number
of important qualifications and exceptions. The Company must annually report to
the Trustee on compliance with such limitations.
15. Successors. When a successor assumes, in accordance with
the Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor will be released from those obligations.
16. Defaults and Remedies. If an Event of Default occurs and
is continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of Notes then outstanding may declare all the Notes to be due and payable
in the manner, at the time and with the effect provided in the Indenture.
Certain events of bankruptcy and insolvency are Events of Default which will
result in the Notes being due and payable immediately upon the occurrence of
such Events of Default. Holders of Notes may not enforce the Indenture or the
Notes except as provided in the Indenture. The Trustee is not obligated to
enforce the Indenture or the Notes unless it has received indemnity reasonably
satisfactory to it. The Indenture permits, subject to certain limitations
therein provided, Holders of a majority in aggregate principal amount of the
Notes then outstanding to direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders of Notes notice of any continuing
Default or Event of Default (except a Default in payment of principal or
interest) if it determines that withholding notice is in their interest.
17. Trustee Dealings with Company. The Trustee under the
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Notes and may otherwise deal with the Company, its Subsidiaries or
their respective Affiliates as if it were not the Trustee.
18. No Recourse Against Others. No past, present or future
stockholder, director, officer, employee or incorporator, as such, of the
Company or any Subsidiary Guarantor shall have any liability for any obligation
of the Company under the Notes or the Indenture or for any claim based on, in
respect of or by reason of, such obligations or their creation. Each Holder of a
Note by accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Notes.
19. Authentication. This Note shall not be valid until the
Trustee or Authenticating Agent manually signs the certificate of authentication
on this Note.
20. Governing Law. The Laws of the State of New York shall
govern this Note and the Indenture (and the Subsidiary Guarantees relating
thereto), without regard to principles of conflict of laws.
21. Abbreviations and Defined Terms. Customary abbreviations
may be used in the name of a Holder of a Note or an assignee, such as: TEN COM
(= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
22. CUSIP Numbers. Pursuant to a recommendation promulgated
by the Committee on Uniform Security Identification Procedures, the Company
has caused CUSIP numbers to be printed on the Notes as a convenience to the
Holders of the Notes. No representation is made as to the accuracy of such
numbers as printed on the Notes and reliance may be placed only on the other
identification numbers printed hereon.
23. Indenture. Each Holder, by accepting a Note, agrees to be
bound by all of the terms and provisions of the Indenture, as the same may be
amended from time to time.
[24. Registration Rights. Pursuant to the Registration Rights
Agreement (as defined in the Indenture), the Company will have certain
obligations to the Holders of the Exchange Notes and the Private Exchange Notes.
The Holders of the Exchange Notes and the Private Exchange Notes shall be
entitled to receive certain additional interest payments upon certain
conditions, all pursuant to and in accordance with the terms of the Registration
Rights Agreement. The Company shall notify the Trustee of the amount of any such
payments.]5
The Company will furnish to any Holder of a Note upon written
request and without charge a copy of the Indenture, which has the text of this
Note in larger type. Requests may be made to: TEREX CORPORATION, 500 Post Road
East, Westport, CT 06880, Attn: Secretary.
_____________________
5 To be included if applicable.
<PAGE>
[FORM OF NOTATION ON NOTE RELATING TO SUBSIDIARY GUARANTEE]
SUBSIDIARY GUARANTEE
Koehring Cranes, Inc., M&M Enterprises of Baraga, Inc.,
Payhauler Corp., PPM Cranes, Inc., Terex Aerials, Inc., Terex Baraga Products,
Inc., Terex Cranes, Inc., Terex Mining Equipment, Inc., Terex-RO Corporation,
Terex-Telelect, Inc., The American Crane Corporation and O&K Orenstein & Koppel,
Inc. (collectively, the "Subsidiary Guarantors"), have each unconditionally
guaranteed on a senior subordinated basis (such guarantee by the Subsidiary
Guarantors being referred to herein as the "Subsidiary Guarantee") (i) the due
and punctual payment of the principal of and interest on the Notes, subject to
any applicable grace period, whether at maturity, by acceleration or otherwise,
the due and punctual payment of interest on the overdue principal and interest,
if any, on the Notes, to the extent lawful, and the due and punctual performance
of all other obligations of the Company to the Holders or the Trustee all in
accordance with the terms set forth in Article Eleven of the Indenture and (ii)
in case of any extension of time of payment or renewal of any Notes or any of
such other obligations, that the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, subject to
any applicable grace period, whether at stated maturity, by acceleration or
otherwise.
The obligations of each Subsidiary Guarantor to the Holders of
Notes and to the Trustee pursuant to the Subsidiary Guarantee and the Indenture
are expressly set forth and are senior subordinated obligations of each
Subsidiary Guarantor, to the extent and in the manner provided, in Articles
Eleven and Twelve of the Indenture, and reference is hereby made to such
Indenture for the precise terms of the Subsidiary Guarantee therein made.
No stockholder, officer, director, employee or incorporator,
as such, past, present or future, of each Subsidiary Guarantor shall have any
liability under the Subsidiary Guarantee by reason of his or its status as such
stockholder, officer, director, employee or incorporator.
The Subsidiary Guarantee shall not be valid or obligatory for
any purpose until the certificate of authentication on the Notes upon which the
Subsidiary Guarantee is noted shall have been executed by the Trustee under the
Indenture by the manual signature of one of its authorized officers.
KOEHRING CRANES, INC.
By:________________________
Name:
Title:
<PAGE>
PAYHAULER CORP.
By:________________________
Name:
Title:
PPM CRANES, INC.
By:________________________
Name:
Title:
TEREX AERIALS, INC.
By:________________________
Name:
Title:
TEREX CRANES, INC.
By:________________________
Name:
Title:
<PAGE>
TEREX MINING EQUIPMENT, INC.
By:________________________
Name:
Title:
TEREX-RO CORPORATION
By:________________________
Name:
Title:
TEREX-TELELECT, INC.
By:________________________
Name:
Title:
THE AMERICAN CRANE CORPORATION
By:________________________
Name:
Title
O&K ORENSTEIN & KOPPEL, INC.
By:________________________
Name:
Title
<PAGE>
ASSIGNMENT FORM 6
If you the Holder want to assign this Note, fill in the form
below and have your signature guaranteed:
I or we assign and transfer this Note to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint ______________________________________________, agent to
transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date:_________________________ Signed:__________________________________________
(Sign exactly as your name
appears on the other side of
this Note)
Signature Guarantee:______________________
(Signature must be guaranteed by an "eligible guarantor institution," that is, a
bank, stockbroker, savings and loan association or credit union meeting the
requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended).
_____________________
6 If the Note is a Private Exchange Note, replace the Assignment Form with
that included in Exhibit A to the Indenture.
<PAGE>
[OPTION OF HOLDER TO ELECT PURCHASE]
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.16 or Section 4.17 of the Indenture, check the
appropriate box:
Section 4.16 [ ]
Section 4.17 [ ]
If you want to elect to have only part of this Note
purchased by the Company pursuant to Section 4.16 or Section 4.17 of the
Indenture, state the amount you elect to have purchased:
$____________________
Dated: __________________ ____________________________________
NOTICE: The signature on this
assignment must correspond with
the name as it appears upon the
face of the within Note in
every particular without alteration
or enlargement or any change
whatsoever and be guaranteed by the
endorser's bank or broker.
Signature Guarantee:__________________________
(Signature must be guaranteed by an "eligible guarantor
institution," that is, a bank, stockbroker, savings and loan association or
credit union meeting the requirements of the Registrar, which requirements
include membership or participation in the Securities Transfer Agents Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Registrar in addition to, or in substitution for, STAMP, all
in accordance with the Securities Exchange Act of 1934, as amended).
<PAGE>
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
310(a)(1) ............................... 7.10
(a)(2) ............................... 7.10
(a)(3) ............................... N.A.
(a)(4) ............................... N.A.
(a)(5) ............................... 7.08; 7.10
(b) ............................... 7.08; 7.10; 13.02
(c) ............................... N.A.
311(a) ............................... 7.11
(b) ............................... 7.11
(c) ............................... N.A.
312(a) ............................... 2.05
(b) ............................... 13.03
(c) ............................... 13.03
313(a) ............................... 7.06
(b)(1) ............................... N.A.
(b)(2) ............................... 7.06
(c) ............................... 7.06; 13.02
(d) ............................... 7.06
314(a) ............................... 4.07; 4.08; 13.02
(b) ............................... N.A.
(c)(1) ............................... 13.04
(c)(2) ............................... 13.04
(c)(3) ............................... N.A.
(d) ............................... N.A.
(e) ............................... 13.05
(f) ............................... N.A.
315(a) ............................... 7.01(b)
(b) ............................... 7.05; 13.02
(c) ............................... 7.01(a)
(d) ............................... 7.01(c)
(e) ............................... 6.11
316(a)(last sentence)............................ 2.09
(a)(1)(A) ............................... 6.05
(a)(1)(B) ............................... 6.04
(a)(2) ............................... N.A.
(b) ............................... 6.07
(c) ............................... 9.05
317(a)(1) .............................. 6.08
(a)(2) .............................. 6.09
(b) .............................. 2.04
318(a) .............................. 13.01
(c) .............................. 13.01
_____________________
N.A. means Not Applicable
NOTE: This Cross-Reference Table shall not, for any purpose,
be deemed to be a part of the Indenture.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions..................................................1
SECTION 1.02. Incorporation by Reference of TIA...........................21
SECTION 1.03. Rules of Construction.......................................22
SECTION 1.04. One Class of Securities.....................................22
ARTICLE TWO
THE NOTES
SECTION 2.01. Form and Dating.............................................23
SECTION 2.02. Execution and Authentication;
Aggregate Principal Amount..............................23
SECTION 2.03. Registrar and Paying Agent..................................24
SECTION 2.04. Paying Agent To Hold Assets in Trust........................24
SECTION 2.05. Noteholder Lists............................................25
SECTION 2.06. [Intentionally Omitted].....................................25
SECTION 2.07. Replacement Notes...........................................25
SECTION 2.08. Outstanding Notes...........................................25
SECTION 2.09. Treasury Notes..............................................26
SECTION 2.10. Temporary Notes.............................................26
SECTION 2.11. Cancellation................................................26
SECTION 2.12. Defaulted Interest..........................................27
SECTION 2.13. CUSIP Number................................................27
SECTION 2.14. Deposit of Moneys...........................................27
SECTION 2.15. Issuance of Additional Notes................................27
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee..........................................28
SECTION 3.02. Selection of Notes To Be Redeemed...........................28
SECTION 3.03. Notice of Redemption........................................29
SECTION 3.04. Effect of Notice of Redemption..............................30
SECTION 3.05. Deposit of Redemption Price.................................30
SECTION 3.06. Notes Redeemed in Part......................................30
SECTION 3.07. Optional Redemption.........................................31
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes............................................32
SECTION 4.02. Maintenance of Office or Agency.............................32
SECTION 4.03. Corporate Existence.........................................32
SECTION 4.04. Payment of Taxes and Other Claims...........................32
SECTION 4.05. Maintenance of Properties and Insurance.....................33
SECTION 4.06. Compliance Certificate; Notice of Default...................33
SECTION 4.07. Compliance with Laws........................................34
SECTION 4.08. SEC Reports.................................................34
SECTION 4.09. Waiver of Stay, Extension or Usury Laws.....................35
SECTION 4.10. Limitation on Restricted Payments...........................35
SECTION 4.11. Limitation on Restrictions on Distributions from
Restricted Subsidiaries.......................37
SECTION 4.12. Limitation on Affiliate Transactions........................38
SECTION 4.13. Limitation on Indebtedness..................................39
SECTION 4.14. Limitation on the Sale or Issuance of Capital Stock of
Restricted Subsidiaries.......................40
SECTION 4.15. Limitation on Other Senior Subordinated Debt................41
SECTION 4.16. Change of Control...........................................41
SECTION 4.17. Limitation on Sales of Assets and Subsidiary Stock..........42
SECTION 4.18. Limitation on Indebtedness and Preferred Stock
of Restricted Subsidiaries....................45
SECTION 4.19. Limitation on Liens Securing Subordinated Indebtedness......46
SECTION 4.20. Future Subsidiary Guarantors................................47
SECTION 4.21. Limitation on Designations of Unrestricted Subsidiaries.....47
SECTION 4.22. Limitation on Lines of Business.............................48
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Merger, Consolidation and Sale of Assets of the Company.....49
SECTION 5.02. Successor Corporation Substituted for the Company...........50
SECTION 5.03. Merger, Consolidation and Sale of Assets of
Any Subsidiary Guarantor......................50
SECTION 5.04. Successor Corporation Substituted for Subsidiary Guarantor..50
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default...........................................51
SECTION 6.02. Acceleration................................................52
SECTION 6.03. Other Remedies..............................................53
SECTION 6.04. Waiver of Past Defaults.....................................53
SECTION 6.05. Control by Majority.........................................54
SECTION 6.06. Limitation on Suits.........................................54
SECTION 6.07. Rights of Holders To Receive Payment........................54
SECTION 6.08. Collection Suit by Trustee..................................55
SECTION 6.09. Trustee May File Proofs of Claim............................55
SECTION 6.10. Priorities..................................................55
SECTION 6.11. Undertaking for Costs.......................................56
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee...........................................56
SECTION 7.02. Rights of Trustee...........................................57
SECTION 7.03. Individual Rights of Trustee................................58
SECTION 7.04. Trustee's Disclaimer........................................59
SECTION 7.05. Notice of Default...........................................59
SECTION 7.06. Reports by Trustee to Holders...............................59
SECTION 7.07. Compensation and Indemnity..................................59
SECTION 7.08. Replacement of Trustee......................................60
SECTION 7.09. Successor Trustee by Merger, Etc............................62
SECTION 7.10. Eligibility; Disqualification...............................62
SECTION 7.11. Preferential Collection of Claims Against Company...........62
ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. Discharge of Liability on Notes; Defeasance.................63
SECTION 8.02. Conditions to Defeasance....................................63
SECTION 8.03. Application of Trust Money..................................65
SECTION 8.04. Repayment to Company........................................65
SECTION 8.05. Indemnity for Government Obligations........................65
SECTION 8.06. Reinstatement...............................................66
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders..................................66
SECTION 9.02. With Consent of Holders.....................................67
SECTION 9.03. Effect on Senior Indebtedness...............................68
SECTION 9.04. Compliance with TIA.........................................68
SECTION 9.05. Revocation and Effect of Consents...........................68
SECTION 9.06. Notation on or Exchange of Notes............................69
SECTION 9.07. Trustee To Sign Amendments, Etc.............................69
SECTION 9.08. Payment for Consent.........................................70
ARTICLE TEN
SUBORDINATION
SECTION 10.01. Notes Subordinated to Senior Indebtedness...................70
SECTION 10.02. No Payment on Notes in Certain Circumstances................70
SECTION 10.03. Payment Over of Proceeds upon Dissolution, Etc..............72
SECTION 10.04. Payments May Be Paid Prior to Dissolution...................73
SECTION 10.05. Subrogation.................................................74
SECTION 10.06. Obligations of the Company Unconditional....................74
SECTION 10.07. Notice to Trustee...........................................75
SECTION 10.08. Reliance on Judicial Order or Certificate of Liquidating
Agent..............................................75
SECTION 10.09. Trustee's Relation to Senior Indebtedness...................75
SECTION 10.10. Subordination Rights Not Impaired by Acts or Omissions of
the Company or Holders of Senior Indebtedness......76
SECTION 10.11. Noteholders Authorize Trustee To Effectuate Subordination
of Notes....................76
SECTION 10.12. This Article Ten Not To Prevent Events of Default...........77
SECTION 10.13. Trustee's Compensation Not Prejudiced.......................77
SECTION 10.14. Acceleration of Payment of Notes............................77
ARTICLE ELEVEN
GUARANTEES
SECTION 11.01. Unconditional Guarantee.....................................78
SECTION 11.02. Subordination of Subsidiary Guarantee.......................79
SECTION 11.03. Severability................................................79
SECTION 11.04. Release of Subsidiary Guarantor from the Subsidiary
Guarantee..........................................79
SECTION 11.05. Limitation on Amount Guaranteed; Contribution by
Subsidiary Guarantors..............................79
SECTION 11.06. Waiver of Subrogation.......................................81
SECTION 11.07. Execution of Subsidiary Guarantee...........................81
SECTION 11.08. Waiver of Stay, Extension or Usury Laws.....................82
SECTION 11.09. Effectiveness of Subsidiary Guarantee.......................82
ARTICLE TWELVE
SUBORDINATION OF GUARANTEE OBLIGATIONS
SECTION 12.01. Subsidiary Guarantee Obligations Subordinated
to Senior Indebtedness of Subsidiary Guarantors....83
SECTION 12.02. No Payment on Notes in Certain Circumstances................83
SECTION 12.03. Payment Over of Proceeds upon Dissolution, Etc..............85
SECTION 12.04. Payments May Be Paid Prior to Dissolution...................86
SECTION 12.05. Subrogation.................................................87
SECTION 12.06. Obligations of Subsidiary Guarantor Unconditional...........87
SECTION 12.07. Notice to Trustee...........................................88
SECTION 12.08. Reliance on Judicial Order or Certificate of Liquidating
Agent..............................................88
SECTION 12.09. Trustee's Relation to Subsidiary Guarantor's Senior
Indebtedness.......................................89
SECTION 12.10. Subordination Rights Not Impaired by Acts or Omissions
of Subsidiary Guarantors or Holders of Subsidiary
Guarantors' Senior Indebtedness....................89
SECTION 12.11. Noteholders Authorize Trustee To Effectuate
Subordination of Notes.............................90
SECTION 12.12. This Article Twelve Not To Prevent Events of Default........90
ARTICLE THIRTEEN MISCELLANEOUS
SECTION 13.01. TIA Controls................................................91
SECTION 13.02. Notices 91
SECTION 13.03. Communications by Holders with Other Holders................92
SECTION 13.04. Certificate and Opinion as to Conditions Precedent..........92
SECTION 13.05. Statements Required in Certificate or Opinion...............93
SECTION 13.06. Rules by Trustee, Paying Agent, Registrar...................93
SECTION 13.07. Legal Holidays..............................................93
SECTION 13.08. Governing Law...............................................94
SECTION 13.09. No Adverse Interpretation of Other Agreements...............94
SECTION 13.10. No Recourse Against Others..................................94
SECTION 13.11. Successors..................................................94
SECTION 13.12. Duplicate Originals.........................................94
SECTION 13.13. Severability................................................95
Signatures ............................................................95
Appendix ............................................................ I
<PAGE>
1
AMENDMENT No. 1, dated as of July
14, 1998 (this "Amendment"), to the Credit
Agreement dated as of March 6, 1998 (the
"Credit Agreement"), among TEREX
CORPORATION, a Delaware corporation
("Terex"), TEREX EQUIPMENT LIMITED, a
company organized under the laws of
Scotland, P.P.M. S.A., a company organized
under the laws of the Republic of France,
UNIT RIG (AUSTRALIA) PTY. LTD., a company
organized under the laws of New South Wales,
Australia, and P.P.M. Sp.A., a company
organized under the laws of the Republic of
Italy, the Lenders (as defined in the Credit
Agreement), the Issuing Banks (as defined in
the Credit Agreement) and CREDIT SUISSE
FIRST BOSTON, a bank organized under the
laws of Switzerland, acting through its New
York branch ("CSFB"), as administrative
agent (in such capacity, the "Administrative
Agent") and as collateral agent (in such
capacity, the "Collateral Agent") for the
Lenders.
A. Pursuant to the Credit Agreement, the Lenders and the
Issuing Banks have extended credit to the Borrowers, and have agreed to extend
credit to the Borrowers, in each case pursuant to the terms and subject to the
conditions set forth therein.
B. Terex, through its indirect, wholly-owned subsidiary
Picadilly Maschinenhandel GmbH & Co. KG, a partnership organized under the laws
of the Federal Republic of Germany ("Picadilly"), has acquired all the
outstanding capital shares of O&K Mining from O&K Orenstein & Koppel AG ("O&K
Orenstein AG") pursuant to the Share Purchase Agreement dated as of December 18,
1997, between O&K Orenstein AG and Terex Mining Equipment, Inc.
C. Terex intends (a) to designate O&K Mining as a Subsidiary
Borrower under the Credit Agreement pursuant to the procedures set forth in
Section 9.19 thereof and (b) following such designation, to merge O&K Mining
with and into Picadilly with Picadilly as the surviving entity. Terex desires
that following such merger, Picadilly will succeed O&K Mining as a Subsidiary
Borrower.
D. Terex, having acquired all the outstanding capital shares
of O&K Mining indirectly, is unable to pledge 65% of such shares for the benefit
of the Secured Parties as contemplated by Section 9.19 of the Credit Agreement.
Picadilly, as a Foreign Subsidiary, is exempt from the share pledge requirement
of Section 5.11 of the Credit Agreement because such a pledge by a Foreign
Subsidiary could result in adverse tax consequences to Terex.
E. The Borrowers have requested that certain provisions of the
Credit Agreement be amended as set forth herein.
F. The Required Lenders are willing to amend the Credit
Agreement, pursuant to the terms and subject to the conditions set forth herein.
<PAGE>
2
G. The Borrowers and the Required Lenders have agreed to amend
certain provisions of the Credit Agreement with respect to the sale of
participations under the Credit Agreement as set forth herein.
H. Capitalized terms used and not otherwise defined herein
shall have the meanings assigned to them in the Credit Agreement.
Accordingly, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the sufficiency and receipt
of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Amendment to the Preliminary Statement of the
Credit Agreement. The last sentence of the first paragraph of the preliminary
statement of the Credit Agreement is hereby amended by inserting the phrase ",
through one or more direct or indirect wholly-owned Subsidiaries," after the
phrase "(the "Acquisition")" in such sentence.
SECTION 2. Amendment to Section 1.01 of the Credit Agreement.
(a) The definition of the term "German Borrower" set forth in Section 1.01 of
the Credit Agreement is hereby amended and restated in its entirety as follows:
""German Borrower" shall mean (a) prior to such time as O&K
Mining is merged with and into Picadilly with Picadilly as the
surviving entity, O&K Mining and (b) after such time as O&K Mining is
merged with and into Picadilly with Picadilly as the surviving entity,
Picadilly, but only, in each case, following the consummation of the
Acquisition and the accession to this Agreement by O&K Mining or
Picadilly, as applicable, pursuant to Section 9.19."
(b) Section 1.01 of the Credit Agreement is hereby amended by
inserting, in the appropriate alphabetical order, the following definition:
"Picadilly" shall mean Picadilly Maschinenhandel GmbH & Co.
KG,a partnership founded under the laws of the Federal Republic of Germany.
SECTION 3. Amendment to Section 9.19 of the Credit Agreement.
Section 9.19 of the Credit Agreement is hereby amended by (a) deleting the comma
from the first sentence of such Section and inserting the word "and" in lieu
thereof and (b) deleting the phrase "and (iii) a pledge by Terex of 65% of the
capital stock of the German Borrower for the benefit of the Secured Parties"
from such sentence.
SECTION 4. Amendment to Section 9.04 of the Credit Agreement.
Section 9.04(f) of the Credit Agreement is hereby amended by inserting the
phrase ", releasing any Guarantor or all or any substantial part of the
Collateral" after the word "Loans" in the last line of such Section.
SECTION 5. Representations and Warranties. Each of the
Borrowers represents and warrants to each other party hereto that, after giving
effect to this Amendment, (a) the representations and warranties set forth in
Article III of the Credit Agreement are true and correct in all material
respects on and as of the date hereof with the same effect as though made on and
as of the date hereof, except to the extent such representations and warranties
<PAGE>
3
expressly relate to an earlier date, and (b) no Default or Event of Default has
occurred and is continuing.
SECTION 6. Conditions to Effectiveness. This Amendment shall
become effective as of the date first written above on the date that the
Administrative Agent shall have received counterparts of this Amendment which,
when taken together, bear the signatures of the Required Lenders.
SECTION 7. Effect of Amendment. Except as expressly set forth
herein, this Amendment shall not by implication or otherwise limit, impair,
constitute a waiver of, or otherwise affect the rights and remedies of the
Lenders, the Swingline Lender, any Issuing Bank, the Collateral Agent or the
Administrative Agent, under the Credit Agreement or any other Loan Document, and
shall not alter, modify, amend or in any way affect any of the terms,
conditions, obligations, covenants or agreements contained in the Credit
Agreement or any other Loan Document, all of which are ratified and affirmed in
all respects and shall continue in full force and effect. Nothing herein shall
be deemed to entitle any Borrower to a consent to, or a waiver, amendment,
modification or other change of, any of the terms, conditions, obligations,
covenants or agreements contained in the Credit Agreement or any other Loan
Document in similar or different circumstances. This Amendment shall apply and
be effective only with respect to the provisions of the Credit Agreement
specifically referred to herein.
SECTION 8. Counterparts. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an original, but
all such counterparts together shall constitute but one and the same instrument.
Delivery of any executed counterpart of a signature page of this Amendment by
facsimile transmission shall be as effective as delivery of a manually executed
counterpart hereof.
SECTION 9. Applicable Law. THIS AMENDMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 10. Headings. The headings of this Amendment are for
purposes of reference only and shall not limit or otherwise affect the meaning
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
TEREX CORPORATION,
by
/s/Eric I Cohen
-------------------------------
Name: Eric I Cohen
Title: Senior Vice President
<PAGE>
4
TEREX EQUIPMENT LIMITED,
by
/s/Eric I Cohen
-------------------------------
Name: Eric I Cohen
Title: Director
P.P.M. S.A.,
by
/s/Eric I Cohen
-------------------------------
Name: Eric I Cohen
Title: Director
UNIT RIG (AUSTRALIA) PTY. LTD.,
by
/s/Eric I Cohen
-------------------------------
Name: Eric I Cohen
Title: Director
P.P.M. Sp.A,
by
/s/Fil Filipov
-------------------------------
Name: Fil Filipov
Title: President and Director
CREDIT SUISSE FIRST BOSTON,
individually and as Administrative Agent,
Collateral Agent and Swingline Lender,
by
/s/Jodi A. Fatto
-------------------------------
Name: Jodi A. Fatto
Title: Assistant Vice President
by
/s/Chris Cunningham
-------------------------------
Name: Chris Cunningham
Title: Director
<PAGE>
5
ABN AMRO BANK N.V.,
by
/s/Donald Sutton
-------------------------------
Name: Donald Sutton
Title: Vice President
by
/s/Michael A. Kowalczuk
-------------------------------
Name: Michael A. Kowalczuk
Title: Corporate Banking Officer
ALLIANCE CAPITAL MANAGEMENT
L.P., as Manager on behalf of ALLIANCE
CAPITAL FUNDING, L.L.C. by:
ALLIANCE CAPITAL MANAGEMENT
CORPORATION, General Partner of
Alliance Capital Management L.P.,
by
/s/Kenneth G. Ostmann
-------------------------------
Name: Kenneth G. Ostmann
Title: Vice President
ARES LEVERAGED INVESTMENT
FUND L.P.,
by ARES Management, L.P.
by ARES Operating Member, LLC
Its General Partner
by
/s/David A. Sachs
-------------------------------
Name: David A. Sachs
Title: Vice President
BANK OF TOKYO-MITSUBISHI TRUST
COMPANY,
by
/s/Paul P. Malecki
-------------------------------
Name: Paul P. Malecki
Title: Vice President
<PAGE>
6
BANKBOSTON N.A., as Revolver and
Term A Lender,
by
/s/Garrett Quinn
-------------------------------
Name: Garrett Quinn
Title: Vice President
BANKBOSTON, N.A.,
by
/s/Garrett Quinn
-------------------------------
Name: Garrett Quinn
Title: Vice President
CHASE SECURITIES INC., as agent for
THE CHASE MANHATTAN BANK,
by
-------------------------------
Name:
Title:
CIBC INC.,
by
/s/Timothy Doyle
-------------------------------
Name: Timothy Doyle
Title: Managing Director
CIBC Oppenheimer Corp.
AS AGENT
CREDIT LYONNAIS, NEW YORK
BRANCH,
by
/s/Vladimir Labun
-------------------------------
Name: Vladimir Labun
Title: First Vice President-Manager
<PAGE>
7
CYPRESSTREE INVESTMENT
PARTNERS I, LTD., BY: CYPRESSTREE
INVESTMENT MANAGEMENT
COMPANY INC., as portfolio manager,
by
-------------------------------
Name:
Title:
DEBT STRATEGIES FUND II, INC.,
by
-------------------------------
Name:
Title:
DRESDNER BANK AG, NEW YORK
AND GRAND CAYMAN BRANCHES,
by
-------------------------------
Name:
Title:
by
-------------------------------
Name:
Title:
FIRST DOMINION FUNDING I,
by
/s/Andrew H. Marshak
-------------------------------
Name: Andrew H. Marshak
Title: Managing Director
FIRST UNION NATIONAL BANK,
by
/s/Henry R. Biedrzycki
-------------------------------
Name: Henry R. Biedrzycki
Title: Vice President
<PAGE>
8
GENERAL ELECTRIC CAPITAL
CORPORATION,
by
/s/Janet K. Williams
-------------------------------
Name: Janet K. Williams
Title: Duly Authorized Signatory
KZH HOLDING CORPORATION III,
by
/s/Dennis Kildea
-------------------------------
Name: Dennis Kildea
Title: Authorized Agent
LEHMAN COMMERCIAL PAPER INC,
by
-------------------------------
Name:
Title:
MARINE MIDLAND BANK,
by
/s/Randolph H. Ross
-------------------------------
Name: Randolph H. Ross
Title: Authorized Signatory
MERRILL LYNCH GLOBAL
INVESTMENT SERIES: INCOME
STRATEGIES PORTFOLIO, by MERRILL
LYNCH ASSET MANAGEMENT, L.P., as
investment advisor,
by
-------------------------------
Name:
Title:
<PAGE>
9
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED,
by
/s/Neil Brisson
-------------------------------
Name: Neil Brisson
Title: Director
MERRILL LYNCH PRIME RATE
PORTFOLIO, by MERRILL LYNCH
ASSET MANAGEMENT, L.P., as
investment advisor,
by
-------------------------------
Name:
Title:
MOUNTAIN CLO TRUST,
by
/s/Kazuyuki Nishimura
-------------------------------
Name: Kazuyuki Nishimura
Title: Authorized Signatory
NATIONAL CITY BANK,
by
/s/Joseph D. Robison
-------------------------------
Name: Joseph D. Robison
Title: Vice President
PAM CAPITAL FUNDING LP,
by
-------------------------------
Name:
Title:
<PAGE>
10
PUTNAM DIVERSIFIED INCOME
TRUST,
by
-------------------------------
Name:
Title:
PUTNAM FIDUCIARY TRUST
COMPANY, on behalf of PUTNAM HIGH
YIELD MANAGED TRUST,
by
-------------------------------
Name:
Title:
PUTNAM HIGH YIELD TRUST,
by
-------------------------------
Name:
Title:
PUTNAM VARIABLE TRUST, on behalf
of PUTNAM VT DIVERSIFIED INCOME
FUND,
by
-------------------------------
Name:
Title:
SKANDINAVISKA ENSKILDA BANKEN
AB (publ), NEW YORK BRANCH,
by
-------------------------------
Name:
Title:
by
-------------------------------
Name:
Title:
<PAGE>
11
TORONTO DOMINION (TEXAS), INC.,
by
-------------------------------
Name:
Title:
<PAGE>
<PAGE>
1
AMENDMENT No. 2, dated as of October
20, 1998 (this "Amendment"), to the Credit
Agreement dated as of March 6, 1998, as
amended (the "Credit Agreement"), among
TEREX CORPORATION, a Delaware corporation
("Terex"), TEREX EQUIPMENT LIMITED, a
company organized under the laws of
Scotland, P.P.M. S.A., a company organized
under the laws of the Republic of France,
UNIT RIG (AUSTRALIA) PTY. LTD., a company
organized under the laws of New South Wales,
Australia, and P.P.M. Sp.A., a company
organized under the laws of the Republic of
Italy, the Lenders (as defined in the Credit
Agreement), the Issuing Banks (as defined in
the Credit Agreement) and CREDIT SUISSE
FIRST BOSTON, a bank organized under the
laws of Switzerland, acting through its New
York branch ("CSFB"), as administrative
agent (in such capacity, the "Administrative
Agent") and as collateral agent (in such
capacity, the "Collateral Agent") for the
Lenders.
A. Pursuant to the Credit Agreement, the Lenders and the
Issuing Banks have extended credit to the Borrowers, and have agreed to extend
credit to the Borrowers, in each case pursuant to the terms and subject to the
conditions set forth therein.
B. The Borrowers have requested that certain provisions of the
Credit Agreement be amended as set forth herein.
C. The Required Lenders are willing to amend the Credit
Agreement, pursuant to the terms and subject to the conditions set forth herein.
D. Capitalized terms used and not otherwise defined herein
shall have the meanings assigned to them in the Credit Agreement.
Accordingly, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the sufficiency and receipt
of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Amendment to the Preliminary Statement of the
Credit Agreement. The third sentence of the second paragraph of the preliminary
statement of the Credit Agreement is hereby amended by replacing the amount
"$35,000,000" with the amount "$60,000,000".
SECTION 2. Amendment to Section 2.23(b) of the Credit
Agreement. The last sentence of Section 2.23(b) of the Credit Agreement is
hereby amended by replacing the amount "$35,000,000" with the amount
"$60,000,000".
SECTION 3. Representations and Warranties. Each of the
Borrowers represents and warrants to each other party hereto that, after giving
effect to this Amendment, (a) the representations and warranties set forth in
Article III of the Credit Agreement are true and correct in all material
<PAGE>
2
respects on and as of the date hereof with the same effect as though made on and
as of the date hereof, except to the extent such representations and warranties
expressly relate to an earlier date, and (b) no Default or Event of Default has
occurred and is continuing.
SECTION 4. Conditions to Effectiveness. This Amendment shall
become effective as of the date first written above on the date that the
Administrative Agent shall have received counterparts of this Amendment which,
when taken together, bear the signatures of the Required Lenders.
SECTION 5. Effect of Amendment. Except as expressly set forth
herein, this Amendment shall not by implication or otherwise limit, impair,
constitute a waiver of, or otherwise affect the rights and remedies of the
Lenders, the Swingline Lender, any Issuing Bank, the Collateral Agent or the
Administrative Agent, under the Credit Agreement or any other Loan Document, and
shall not alter, modify, amend or in any way affect any of the terms,
conditions, obligations, covenants or agreements contained in the Credit
Agreement or any other Loan Document, all of which are ratified and affirmed in
all respects and shall continue in full force and effect. Nothing herein shall
be deemed to entitle any Borrower to a consent to, or a waiver, amendment,
modification or other change of, any of the terms, conditions, obligations,
covenants or agreements contained in the Credit Agreement or any other Loan
Document in similar or different circumstances. This Amendment shall apply and
be effective only with respect to the provisions of the Credit Agreement
specifically referred to herein.
SECTION 6. Counterparts. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an original, but
all such counterparts together shall constitute but one and the same instrument.
Delivery of any executed counterpart of a signature page of this Amendment by
facsimile transmission shall be as effective as delivery of a manually executed
counterpart hereof.
SECTION 7. Applicable Law. THIS AMENDMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 8. Headings. The headings of this Amendment are for
purposes of reference only and shall not limit or otherwise affect the meaning
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
TEREX CORPORATION,
by
/s/ Susan K. Sutherland
-------------------------------
Name: Susan K. Sutherland
Title: Treasurer
<PAGE>
3
TEREX EQUIPMENT LIMITED,
by
/s/ Eric Cohen
-------------------------------
Name: Eric Cohen
Title: Director
P.P.M. S.A.,
by
/s/ J.M. Fleury
-------------------------------
Name: J.M. Fleury
Title: V.P., General Manager
UNIT RIG (AUSTRALIA) PTY. LTD.,
by
/s/ Eric Cohen
-------------------------------
Name: Eric Cohen
Title: Director
P.P.M. Sp.A,
by
/s/ Michele Hillebrand
-------------------------------
Name: Michele Hillebrand
Title: General Manager
<PAGE>
4
CREDIT SUISSE FIRST BOSTON,
individually and as Administrative Agent,
Collateral Agent and Swingline Lender,
by
/s/ William O'Daly
-------------------------------
Name: William O'Daly
Title: Vice President
by
/s/ J. Glodowski
-------------------------------
Name: J. Glodowski
Title: Managing Director
ABN AMRO BANK N.V.,
by
/s/ Donald Sutton
-------------------------------
Name: Donald Sutton
Title: Vice President
by
/s/ Stephen Van Besien
-------------------------------
Name: Stephen Van Besien
Title: Group Vice President
ALLIANCE CAPITAL MANAGEMENT
L.P., as Manager on behalf of ALLIANCE
CAPITAL FUNDING, L.L.C. by:
ALLIANCE CAPITAL MANAGEMENT
CORPORATION, General Partner of
Alliance Capital Management L.P.,
by
/s/ Kenneth G. Ostmann
-------------------------------
Name: Kenneth G. Ostmann
Title: Vice President
<PAGE>
5
ARES LEVERAGED INVESTMENT
FUND L.P.,
by ARES Management, L.P.
by ARES Operating Member, LLC
Its General Partner
by
/s/ David A. Sachs
-------------------------------
Name: David A. Sachs
Title: Vice President
BANK OF TOKYO-MITSUBISHI TRUST
COMPANY,
by
/s/ Paul Malecki
-------------------------------
Name: Paul Malecki
Title: Vice President
BANKBOSTON N.A., as Revolver and
Term A Lender,
by
/s/ Garrett Quinn
-------------------------------
Name: Garrett Quinn
Title: Vice President
BANKBOSTON, N.A.,
by
/s/ Garrett Quinn
-------------------------------
Name: Garrett Quinn
Title: Vice President
CIBC INC.,
by
/s/ Timothy Doyle
-------------------------------
Name: Timothy Doyle
Title: Managing Director
<PAGE>
6
CREDIT LYONNAIS, NEW YORK
BRANCH,
by
-------------------------------
Name:
Title:
CYPRESSTREE INVESTMENT
PARTNERS I, LTD., BY: CYPRESSTREE
INVESTMENT MANAGEMENT
COMPANY INC., as portfolio manager,
by
/s/ Philip C. Robbins
-------------------------------
Name: Philip C. Robbins
Title: Principal
DEBT STRATEGIES FUND II, INC.,
by
-------------------------------
Name:
Title:
DRESDNER BANK AG, NEW YORK
AND GRAND CAYMAN BRANCHES,
by
-------------------------------
Name:
Title:
by
-------------------------------
Name:
Title:
FIRST DOMINION FUNDING I,
by
-------------------------------
Name:
Title:
<PAGE>
7
FIRST UNION NATIONAL BANK,
by
/s/ Hank Biedrzyscki
-------------------------------
Name: Hank Biedrzyscki
Title: Vice President/Director
GENERAL ELECTRIC CAPITAL
CORPORATION,
by
/s/ Janet K. Williams
-------------------------------
Name: Janet K. Williams
Title: Duly Authorized Signatory
KZH III LLC,
by
/s/ Virginia Conway
-------------------------------
Name: Virginia Conway
Title: Authorized Agent
LEHMAN COMMERCIAL PAPER INC,
by
/s/ Michelle Swanson
-------------------------------
Name: Michelle Swanson
Title: Authorized Signatory
MARINE MIDLAND BANK,
by
/s/ Randolph M. Ross
-------------------------------
Name: Randolph M. Ross
Title: Authorized Signatory
MERRILL LYNCH GLOBAL
INVESTMENT SERIES: INCOME
STRATEGIES PORTFOLIO, by MERRILL
LYNCH ASSET MANAGEMENT, L.P., as
investment advisor,
by
/s/ Paul Travers
-------------------------------
Name: Paul Travers
Title: Vice President
<PAGE>
8
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED,
by
/s/ Neil Brisson
-------------------------------
Name: Neil Brisson
Title: Director
MERRILL LYNCH PRIME RATE
PORTFOLIO, by MERRILL LYNCH
ASSET MANAGEMENT, L.P., as
investment advisor,
by
/s/ Paul Travers
-------------------------------
Name: Paul Travers
Title: Vice President
MOUNTAIN CLO TRUST,
by
-------------------------------
Name:
Title:
NATIONAL CITY BANK,
by
/s/ Joseph D. Robison
-------------------------------
Name: Joseph D. Robison
Title: Vice President
PAM CAPITAL FUNDING LP
by HIGHLAND CAPITAL
MANAGEMENT, L.P., as Collateral
Manager
by
/s/ Mark K. Okada
-------------------------------
Name: Mark K. Okada CFA
Title: Executive Vice President
<PAGE>
9
PUTNAM DIVERSIFIED INCOME
TRUST,
by
-------------------------------
Name:
Title:
PUTNAM FIDUCIARY TRUST
COMPANY, on behalf of PUTNAM HIGH
YIELD MANAGED TRUST,
by
-------------------------------
Name:
Title:
PUTNAM HIGH YIELD TRUST,
by
-------------------------------
Name:
Title:
PUTNAM VARIABLE TRUST, on behalf
of PUTNAM VT DIVERSIFIED INCOME
FUND,
by
-------------------------------
Name:
Title:
SKANDINAVISKA ENSKILDA
BANKEN AB (publ), NEW YORK
BRANCH,
by
/s/ Philip Montemurro
-------------------------------
Name: Philip Montemurro
Title: Vice President
by
/s/ Sveryer Johansson
-------------------------------
Name: Sveryer Johansson
Title: Vice President
<PAGE>
10
TORONTO DOMINION (TEXAS), INC.,
by
-------------------------------
Name:
Title:
GOLDMAN SACHS CREDIT PARTNERS
LP
by
/s/ Stephen J. McGuinness
-------------------------------
Name: Stephen J. McGuiness
Title: Managing Director
KZH PAMCO LLC,
by
/s/ Virginia Conway
-------------------------------
Name: Virginia Conway
Title: Authorized Agent
PAMCO CAYMAN, LTD.
by HIGHLAND CAPITAL
MANAGEMENT, L.P., as Collateral
Manager
by
/s/ Mark K. Okada
-------------------------------
Name: Mark K. Okada CFA
Title: Executive Vice President
DEUTSCHE FINANCIAL SERVICES
CORPORATION
by
-------------------------------
Name:
Title:
<PAGE>
1
AMENDMENT No. 3, CONSENT AND WAIVER dated as of
February 26, 1999 (this "Amendment"), to the Credit Agreement
dated as of March 6, 1998, as amended (the "Credit
Agreement"), among TEREX CORPORATION, a Delaware corporation
("Terex"), TEREX EQUIPMENT LIMITED, a company organized under
the laws of Scotland (the "Scottish Borrower"), P.P.M. S.A., a
company organized under the laws of the Republic of France
(the "French Borrower"), UNIT RIG (AUSTRALIA) PTY. LTD., a
company organized under the laws of New South Wales, Australia
(the "Australian Borrower"), and P.P.M. SP.A., a company
organized under the laws of the Republic of Italy (the
"Italian Borrower"), PICADILLY MASCHINENHANDEL GMBH & CO. KG,
a partnership organized under the laws of the Federal Republic
of Germany (the "German Borrower", and together with Terex,
the Scottish Borrower, the French Borrower, the Australian
Borrower and the Italian Borrower, the "Borrowers"), the
Lenders (as defined in the Credit Agreement), the Issuing
Banks (as defined in the Credit Agreement) and CREDIT SUISSE
FIRST BOSTON, a bank organized under the laws of Switzerland,
acting through its New York branch ("CSFB"), as administrative
agent (in such capacity, the "Administrative Agent") and as
collateral agent (in such capacity, the "Collateral Agent")
for the Lenders.
A. Pursuant to the Credit Agreement, the Lenders and the
Issuing Banks have extended credit to the Borrowers, and have agreed to extend
credit to the Borrowers, in each case pursuant to the terms and subject to the
conditions set forth therein.
B. The Borrowers have informed the Administrative Agent that
they propose to issue on or prior to April 30, 1999, Additional Subordinated
Notes (the "New Notes"), as permitted by Section 6.01(c) of the Credit
Agreement.
C. The Borrowers propose to (i) use the proceeds of the New
Notes to (a) prepay the scheduled amortization payments for the Term Loans
through and including March 31, 2000, and (b) prepay not less than $15,000,000
of the outstanding Revolving Loans, without reducing the Revolving Credit
Commitments, and (ii) use the balance of such proceeds to finance Permitted
Acquisitions and related fees and expenses.
D. The Borrowers have requested that the Required Lenders
consent to the use of proceeds of the New Notes as described in the preceding
paragraph and grant such waivers and agree to such modifications of the Credit
Agreement as are necessary to effectuate the same.
E. The Borrowers have requested that certain provisions of the
Credit Agreement be further amended as set forth herein.
F. The Required Lenders are willing to grant such amendments,
consents and waivers pursuant to the terms and subject to the conditions set
forth herein.
G. Capitalized terms used and not otherwise defined herein
shall have the meanings assigned to them in the Credit Agreement.
<PAGE>
2
Accordingly, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the sufficiency and receipt
of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Consent and Waiver. The German Borrower hereby
consents to Amendment No. 2, dated as of October 20, 1998, to the Credit
Agreement and agrees to be bound thereby.
SECTION 2. Amendment to Section 1.01 (Defined Terms) of the
Credit Agreement. (a) The definition of "Additional Subordinated Notes" in
Section 1.01 of the Credit Agreement is hereby amended by (i) deleting the words
"in an aggregate principal amount at any time outstanding not to exceed
$150,000,000 and" in the first two lines thereof, and (ii) deleting the word
"Term" in the seventh line thereof.
(b) After the definition of "Alternative Currency Term Loan"
in Section 1.01 of the Credit Agreement, the following definition is hereby
inserted:
"'Amendment No. 3' shall mean Amendment No. 3, Consent
and Waiver dated as of February 26,1999, to this Agreement,
among the Borrowers, the Lenders and CSFB."
(c) The definition of "Asset Sale" in Section 1.01 of the
Credit Agreement is hereby amended by deleting the words "and accounts
receivable" and inserting the words ", accounts receivable and/or letters of
credit supporting accounts receivable issued to Terex or any Subsidiary" in the
sixth line of such definition.
(d) The definition of "Italian Facilities" in Section 1.01 of
the Credit Agreement is hereby amended and restated in its entirety as follows:
"'Italian Facilities' shall mean the credit facilities of the
Italian Borrower or any other Subsidiary located in Italy."
SECTION 3. Amendment to Section 2.13 (Mandatory Prepayments)
of the Credit Agreement. Section 2.13 of the Credit Agreement is hereby amended
by (a) deleting the word "either" in the sixth line of paragraph (e), and (b)
replacing the words "and/or (ii) to prepay outstanding Term Loans in accordance
with Section 2.13(g)" in paragraph (e) with the following:
"(ii) to prepay outstanding Term Loans in accordance with
Section 2.13(g), and/or (iii) to prepay outstanding Revolving
Loans, without reducing the Revolving Credit Commitments
thereby,"
Section 2.13 of the Credit Agreement is hereby further amended by adding to the
end of paragraph (e) the following:
"Notwithstanding the foregoing, the Net Cash Proceeds from the
issuance of the New Notes (as defined in Amendment No. 3) will
be applied as set forth in Section 7 of Amendment No. 3."
SECTION 4. Amendment to Section 6.01 (Indebtedness) of the
Credit Agreement. Section 6.01 of the Credit Agreement is hereby amended by (a)
deleting the word "Term" in the second line of paragraph (c), (b) replacing the
amount of "$30,000,000" in paragraph (j) with the amount of "$70,000,000", (c)
deleting the words "existing on the date the Acquisition is consummated" in
<PAGE>
3
paragraph (k), and (d) replacing the amount of "$5,000,000" in paragraph (q)
with the amount of "$10,000,000".
SECTION 5. Amendment to Section 6.04 (Investments, Loans and
Advancements) of the Credit Agreement. Section 6.04 of the Credit Agreement is
hereby amended by inserting the word "Consolidated" before the words "Capital
Expenditures" in paragraph (f).
SECTION 6. Amendment to Section 6.10 (Capital Expenditures) of
the Credit Agreement. Section 6.10 of the Credit Agreement is hereby amended by
(a) inserting, at the end of the first sentence thereof, the words "plus 75% of
all Consolidated Capital Expenditures made by Subsidiaries within twelve months
prior to such Subsidiaries being acquired as Permitted Acquisitions", and (b)
inserting the word "Consolidated" before the words "Capital Expenditures" in
each place such term appears in the second sentence.
SECTION 7. Agreements. The Borrowers agree that, substantially
simultaneously with (and in any event not later than the Business Day next
following) the receipt of the Net Cash Proceeds of the New Notes, they will use
the proceeds thereof (a) to prepay the Term Loans scheduled to be paid through
and including March 31, 2000, pursuant to Sections 2.11(a) and (b) of the Credit
Agreement in the direct order of maturity, (b) thereafter, to prepay not less
than $15,000,000 of the outstanding Revolving Loans and (c) thereafter, at the
discretion of the Borrowers, to make Permitted Acquisitions pursuant to Section
6.04(d). To the extent the remaining Net Cash Proceeds are not used to finance
such Permitted Acquisitions and related fees and expenses on or prior to April
30, 1999, then such proceeds (but not any investment earnings, if any, thereon,
which shall be for the account of the Borrowers) shall be applied by the
Administrative Agent to the prepayment of Loans in accordance with Section
2.13(e) of the Credit Agreement, as amended hereby. If the maturity of the Loans
has been accelerated pursuant to Article VII of the Credit Agreement, then the
Administrative Agent may, in its discretion, require the Borrowers to apply the
remaining proceeds (and all investment earnings, if any, thereon) to any of the
Obligations in accordance with the terms of the Credit Agreement and the other
Loan Documents.
SECTION 8. Representations and Warranties. Each of the
Borrowers represents and warrants to each other party hereto that, after giving
effect to this Amendment, (a) the representations and warranties set forth in
Article III of the Credit Agreement are true and correct in all material
respects on and as of the date hereof with the same effect as though made on and
as of the date hereof, except to the extent such representations and warranties
expressly relate to an earlier date, and (b) no Default or Event of Default has
occurred and is continuing.
SECTION 9. Conditions to Effectiveness. This Amendment shall
become effective as of the date first written above on the date that the
Administrative Agent shall have received counterparts of this Amendment which,
when taken together, bear the signatures of the Borrowers and the Required
Lenders.
SECTION 10. Effect of Amendment. Except as expressly set
forth herein, this Amendment shall not by implication or otherwise limit,
impair, constitute a waiver of, or otherwise affect the rights and remedies of
the Lenders, the Swingline Lender, any Issuing Bank, the Collateral Agent or
<PAGE>
4
the Administrative Agent, under the Credit Agreement or any other Loan Document,
and shall not alter, modify, amend or in any way affect any of the terms,
conditions, obligations, covenants or agreements contained in the Credit
Agreement or any other Loan Document, all of which are ratified and affirmed in
all respects and shall continue in full force and effect. Nothing herein shall
be deemed to entitle any Borrower to a consent to, or a waiver, amendment,
modification or other change of, any of the terms, conditions, obligations,
covenants or agreements contained in the Credit Agreement or any other Loan
Document in similar or different circumstances. This Amendment shall apply and
be effective only with respect to the provisions of the Credit Agreement
specifically referred to herein.
SECTION 11. Counterparts. This Amendment may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument. Delivery of any executed counterpart of a signature page of
this Amendment by facsimile transmission shall be as effective as delivery of a
manually executed counterpart hereof.
SECTION 12. Applicable Law. THIS AMENDMENT SHALL BE GOVERNED
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
SECTION 13. Headings. The headings of this Amendment are for
purposes of reference only and shall not limit or otherwise affect the meaning
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
TEREX CORPORATION,
by
/s/ Eric I. Cohen
-------------------------------
Name: Eric I. Cohen
Title: Senior Vice President
TEREX EQUIPMENT LIMITED,
by
/s/ Eric I. Cohen
-------------------------------
Name: Eric I. Cohen
Title: Director
<PAGE>
5
P.P.M. S.A.,
by
/s/ Fil Filipov
-------------------------------
Name: Fil Filipov
Title: CEO
UNIT RIG (AUSTRALIA) PTY. LTD.,
(now known as Terex Mining (Austrialia)
Pty. Ltd.),
by
/s/ Eric I. Cohen
-------------------------------
Name: Eric I. Cohen
Title: Director
P.P.M. SP.A,
by
/s/ Fil Filipov
-------------------------------
Name: Fil Filipov
Title: Chairman
PICADILLY MASCHINENHANDEL
GMBH & CO. KG,
by
/s/ Eric I. Cohen
-------------------------------
Name: Eric I. Cohen
Title: Director
CREDIT SUISSE FIRST BOSTON,
individually and as Administrative Agent,
Collateral Agent and Swingline Lender,
by
/s/ Kristin Lepri
-------------------------------
Name: Kristin Lepri
Title: Associate
by
/s/ Bill O'Daly
-------------------------------
Name: Bill O'Daly
Title: Vice President
<PAGE>
6
ABN AMRO BANK N.V.,
by
/s/ Lisa Megeaski
-------------------------------
Name: Lisa Megeaski
Title: Vice President
by
/s/ Richard Schrage
-------------------------------
Name: Richard Schrage
Title: Assistant Vice President
ALLIANCE CAPITAL MANAGEMENT
L.P., as Manager on behalf of ALLIANCE
CAPITAL FUNDING, L.L.C. by:
ALLIANCE CAPITAL MANAGEMENT
CORPORATION, General Partner of
Alliance Capital Management L.P.,
by
-------------------------------
Name:
Title:
ARES LEVERAGED INVESTMENT
FUND L.P.,
by ARES Management, L.P.
by ARES Operating Member, LLC
Its General Partner
by
/s/ David A. Sachs
-------------------------------
Name: David A. Sachs
Title: Vice President
BANK OF TOKYO-MITSUBISHI TRUST
COMPANY,
by
/s/ Paul P. Malecki
-------------------------------
Name: Paul P. Malecki
Title: Vice President
<PAGE>
7
BANKBOSTON N.A., as Revolver and
Term A Lender,
by
/s/ Garrett Quinn
-------------------------------
Name: Garrett Quinn
Title: Vice President
BANKBOSTON, N.A.,
by
/s/ Garrett Quinn
-------------------------------
Name: Garrett Quinn
Title: Vice President
BLACK DIAMOND CAPITAL
MANAGEMENT,LLC,
AS COLLATERAL MANAGER FOR:
BLACK DIAMOND CLO 1998-1 LTD.,
by
-------------------------------
Name:
Title:
CIBC INC.,
by
/s/ Ihor Zaluckyj
-------------------------------
Name: Ihor Zaluckyj
Title: Executive Director
CIBC Oppenheimer Corp.,
as Agent
THE CIT GROUP/EQUIPMENT
FINANCING, INC.,
by
/s/ Eric M. Moore
-------------------------------
Name: Eric M. Moore
Title: Assistant Vice President
<PAGE>
8
CREDIT LYONNAIS, NEW YORK
BRANCH,
by
/s/ Vladimir Labun
-------------------------------
Name: Vladimir Labun
Title: First Vice President-Manager
CYPRESSTREE INVESTMENT
PARTNERS I, LTD., BY: CYPRESSTREE
INVESTMENT MANAGEMENT
COMPANY INC., as portfolio manager,
by
/s/ Philip C. Robbins
-------------------------------
Name: Philip C. Robbins
Title: Principal
DEBT STRATEGIES FUND II, INC.,
by
/s/ George D. Pelrose
-------------------------------
Name: George D. Pelrose
Title: Authorized Signatory
DRESDNER BANK AG, NEW YORK
AND GRAND CAYMAN BRANCHES,
by
/s/ Beverly G. Cason
-------------------------------
Name: Beverly G. Cason
Title: Vice President
by
/s/ John Sweeney
-------------------------------
Name: John Sweeney
Title: Assistant Vice President
DEUTSCHE FINANCIAL SERVICES
CORPORATION
by
/s/ Pamela D. Petrick
-------------------------------
Name: Pamela D. Petrick
Title: Vice President
<PAGE>
9
ELC (CAYMAN) LTD.,
by
/s/ Thomas M. Finke
-------------------------------
Name: Thomas M. Finke
Title: Managing Director
FIRST DOMINION FUNDING I,
by
-------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK,
by
/s/ Henry R. Biedrzycki
-------------------------------
Name: Henry R. Biedrzycki
Title: Vice President
GENERAL ELECTRIC CAPITAL
CORPORATION,
by
-------------------------------
Name:
Title:
KZH III LLC,
by
/s/ Virginia Conway
-------------------------------
Name: Virginia Conway
Title: Authorized Agent
KZH PAMCO LLC,
by
/s/ Virginia Conway
-------------------------------
Name: Virginia Conway
Title: Authorized Agent
<PAGE>
10
MARINE MIDLAND BANK,
by
/s/ Susan L. LeFevre
-------------------------------
Name: Susan L. LeFevre
Title: Authorized Signatory
MERRILL LYNCH GLOBAL
INVESTMENT SERIES: INCOME
STRATEGIES PORTFOLIO, by MERRILL
LYNCH ASSET MANAGEMENT, L.P., as
investment advisor,
by
/s/ George D. Pelose
-------------------------------
Name: George D. Pelose
Title: Authorized Signatory
MERRILL LYNCH SENIOR FLOATING
RATE FUND, INC.,
by
/s/ George D. Pelose
-------------------------------
Name: George D. Pelose
Title: Authorized Signatory
MERRILL LYNCH PRIME RATE
PORTFOLIO, by MERRILL LYNCH
ASSET MANAGEMENT, L.P., as
investment advisor,
by
/s/ George D. Pelose
-------------------------------
Name: George D. Pelose
Title: Authorized Signatory
MOUNTAIN CLO TRUST,
by
/s/ Kazuyuki Nishimura
-------------------------------
Name: Kazuyuki Nishimura
Title: Authorized Signatory
<PAGE>
11
NATIONAL CITY BANK,
by
/s/ Andrew J. Walshaw
-------------------------------
Name: Andrew J. Walshaw
Title: Vice President
PAM CAPITAL FUNDING LP
by HIGHLAND CAPITAL
MANAGEMENT, L.P., as Collateral
Manager
by
/s/ Mark K. Okada CFA
-------------------------------
Name: Mark K. Okada CFA
Title: Executive Vice President
Highland Capital Management
L.P.
PAMCO CAYMAN, LTD.
by HIGHLAND CAPITAL
MANAGEMENT, L.P., as Collateral
Manager
by
/s/ Mark K. Okada CFA
-------------------------------
Name: Mark K. Okada CFA
Title: Executive Vice President
Highland Capital Management
L.P.
PUTNAM DIVERSIFIED INCOME
TRUST,
by
-------------------------------
Name:
Title:
<PAGE>
12
PUTNAM FIDUCIARY TRUST
COMPANY, on behalf of PUTNAM HIGH
YIELD MANAGED TRUST,
by
-------------------------------
Name:
Title:
PUTNAM HIGH YIELD TRUST,
by
-------------------------------
Name:
Title:
PUTNAM VARIABLE TRUST, on behalf
of PUTNAM VT DIVERSIFIED INCOME
FUND,
by
-------------------------------
Name:
Title:
PUTNAM VT HIGH YIELD FUND,
by
-------------------------------
Name:
Title:
SENIOR HIGH INCOME PORTFOLIO,
INC.
by
/s/ George D. Pelose
-------------------------------
Name: George D. Pelose
Title: Authorized Signatory
<PAGE>
13
SKANDINAVISKA ENSKILDA
BANKEN AB (publ), NEW YORK
BRANCH,
by
/s/ Sverker Johansson
-------------------------------
Name: Sverker Johansson
Title: Vice President
by
/s/ Phillip Montemurro
-------------------------------
Name: Phillip Montemurro
Title: Vice President
TORONTO DOMINION (TEXAS), INC.,
by
/s/ Sonja R. Jordan
-------------------------------
Name: Sonja R. Jordan
Title: Vice President
KZH SHOSHONE LLC,
by
/s/ Virginia Conway
-------------------------------
Name: Virginia Conway
Title: Authorized Agent
CANADIAN IMPERIAL BANK OF
COMMERCE,
by
/s/ Koren Volk
-------------------------------
Name: Koren Volk
Title: Authorized Signatory
$100,000,000
TEREX CORPORATION
8 7/8% Series C Senior Subordinated Notes due 2008
PURCHASE AGREEMENT
March 4, 1999
CREDIT SUISSE FIRST BOSTON CORPORATION
CIBC OPPENHEIMER CORP.
c/o Credit Suisse First Boston Corporation,
Eleven Madison Avenue,
New York, N.Y. 10010-3629
Dear Sirs:
1. Introductory. Terex Corporation, a Delaware corporation (the
"Company"), proposes, subject to the terms and conditions stated herein, to
issue and sell to the several initial purchasers named in Schedule A hereto (the
"Purchasers") U.S.$100,000,000 principal amount of its 8-7/8% Series C Senior
Subordinated Notes due 2008 ("Notes") to be issued under an indenture, to be
dated as of March 9, 1999 (the Indenture"), between the Company, the guarantors
named therein and United States Trust Company of New York, as Trustee, which
Notes will be unconditionally guaranteed by Koehring Cranes, Inc., Payhauler
Corp., PPM Cranes, Inc., Terex Aerials, Inc., Terex Cranes, Inc., Terex Mining
Equipment, Inc., Terex-RO Corporation, Terex-Telelect, Inc., The American Crane
Corporation and O&K Orenstein & Koppel, Inc. (the "Guarantors," and together
with the Company, the "Issuers"). For purposes of this agreement, the term
"Offered Securities" means the Notes, together with the guarantees (the
"Guarantees") thereof by the Guarantors. The United States Securities Act of
1933, as amended, is herein referred to as the "Securities Act."
Holders (including subsequent transferees) of the Notes will have the
registration rights set forth in the Registration Rights Agreement (the
"Registration Rights Agreement"), to be dated the Closing Date (as hereinafter
defined), in substantially the form of Exhibit A hereto. Pursuant to the
Registration Rights Agreement, the Company and the Guarantors will agree to file
with the Securities and Exchange Commission (the "Commission") under the
circumstances set forth therein, (i) a registration statement under the
Securities Act (the "Exchange Offer Registration Statement") registering an
issue of senior subordinated notes identical in all material respects to the
Notes (the "Exchange Notes") to be offered in exchange for the Notes (the
"Exchange Offer") and (ii) under the circumstances set forth therein, a
registration statement pursuant to Rule 415 under the Securities Act (the "Shelf
Registration Statement").
This Agreement, the Indenture, the Offered Securities, the Exchange
Notes and the Registration Rights Agreement, are sometimes referred to in this
Agreement, individually, as a "Transaction Document" and, collectively, as the
"Transaction Documents," and the execution and delivery of the Indenture and the
issuance and sale of the Offered Securities are sometimes referred to herein,
individually, as a "Transaction" and collectively, as the "Transactions."
1
<PAGE>
Each of the Issuers, jointly and severally, hereby agrees with the
several Purchasers as follows:
2. Representations and Warranties of the Company. Each of the Issuers,
jointly and severally, represents and warrants to, and agrees with, the several
Purchasers that:
(a) A preliminary offering circular dated February 26, 1999,
and an offering circular relating to the Offered Securities to be
offered by the Purchasers have been prepared by the Company. Such
preliminary offering circular and offering circular (including material
incorporated by reference therein), as supplemented as of the date of
this Agreement, together with any other document approved by the
Company for use in connection with the contemplated resale of the
Offered Securities are hereinafter collectively referred to as the
"Offering Document". On the date of this Agreement, the Offering
Document does not include any untrue statement of a material fact or
omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. The preceding sentence does not apply to
statements in or omissions from the Offering Document based upon
written information furnished to the Company by any Purchaser through
Credit Suisse First Boston Corporation ("CSFBC") specifically for use
therein, it being understood and agreed that the only such information
is that described as such in Section 7(b). Except as disclosed in the
Offering Document, the Company's Annual Report on Form 10-K most
recently filed with the Securities and Exchange Commission (the
"Commission") and all subsequent reports (collectively, the "Exchange
Act Reports") which have been filed by the Company with the Commission
or sent to stockholders in either case pursuant to the Securities
Exchange Act of 1934 (the "Exchange Act") did not include, as of their
respective dates, any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
Such documents, when they were filed with the Commission, conformed in
all material respects to the requirements of the Exchange Act and the
rules and regulations of the Commission thereunder.
(b) Each of the Issuers has been duly incorporated and is an
existing corporation in good standing under the laws of the
jurisdiction of its incorporation, with the corporate power and
authority to own its properties and conduct its business as described
in the Offering Document; and each of the Issuers is duly qualified to
do business as a foreign corporation in good standing in all other
jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification, except where the
failure to be so qualified and in good standing could not reasonably be
expected, individually or in the aggregate, to have a material adverse
effect on the condition (financial or other), business, properties or
results of operations of the Company and its subsidiaries taken as a
whole (a "Material Adverse Effect").
(c) Each subsidiary of the Company other than the Guarantors
that (i) generates 5% or more of the revenues, (ii) generates 5% or
more of the operating income, or (iii) holds 5% or more of the assets,
in each case, of the Company and its subsidiaries on a consolidated
basis (each, a "Significant Non-Guarantor Subsidiary," and, together
with the Guarantors, each a "Significant Subsidiary"), has been duly
incorporated and is an existing corporation in good standing under the
laws of the jurisdiction of its incorporation, with the corporate power
and authority to own its properties and conduct its business as
described in the Offering Document; and each Significant Non-Guarantor
Subsidiary of the Company is duly qualified to do business as a foreign
corporation in good standing in all other jurisdictions in which its
ownership or lease of property or the conduct of its business requires
such qualification, except where the failure to be so qualified and in
good standing could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect; all of the issued and
outstanding capital stock of the Company and of each Significant
Subsidiary has been duly authorized and validly issued and is fully
paid and nonassessable; and, except as expressly disclosed or
incorporated by reference in the Offering Document and except for (i)
pledges in favor of Credit Suisse First Boston, as collateral agent for
the lenders, under the Company's Credit Agreement, dated as of March 6,
1998, as amended (the "Credit Facility"), among the Company, certain of
its subsidiaries and the lenders named therein, and (ii) the purchase
money security interest in respect of 49% of the share capital of Gru
Comedil SpA, the capital stock of each Significant Subsidiary owned by
the Company, directly or through subsidiaries, is owned free from
liens, encumbrances and defects.
2
<PAGE>
(d) The Indenture has been duly authorized by all necessary
corporate action; the Offered Securities have been duly authorized by
each of the Issuers by all necessary corporate action; and when the
Offered Securities are delivered and paid for pursuant to this
Agreement and the Indenture on the Closing Date (as defined below), the
Indenture will have been duly executed and delivered by each of the
Issuers, such Offered Securities will have been duly executed,
authenticated, issued and delivered by each of the Issuers and will
conform in all material respects to the description thereof contained
in the Offering Document and the Indenture and such Offered Securities
will constitute valid and legally binding obligations of each of the
Issuers, enforceable in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
(e) Except as disclosed or reflected in the fees and expenses
set forth in the Offering Document, there are no contracts, agreements
or understandings between the Company and any person that would give
rise to a valid claim against the Company or any Purchaser for a
brokerage commission, finder's fee or other like payment in connection
with the Transactions.
(f) Except for (a) that certain Registration Rights Agreement,
dated as of December 9, 1994, by and among Randolph W. Lenz, David J.
Langevin, Marvin B. Rosenberg and the Company, (b) that certain Warrant
Registration Rights Agreement, dated as of December 20, 1993, by and
among the Company and the parties signatory thereto, (c) that certain
Registration Rights Agreement, dated May 9, 1995, between the Company,
Jefferies & Company, Inc., and Dillon, Read & Co. Inc., and (d) that
certain Agreement, dated as of November 2, 1995, between the Company
and Randolph W. Lenz, there are no contracts, agreements or
understandings between the Company and any person granting such person
the right to require the Company to file a registration statement under
the Securities Act with respect to any securities of the Company owned
or to be owned by such person or to require the Company to include such
securities in any securities being registered pursuant to any other
registration statement filed by the Company under the Securities Act.
(g) Except for those which have been previously obtained or as
to which the failure to obtain would not, individually or in the
aggregate, have a material adverse effect on the consummation of the
Transactions by the Issuers, no consent, approval, authorization, or
order of, or filing with, any governmental agency or body or any court
is required for the consummation of the Transactions as contemplated by
(i) this Agreement in connection with the issuance and sale of the
Offered Securities by the Issuers, or (ii) any other Transaction
Documents in connection with the consummation of the transactions
contemplated therein.
3
<PAGE>
(h) The execution, delivery and performance by each of the
Company and its subsidiaries (to the extent each is a party thereto) of
each of the Transaction Documents and compliance with the terms and
provisions thereof will not result in a breach or violation of any of
the terms and provisions of, or constitute a default under, (i) any
statute, any rule, regulation or order of any governmental agency or
body or any court, domestic or foreign, having jurisdiction over the
Company or any Significant Subsidiary of the Company or any of their
properties, or (ii) any agreement or instrument to which the Company or
any such Significant Subsidiary is a party or by which the Company or
any such Significant Subsidiary is bound or to which any of the
properties of the Company or any such Significant Subsidiary is
subject, or (iii) the charter or by-laws of the Company or any such
Significant Subsidiary, except (A) in each case, that any rights to
indemnity and contribution may be limited by federal and state
securities laws and public policy considerations and (B) in the case of
clauses (i) and (ii) for such breaches, violations or defaults as would
not, individually or in the aggregate, have a material adverse effect
on the consummation of the Transactions by such parties; and each of
the Issuers has full corporate power and authority to authorize, issue
and sell the Offered Securities as contemplated by this Agreement.
(i) This Agreement has been duly authorized, executed and
delivered by the Company. Each of the other Transaction Documents has
been, or as of the Closing Date will have been, duly authorized,
executed and delivered by each of the Company and its subsidiaries (to
the extent each is a party thereto) and each Transaction Document
conforms or will conform in all material respects to the descriptions
thereof contained in the Offering Document and each Transaction
Document (other than this Agreement) is or will constitute valid and
legally binding obligations of the Company and its subsidiaries (to the
extent each is a party thereto), enforceable in accordance with its
respective terms, except that any rights to indemnity and contribution
may be limited by federal and state securities laws and public policy
considerations and subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles.
(j) Except as disclosed in the Offering Document, the Company
and its Significant Subsidiaries have good title to all real properties
and all other properties and assets owned by them that are material to
the Company and its subsidiaries taken as a whole, in each case free
from liens and encumbrances that would materially affect the value
thereof or materially interfere with the use made or to be made thereof
by them; and except as disclosed in the Offering Document, the Company
and its Significant Subsidiaries hold any leased real or personal
property that is material to the Company and its subsidiaries taken as
a whole under valid and enforceable leases with no exceptions that
would materially interfere with the use made or to be made thereof by
them.
(k) The Company and its subsidiaries (A) possess all
certificates, authorities or permits issued by appropriate governmental
agencies or bodies necessary to conduct the business now operated by
them, except for those which the failure to so possess could not
reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect and (B) have not received any notice of
proceedings relating to the revocation or modification of any such
certificate, authority or permit that, if determined adversely to the
Company or any of its subsidiaries, would reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
(l) Except as disclosed in the Offering Document, no labor
strike, slowdown, stoppage or dispute (except for routine disciplinary
and grievance matters) with the employees of the Company or any
subsidiary exists or, to the knowledge of the Company, is imminent,
that would reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect.
4
<PAGE>
(m) The Company and its subsidiaries own, possess, have the
right to use, or can acquire on reasonable terms, adequate trademarks,
trade names and other rights to inventions, know-how, patents,
copyrights, confidential information and other intellectual property
(collectively, "intellectual property rights") used in the conduct of
the business now operated by them, except for such failures to so own,
possess or have the right to use or acquire such intellectual property
rights which would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect, and have not received any
notice of infringement of or conflict with asserted rights of others
with respect to any intellectual property rights that, if determined
adversely to the Company or any of its subsidiaries, would,
individually or in the aggregate, have a Material Adverse Effect.
(n) Except as disclosed in the Offering Document, neither the
Company nor any of its subsidiaries (i) is in violation of any statute,
any rule, regulation, decision or order of any governmental agency or
body or any court, domestic or foreign, relating to the use, disposal
or release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to
hazardous or toxic substances (collectively, "environmental laws'),
(ii) owns or operates any real property that to the knowledge of the
Company is contaminated with any substance that is subject to any
environmental laws, (iii) is to the knowledge of the Company liable for
any off-site disposal or contamination pursuant to any environmental
laws, or (iv) is to the knowledge of the Company subject to any claim
relating to any environmental laws, in each case of clauses (i), (ii),
(iii) or (iv) above, which violation, contamination, liability or claim
would individually or in the aggregate have a Material Adverse Effect;
and the Company is not aware of any pending investigation which might
lead to such a claim.
(o) Except as disclosed in the Offering Document, there are no
pending actions, suits or proceedings against or affecting the Company,
any of its subsidiaries or any of their respective properties that have
a reasonable likelihood of being adversely determined and, if
determined adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a Material Adverse Effect, or
would materially and adversely affect the ability of the Company to
perform its obligations under the Transaction Documents, or which are
otherwise material in the context of the sale of the Offered Securities
and the consummation of the other Transactions; and no such actions,
suits or proceedings are threatened in writing or, to the Company's
knowledge, contemplated.
(p) The financial statements included or incorporated by
reference in the Offering Document present fairly in all material
respects the financial position, as applicable, (a) of the Company and
its consolidated subsidiaries, (b) of PPM Cranes, Inc. and its
consolidated subsidiaries and (c) of O&K Mining GmbH and its
consolidated subsidiaries, in each case as of the dates shown and their
results of operations and cash flows for the periods shown (subject in
the case of interim financial statements to normal year-end
adjustments), and such financial statements have been prepared in
conformity with generally accepted accounting principles in the United
States applied on a consistent basis and the schedules included or
incorporated by reference in the Offering Document present fairly the
information required to be stated therein. The assumptions used in
preparing the pro forma financial data incorporated by reference in the
Offering Document provide a reasonable basis for presenting the
significant effects directly attributable to the transactions or events
described therein, the related pro forma adjustments give appropriate
effect to those assumptions, and the pro forma columns therein reflect
the proper application of those adjustments to the corresponding
historical financial statement amounts.
5
<PAGE>
(q) Except as disclosed in the Offering Document, since the
date of the latest financial statements included in the Offering
Document, there has been no material adverse change, nor any
development or event that could reasonably be expected to result in a
material adverse change, in the condition (financial or other),
business, properties or results of operations of the Company and its
subsidiaries taken as a whole, and, except as disclosed in or
contemplated by the Offering Document, there has been no dividend or
distribution of any kind declared, paid or made by the Company on any
class of its capital stock.
(r) None of the Issuers is an open-end investment company,
unit investment trust or face-amount certificate company that is or is
required to be registered under Section 8 of the United States
Investment Company Act of 1940 (the "Investment Company Act"); and each
of the Issuers is not and, after giving effect to the offering and sale
of the Offered Securities and the application of the proceeds thereof
as described in the Offering Document and the consummation of the other
Transactions, will not be an "investment company" as defined in the
Investment Company Act.
(s) No securities of the Company or any of its subsidiaries
the same class (within the meaning of Rule 144A(d)(3) under the
Securities Act) as the Offered Securities are listed on any national
securities exchange registered under Section 6 of Exchange Act or
quoted in a U.S. automated inter-dealer quotation system.
(t) Assuming the representations of the Purchasers set forth
in Section 4 below are true and correct in all material respects and
that the Purchasers comply in all material respects with applicable
federal and state securities laws and regulations in connection with
the initial resale of the Offered Securities, the offer and sale of the
Offered Securities in the manner contemplated by this Agreement will be
exempt from the registration requirements of the Securities Act by
reason of Section 4(2) thereof and Regulation S thereunder; and it is
not necessary to qualify an indenture in respect of the Offered
Securities under the United States Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act").
(u) Neither the Company, nor any of its affiliates, nor any
person acting on its or their behalf (i) has, within the six-month
period prior to the date hereof, offered or sold in the United States
or to any U.S. person (as such terms are defined in Regulation S under
the Securities Act) the Offered Securities or any security of the same
class or series as the Offered Securities or (ii) has offered or will
offer or sell the Offered Securities (A) in the United States by means
of any form of general solicitation or general advertising within the
meaning of Rule 502(c) under the Securities Act or (B) with respect to
any such securities sold in reliance on Rule 903 of Regulation S
("Regulation S") under the Securities Act, by means of any directed
selling efforts within the meaning of Rule 902(b) of Regulation S. The
Company, its affiliates and any person acting on its or their behalf
have complied in all material respects and will comply in all material
respects with the offering restrictions requirement of Regulation S in
connection with the offer and sale of the Offered Securities. The
Company has not entered and will not enter into any contractual
arrangement with respect to the distribution of the Offered Securities
except for this Agreement.
(v) The Company is subject to Section 13 or 15(d) of the
Exchange Act.
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(w) The Company is permitted by the terms of the Credit
Facility to use the proceedings of this Offering in the manner
described in the Offering Document.
3. Purchase, Sale and Delivery of Offered Securities. On the basis of
the representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, the Company agrees to sell to the
Purchasers, and the Purchasers agree, severally and not jointly, to purchase
from the Company, at a purchase price of 94.923% of the principal amount thereof
plus accrued interest from March 9, 1999 to the Closing Date (as hereinafter
defined), the respective principal amounts of Notes set forth opposite the names
of the several Purchasers in Schedule A hereto.
The Company will deliver against payment of the purchase price the
Offered Securities in the form of one or more permanent global securities in
definitive form (the "Global Securities") deposited with the Trustee as
custodian for The Depository Trust Company ("DTC") and registered in the name of
Cede & Co., as nominee for DTC. Interests in any permanent Global Securities
will be held only in book-entry form through DTC, except in the limited
circumstances described in the Offering Document. Payment for the Offered
Securities shall be made by the Purchasers in Federal (same day) funds by
official check or checks drawn to the order of Terex Corporation or wire
transfer to an account at a bank designated by the Company and reasonably
acceptable to CSFBC at the office of Skadden, Arps, Slate, Meagher & Flom LLP at
9:00 A.M. (New York time), on March 9, 1999, or at such other time not later
than seven full business days thereafter as CSFBC and the Company determine,
such time being herein referred to as the "Closing Date," against delivery to
the Trustee as custodian for DTC of the Global Securities representing all of
the Securities. The Global Securities will be made available for checking at the
above office at least 24 hours prior to the Closing Date.
4. Representations by Purchasers; Resale by Purchasers.
(a) Each Purchaser severally represents and warrants to the
Company that it is a "qualified institutional buyer" within the meaning
of Rule 144A under the Securities Act.
(b) Each Purchaser severally agrees that it and each of its
affiliates has not entered and will not enter into any contractual
arrangement with respect to the distribution of the Offered Securities
except for any such arrangements with the other Purchaser or affiliates
of the other Purchaser or with the prior written consent of the
Company.
(c) Each Purchaser severally agrees that it and each of its
affiliates will not offer or sell the Offered Securities in the United
States by means of any form of general solicitation or general
advertising within the meaning of Rule 502(c) under the Securities Act,
including, but not limited to (i) any advertisement, article, notice or
other communication published in any newspaper, magazine or similar
media or broadcast over television or radio, or (ii) any seminar or
meeting whose attendees have been invited by any general solicitation
or general advertising. Each Purchaser severally agrees, with respect
to resales made in reliance on Rule 144A of any of the Offered
Securities, to deliver either with the confirmation of such resale or
otherwise prior to settlement of such resale a notice to the effect
that the resale of such Offered Securities has been made in reliance
upon the exemption from the registration requirements of the Securities
Act provided by Rule 144A.
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(d) Each of the Purchasers severally represents and agrees
that (i) it has not offered or sold and prior to the date six months
after the date of issue of the Offered Securities will not offer or
sell any Offered Securities to persons in the United Kingdom except to
persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which have
not resulted and will not result in an offer to the public in the
United Kingdom within the meaning of the Public Offers of Securities
Regulations 1995; (ii) it has complied and will comply with all
applicable provisions of the Financial Services Act 1986 with respect
to anything done by it in relation to the Offered Securities in, from
or otherwise involving the United Kingdom; and (iii) it has only issued
or passed on and will only issue or pass on in the United Kingdom any
document received by it in connection with the issue of the Offered
Securities to a person who is of a kind described in Article 11(3) of
the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1996 or is a person to whom such document may
otherwise lawfully be issued or passed on.
(e) Each Purchaser understands that the Offered Securities are
being sold to it hereunder in a transaction not involving a public
offering in the United States within the meaning of the Securities Act,
that the Offered Securities have not been, and except as described in
the Registration Rights Agreement, will not be registered under the
Securities Act, and that such Purchaser will only offer such Offered
Securities for resale only (i) inside the United States to persons whom
such Purchaser reasonably believes is a "qualified institutional buyer"
meeting the requirements of Rule 144A under the Securities Act, (ii)
outside the United States in a transaction complying with Rule 904
under the Securities Act, (iii) pursuant to an exemption from
registration under the Securities Act provided by Rule 144 (if
available), or (iv) pursuant to an effective registration statement
under the Securities Act, and, in each case of clauses (i) through
(iv), in accordance with any applicable securities laws of any state of
the United States, and such Purchaser will notify any subsequent
purchaser from it of such Offered Securities of the resale restrictions
applicable to the Offered Securities referred to in the Indenture and
the Offering Document.
(f) Each Purchaser represents and agrees that it is not
acquiring the Offered Securities with a view to any distribution
thereof in a transaction that would violate the Securities Act or the
securities laws of any state of the United States or any other
applicable jurisdiction.
(g) Each Purchaser understands and acknowledges that the
availability of an exemption from registration under the Securities Act
of the offer and sale of the Offered Securities depends in part on, and
the Issuers and, for the purposes of the opinions to be delivered to
the Purchasers pursuant to Section 6 hereof, counsel for the Issuers
and counsel for the Purchasers will rely upon, the accuracy of the
foregoing representations, and such Purchaser hereby consents to such
reliance.
5. Certain Agreements of the Company. Each of the Issuers, jointly and
severally, agrees with the several Purchasers that:
(a) The Company will advise CSFBC promptly of any proposal to
amend or supplement the Offering Document and will not effect such
amendment or supplementation without CSFBC's consent, which consent
shall not be unreasonably withheld or delayed. If, at any time prior to
the completion of the resale of the Offered Securities by the
Purchasers, any event occurs as a result of which the Offering Document
as then amended or supplemented would include an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, the Company promptly will notify CSFBC of
such event and promptly will prepare, at its own expense, an amendment
or supplement which will correct such statement or omission or effect
such compliance. Neither CSFBC's consent to, nor the Purchasers'
delivery of, any such amendment or supplement shall constitute a waiver
of any of the conditions set forth in Section 6.
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(b) The Company will furnish to CSFBC copies of any
preliminary offering circular, the Offering Document and all amendments
and supplements to such documents, in each case in such quantities as
CSFBC reasonably requests. At any time when the Company is not subject
to Section 13 or 15(d) of the Exchange Act, the Company will promptly
furnish or cause to be furnished to CSFBC (and, upon request, to the
other Purchaser) and, upon request of holders and prospective
purchasers of the Offered Securities, to such holders and purchasers,
copies of the information required to be delivered to holders and
prospective purchasers of the Offered Securities pursuant to Rule
144A(d)(4) under the Securities Act (or any successor provision
thereto) in order to permit compliance with Rule 144A in connection
with resales by such holders of the Offered Securities. The Company
will pay the expenses of printing and distributing to the Purchasers
all such documents.
(c) The Company will arrange for the qualification of the
Offered Securities for sale and the determination of their eligibility
for investment under the laws of such jurisdictions as CSFBC reasonably
designates and will continue such qualifications in effect so long as
required for the resale of the Offered Securities by the Purchasers.
(d) During the period of two years hereafter, the Company will
furnish to CSFBC and, upon request, to the other Purchaser, as soon as
practicable after the end of each fiscal year, a copy of its annual
report to stockholders for such year; and the Company will furnish to
CSFBC and, upon request, to the other Purchaser, as soon as available,
a copy of each other report and any definitive proxy statement of the
Company filed with the Commission under the Exchange Act, or mailed to
stockholders.
(e) During the period of two years after the Closing Date, the
Company will, upon request, furnish to CSFBC and the other Purchaser
and any holder of Offered Securities a copy of the restrictions on
transfer applicable to the Offered Securities.
(f) During the period of two years after the Closing Date, the
Company will not, and will not permit any of its affiliates (as defined
in Rule 144 under the Securities Act) to, resell any of the Offered
Securities that have been reacquired by any of them.
(g) During the period of two years after the Closing Date,
each of the Issuers will not be or become, an open-end investment
company, unit investment trust or face-amount certificate company that
is or is required to be registered under Section 8 of the Investment
Company Act.
(h) The Company will pay all expenses incidental to the
performance of its obligations under this Agreement and the Indenture,
including (i) the fees and expenses of the Trustee and its professional
advisers; (ii) all expenses in connection with the execution, issuance,
authentication, packaging and initial delivery of the Offered
Securities, the preparation and printing of this Agreement, the
Indenture, the Offered Securities, the Offering Document and amendments
and supplements thereto, and any other document relating to the
issuance, offer, sale and delivery of the Offered Securities; (iii) the
cost of listing the Offered Securities and qualifying the Offered
Securities for trading in The PortalSM Market (APORTAL@) and any
expenses incidental thereto; (iv) the cost of any advertising approved
by the Company in connection with the issue of the Offered Securities;
(v) any expenses (including reasonable fees and disbursements of
counsel) incurred in connection with qualification of the Offered
Securities for sale under the laws of such jurisdictions as CSFBC
designates and the printing of memoranda relating thereto; (vi) any
fees charged by investment rating agencies for the rating of the
Offered Securities; and (vii) expenses incurred in distributing
preliminary offering circulars and the Offering Document (including any
amendments and supplements thereto) to the Purchasers. The Company will
also pay for any travel expenses of the Company's officers and
employees and any other expenses of the Company in connection with
attending or hosting meetings with prospective purchasers of the
Offered Securities.
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<PAGE>
(i) In connection with the offering, until CSFBC shall have
notified the Company and the other Purchaser of the completion of the
resale by the Purchasers of the Offered Securities, neither the Company
nor any of its affiliates has or will, either alone or with one or more
other persons, bid for or purchase for any account in which it or any
of its affiliates has a beneficial interest any Offered Securities or
attempt to induce any person to purchase any Offered Securities; and
neither it nor any of its affiliates will make bids or purchases for
the purpose of creating actual, or apparent, active trading in, or of
raising the price of, the Offered Securities.
(j) During the period beginning on the date hereof and
continuing to and including the Closing Date, none of the Issuers will
offer, sell, contract to sell, announce their intention to sell, pledge
or otherwise dispose of, directly or indirectly, any United States
dollar denominated debt securities issued or guaranteed by any of the
Issuers and having a maturity of more than one year from the date of
issue. None of the Issuers will at any time offer, sell, contract to
sell, pledge or otherwise dispose of, directly or indirectly, any
securities under circumstances where such offer, sale, pledge, contract
or disposition would cause the exemption afforded by Section 4(2) of
the Securities Act or the safe harbor of Regulation S thereunder to
cease to be applicable to the offer and sale of the Offered Securities.
6. Conditions of the Obligations of the Purchasers. The obligations of
the Purchasers to purchase and pay for the Offered Securities will be subject to
the accuracy in all material respects of the representations and warranties on
the part of the Issuers herein, to the accuracy in all material respects of the
statements of officers of the Issuers made pursuant to the provisions hereof, to
the performance by the Issuers of their respective obligations hereunder and to
the following additional conditions precedent:
(a) The Purchasers shall have received a letter, dated the
date of this Agreement, from PricewaterhouseCoopers LLP confirming that
they are independent public accountants within the meaning of the
Securities Act and the applicable published rules and regulations
thereunder ("Rules and Regulations") and stating to the effect that:
(i) in their opinion the financial statements and
schedules examined by them and included or incorporated by
reference in the Offering Document comply as to form in all
material respects with the applicable accounting requirements
of the Securities Act and the related published Rules and
Regulations;
(ii) they have performed the procedures specified by
the American Institute of Certified Public Accountants for a
review of interim financial information as described in
Statement of Auditing Standards No. 71, Interim Financial
Information, on the unaudited financial statements included in
or incorporated by reference in the Offering Document;
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<PAGE>
(iii) on the basis of the review referred to in
clause (ii) above, a reading of the latest available interim
financial statements of the Company, and of all subsidiaries
of the Company for which such interim financial statements are
provided, inquiries of officials of the Company, and of such
subsidiaries, who have responsibility for financial and
accounting matters and other specified procedures, nothing
came to their attention that caused them to believe that:
(A) with respect to the unaudited financial
statements included in or incorporated by reference
in the Offering Document, that any material
modifications should be made to such unaudited
financial statements for them to be in conformity
with generally accepted accounting principles;
(B) at the date of the latest available
balance sheet read by such accountants, or at a
subsequent specified date not more than three
business days prior to the date of this Agreement,
there was any change in the capital stock or any
increase in total debt or any decrease in
consolidated net current assets (working capital) or
decrease in shareholders' equity of the Company and
its consolidated subsidiaries, as compared with
amounts shown on the latest balance sheet included in
the Offering Document; or
(C) for the period from the closing date of
the latest income statement included in the Offering
Document to the closing date of the latest available
income statement read by such accountants there were
any decreases, as compared with the corresponding
period of the previous year and with the period of
corresponding length ended the date of the latest
income statement included in the Offering Document,
in consolidated net sales or in the total or per
share amounts of consolidated net income;
except in all cases set forth in clauses (B) and (C) above for
changes, increases or decreases which the Offering Document
disclose have occurred or may occur or which are described in
such letter;
(iv) they have performed the procedures specified
therein on the pro forma financial statements incorporated by
reference in the Offering Document;
(v) on the basis of the review referred to in clause
(iv) above, nothing came to their attention that caused them
to believe that the pro forma financial statements
incorporated by reference in the Offering Document do not
comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published
Rules and Regulations or that the pro forma adjustments have
not been properly applied to the historical amounts in the
compilation of those statements; and
(iv) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other
financial information contained in the Offering Document (in
each case to the extent that such dollar amounts, percentages
and other financial information are derived from the general
accounting records of the Company and its subsidiaries subject
to the internal controls of the Company's accounting system or
are derived directly from such records by analysis or
computation) with the results obtained from inquiries, a
reading of such general accounting records and other
procedures specified in such letter and have found such dollar
amounts, percentages and other financial information to be in
agreement with such results, except as otherwise specified in
such letter.
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<PAGE>
All financial statements and schedules included in material
incorporated by reference into the Offering Document shall be deemed included in
the Offering Document.
(b) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred (A) any change, or any
development or event that could reasonably be expected to result in a
change, in the condition (financial or other), business, properties or
results of operations of the Company and its subsidiaries taken as a
whole, which, in the judgment of a majority in interest of the
Purchasers including CSFBC, is material and adverse to the Company and
its subsidiaries taken as a whole and makes it impractical or
inadvisable to proceed with completion of the offering or the sale of
and payment for the Offered Securities; (B) any downgrading in the
rating of any debt securities of the Company by any Anationally
recognized statistical rating organization@ (as defined for purposes of
Rule 436(g) under the Securities Act), or any public announcement that
any such organization has under surveillance or review its rating in
effect on the date of this Agreement of any debt securities of the
Company (other than an announcement with positive implications of a
possible upgrading, and no implication of a possible downgrading, of
such rating); (C) any suspension or material limitation of trading in
securities generally on the New York Stock Exchange, or any setting of
minimum prices for trading on such exchange, or any suspension of
trading of any securities of the Company on any exchange or in the
over-the-counter market; (D) any banking moratorium declared by U.S.
Federal or New York authorities; or (E) any outbreak or escalation of
major hostilities in which the United States is involved, any
declaration of war by Congress or any other substantial national or
international calamity or emergency if, in the judgment of a majority
in interest of the Purchasers including CSFBC, the effect of any such
outbreak, escalation, declaration, calamity or emergency makes it
impractical or inadvisable to proceed with completion of the offering
or sale of and payment for the Offered Securities.
(c) The Purchasers shall have received an opinion, dated such
Closing Date, of Robinson Silverman Pearce Aronsohn & Berman LLP,
counsel for the Company, that:
(i) The Issuers organized under the laws of the State
of Delaware and each Significant Subsidiary organized under
the laws of the State of Delaware are corporations duly
incorporated, validly existing and in good standing under the
laws of the State of Delaware and have all requisite corporate
power and authority to own their respective properties and
carry on their respective businesses as described in the
Offering Document;
(ii) The Issuers organized under the laws of the
State of Delaware (to the extent each is a party) have taken
all necessary corporate action to duly authorize, execute,
deliver and perform their respective obligations under this
Agreement, the Indenture, the Offered Securities, the Exchange
Notes and the Registration Rights Agreement (collectively, the
"Closing Documents"); the Issuers organized under the laws of
the State of Delaware have taken all necessary corporate
action to execute, deliver and issue the Offered Securities;
the Offered Securities have been validly authorized, executed,
issued and delivered by the Issuers organized under the laws
of the State of Delaware and each of the Closing Documents
conforms in all material respects to the description thereof
contained in the Offering Document; and each of the Closing
Documents (other than this Agreement) have been validly
executed and delivered by, and constitute the legal, valid and
binding obligations of, each of the Issuers (to the extent
each is a party thereto), enforceable against the Issuers in
accordance with the terms thereof, except that any rights to
indemnity and contribution thereunder may be limited by
federal and state securities laws and public policy
consideration and subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting
creditors' rights and to general equity principles;
12
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(iii) Each of the Issuers is not and, after giving
effect to the offering and sale of the Offered Securities and
the application of the proceeds thereof as described in the
Offering Document and the consummation of the other Closing
Transactions (as defined below), will not be an "investment
company" within the meaning of the Investment Company Act of
1940, as amended;
(iv) Except for those consents as to which the
failure to obtain would not, individually or in the aggregate,
have a material adverse effect on the consummation of the
relevant Closing Transaction, neither the Company nor any
Significant Subsidiary incorporated under the laws of the
State of Delaware ("Domestic Significant Subsidiaries") is
required to obtain any consent, approval, authorization or
order of, or filing with, any governmental authority under any
Applicable Law (as defined) in connection with the
consummation by the Company and the Domestic Significant
Subsidiaries of the transactions contemplated by the Closing
Documents or otherwise in connection with the execution and
delivery of the Indenture and the issuance and sale of the
Offered Securities (the "Closing Transactions"), except such
as may be required under state securities laws (with respect
to which such counsel need express no opinion);
(v) The execution, delivery and performance by the
Company and its subsidiaries (to the extent each is a party
thereto) of each of the Closing Documents (including the
issuance and sale of the Offered Securities) and compliance by
the Company and such subsidiaries therewith will not conflict
with, constitute a default under or violate (i) any provision
of the charter or by-laws of the Company or any Domestic
Significant Subsidiary, (ii) any provision of any material
applicable law, rule or regulation (other than state
securities and blue sky laws, as to which such counsel need
express no opinion and except that any rights to indemnity and
contribution herein may be limited by federal and state
securities laws and public policy considerations), (iii) to
our knowledge, any judgment, order, writ, injunction or decree
to which the Company, its subsidiaries or any of their
respective properties are subject, or (iv) any agreement or
instrument filed as an exhibit to the Company's Exchange Act
Reports;
(vi) Such counsel has participated in the preparation
of the Offering Document and, although such counsel is not
passing upon and does not assume responsibility for the
accuracy, completeness or fairness of the Offering Document
(except statements made under the caption "Description of the
Notes" and "Description of Certain Indebtedness" of the
Offering Document insofar as they relate to legal matters),
such counsel shall state that , based upon such participation
but without independent review or verification, nothing has
come to such counsel's attention which causes it to believe
that, at any time from the date thereof through the Closing
Date, the Offering Document (except for financial statements
and related notes, and financial and statistical data and
supporting schedules included therein, as to which such
counsel need express no opinion) contained any untrue
statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under
which they were made, not misleading; the descriptions in the
Offering Document of statutes, legal and governmental
proceedings and contracts are accurate in all material
respects and fairly present the information required to be
shown; and such counsel do not know of any legal or
governmental proceedings that were required to be described in
any of the Exchange Act Reports as of their respective dates
which are not described as required or of any contracts or
documents of a character that were required to be described in
any of the Exchange Act Reports as of their respective dates
or to be filed as exhibits to the respective Exchange Act
Reports as of their respective dates which are not described
and filed as required.
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(vii) Assuming the representations of the Purchasers
set forth in Section 4 of this Agreement are true, complete
and correct in all material respects and assuming compliance
in all material respects by the Purchasers with the covenants
set forth in this Agreement and with applicable federal and
state securities laws and regulations in connection with the
initial resale of the Offered Securities, it is not necessary
in connection with (i) the offer, sale and delivery of the
Offered Securities by the Company to the Purchasers pursuant
to this Agreement or (ii) the resales of the Offered
Securities by the Purchasers in the manner contemplated by
this Agreement, to register the Offered Securities under the
Securities Act or to qualify an indenture in respect thereof
under the Trust Indenture Act.
Such counsel may state that, as it relates to
enforceability, the opinions expressed in clause (v) are
limited by (1) bankruptcy, insolvency, fraudulent conveyance
and similar laws affecting creditors' rights generally and (2)
equitable principles of general applicability. Such counsel
may also qualify such opinion in other respects reasonably
acceptable to the Purchasers.
(d) The Purchasers shall have received an opinion, dated such
Closing Date, of Eric I Cohen, general counsel of the Company, to the
effect that:
(i) The Issuers and each Significant Subsidiary
incorporated within the United States of America (the
"Domestic Significant Subsidiaries") have been duly
incorporated and are existing corporations in good standing
under the laws of their respective jurisdictions of
incorporation, with corporate power and authority to own their
respective properties and conduct their respective businesses
as described in the Offering Documents; and the Issuers and
each Domestic Significant Subsidiary are duly qualified to do
business as foreign corporations in good standing in all other
jurisdictions in which their ownership or lease of property or
the conduct of their business requires such qualifications,
except to the extent that the failure to be so qualified and
in good standing could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse
Effect. Based on my review of organizational documents (or
English translations thereof) of each Significant Subsidiary
incorporated outside the United States of America (the
"Foreign Significant Subsidiaries") and interviews and
statements of persons who are informed as to the formation and
status of the Foreign Significant Subsidiaries, the Foreign
Significant Subsidiaries have been duly incorporated and are
existing corporations in good standing under the laws of their
respective countries of organization, with corporate power and
authority to own their respective properties and conduct their
respective businesses as described in the Offering Document;
based on my review of organizational documents (or English
translations thereof) of the Foreign Significant Subsidiaries
and interviews and statements of persons who are informed as
to the formation and status of the Foreign Significant
Subsidiaries, the Foreign Significant Subsidiaries are duly
qualified to do business as foreign corporations in good
standing in all other jurisdictions in which their ownership
or lease of property or the conduct of their business requires
such qualifications, except to the extent that the failure to
be so qualified and in good standing could not reasonably be
expected, individually or in the aggregate, to have a Material
Adverse Effect.
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(ii) Based upon my examination of the corporate stock
books and records of each of the Domestic Significant
Subsidiaries and the corporate stock books and records (or
English translations thereof) of the Foreign Significant
Subsidiaries and interviews and statements of persons who are
informed as to the status of the Foreign Significant
Subsidiaries, all outstanding shares of the capital stock of
the Company and each Significant Subsidiary have been duly
authorized and validly issued, are fully paid and
nonassessable and conform in all material respects to the
description thereof contained in the Exchange Act Reports; and
the securityholders of each the Issuers have no preemptive
rights with respect to the Offered Securities;
(iii) Except for those agreements referred to in the
representation set forth in Section 2(f) hereof, there are no
contracts, agreements or understandings known to such counsel
between any of the Issuers and any person granting such person
the right to require any of the Issuers to file a registration
statement under the Act with respect to any securities of any
of the Issuers owned or to be owned by such person or to
require any of the Issuers to include such securities in
securities being registered pursuant to any other registration
statement filed by any of the Issuers under the Securities
Act;
(iv) Except for those consents as to which the
failure to obtain would not, individually or in the aggregate,
have a material adverse effect on the consummation of the
relevant Transaction, no consent, approval, authorization or
order of, or filing with, any governmental agency or body or
any court is required to be obtained or made by the Company or
any Significant Subsidiary under any Applicable Law for the
consummation of the Transactions or otherwise in connection
with the sale of the Offered Securities, except such as may be
required under state securities laws (with respect to which
such counsel need express no opinion);
(v) The execution and delivery of, and performance
by, each of the Company and its subsidiaries (to the extent
each is a party thereto) of its obligation under, each of the
Transaction Documents (including the issuance and sale of the
Offered Securities) will not result in a breach or violation
of any of the terms and provisions of, or constitute a default
under, any Applicable Law or order known to such counsel of
any governmental agency or body or any court having
jurisdiction over the Company or any Significant Subsidiary or
any of their respective properties (except that any rights to
indemnity and contribution herein may be limited by federal
and state securities laws and public policy considerations),
or any agreement or instrument to which the Company or any
Significant Subsidiary is a party or by which the Company or
any Significant Subsidiary is bound or to which any of the
properties of the Company or any Significant Subsidiary is
subject, or the charter or by-laws of the Company or any
Significant Subsidiary, and each of the Issuers has full power
and authority to authorize, issue and sell the Offered
Securities as contemplated by this Agreement;
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(vi) This Agreement has been duly authorized,
executed and delivered by each of the Issuers. Each of the
other Transaction Documents has been or will be duly
authorized, executed and delivered by each of the Company and
its subsidiaries (to the extent each is a party thereto); the
Offered Securities have been duly authorized, executed,
authenticated, issued and delivered by each of the Issuers and
each of the Transaction Documents conforms in all material
respects to the description thereof contained in the Offering
Document; and each of the Transaction Documents (other than
this Agreement) constitutes or will constitute valid and
legally binding obligations of the each of the Company and its
subsidiaries (to the extent each is a party thereto)
enforceable in accordance with its respective terms, except
that any rights to indemnity and contribution thereunder may
be limited by federal and state securities laws and public
policy considerations and subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting
creditors' rights and to general equity principles;
(vii) While such counsel is not passing upon and does
not assume responsibility for, and shall not be deemed to have
independently verified the accuracy, completeness or fairness
of the statements contained in the Offering Document (except
statements made under the caption "Description of the Notes"
and "Description of Certain Indebtedness" of the Offering
Document insofar as they relate to legal matters), such
counsel shall state that no facts have come to such counsel's
attention in the course of participating with officers and
representatives of the Company in the preparation of the
Offering Document (except for financial statements and
schedules and other financial and statistical data contained
therein, as to which such counsel need express no opinion) to
lead it to believe that any part of the Offering Document, as
of the Closing Date, contained any untrue statement of a
material fact or omitted to state any material fact required
to be stated therein or necessary to make the statements
therein not misleading; or that the Offering Document, as of
its date or as of the Closing Date, contained any untrue
statement of a material fact or omitted to state any material
fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading; the descriptions in the Offering Document of
statutes, legal and governmental proceedings and contracts and
other documents are accurate and fairly present the
information required to be shown; and such counsel does not
know of any legal or governmental proceedings that were
required to be described in any of the Exchange Act Reports as
of their respective dates which are not described as required
or of any contracts or documents of a character that were
required to be described in any of the Exchange Act Reports as
of their respective dates or to be filed as exhibits to the
respective Exchange Act Reports as of their respective dates
which are not described or filed as required.
Such counsel may state that, as it relates to
enforceability, the opinions expressed in clause (vi) are
limited by (1) bankruptcy, insolvency, fraudulent conveyance
and similar laws affecting creditors' rights generally and (2)
equitable principles of general applicability. Such counsel
may also qualify such opinion in other respects reasonably
acceptable to the Purchasers.
16
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(e) The Purchasers shall have received from Skadden, Arps,
Slate, Meagher & Flom LLP, counsel for the Purchasers, such opinion or
opinions, dated such Closing Date, with respect to the incorporation of
the Company, the validity of the Offered Securities, the Offering
Document, the exemption from registration for the offer and sale of the
Offered Securities by the Company to the several Purchasers and the
resales by the several Purchasers as contemplated hereby and other
related matters as CSFBC may require, and the Company shall have
furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters.
(f) The Purchasers shall have received a certificate, dated
the Closing Date, of the President or any Vice President and a
principal financial or accounting officer of the each of the Issuers in
which such officers, to the best of their knowledge after reasonable
investigation, shall state that the representations and warranties of
such Issuer in this Agreement are true and correct, that such Issuer
has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied hereunder at or prior to the Closing
Date, and that, subsequent to the date of the most recent financial
statements in the Offering Document, there has been no material adverse
change, nor any development or event involving a prospective material
adverse change, in the condition (financial or other), business,
properties or results of operations of the Company and its
subsidiaries, taken as a whole, except as set forth in or contemplated
by the Offering Document or as described in such certificate.
(g) The Purchasers shall have received letters, dated the
Closing Date, of PricewaterhouseCoopers LLP which meets the
requirements of subsection (a) of this Section, except that the
specified date referred to in such subsection will be a date not more
than three business days prior to the Closing Date for the purposes of
this subsection.
(h) The Company, the Guarantors and the Trustee shall have
entered into the Indenture and you shall have received counterparts,
conformed as executed, thereof.
(i) The Company and the Guarantors shall have entered into the
Registration Rights Agreement and you shall have received counterparts,
conformed as executed, thereof.
(j) The Offered Securities shall have been designated PORTAL
securities in accordance with the rules and regulations adopted by the
NASD relating to trading in the PORTAL market.
The Company will furnish the Purchasers with such conformed copies of
such opinions, certificates, letters and documents as the Purchasers reasonably
request. CSFBC may in its sole discretion waive on behalf of the Purchasers
compliance with any conditions to the obligations of the Purchasers hereunder.
7. Indemnification and Contribution. (a) Each of the Issuers, jointly
and severally, will indemnify and hold harmless each Purchaser against any
losses, claims, damages or liabilities, joint or several, to which such
Purchaser may become subject, under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Offering Document, or any amendment or
supplement thereto, or any related preliminary offering circular, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Purchaser for any legal or other
expenses reasonably incurred by such Purchaser in connection with investigating
or defending any such loss, claim, damage, liability or action as such expenses
are incurred; provided, however, that the Company will not be liable in any such
case to the extent that any such loss, claim, damage or liability (or actions in
respect thereof) arises out of or is based upon an untrue statement or alleged
untrue statement in or omission or alleged omission from any of such documents
in conformity with written information furnished to the Company by any Purchaser
through CSFBC specifically for use therein, it being understood and agreed that
the only such information consists of the information described as such in
subsection (b) below.
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(b) Each Purchaser will severally and not jointly indemnify
and hold harmless each of the Issuers against any losses, claims, damages or
liabilities to which such Issuers may become subject, under the Securities Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Offering
Document, or any amendment or supplement thereto, or any related preliminary
offering circular, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary in order to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in conformity with
information furnished to the Company by such Purchaser through CSFBC
specifically for use therein, and will reimburse each Issuer for any legal or
other expenses reasonably incurred by the Issuers in connection with
investigating or defending any such loss, claim, damage, liability or action as
such expenses are incurred, it being understood and agreed that the only such
information furnished by any Purchaser consists of (i) the following information
in the Offering Document furnished on behalf of each Purchaser: the second to
last paragraph at the bottom of the cover page concerning the terms of the
offering by the Purchasers, and the information concerning over-allotments and
stabilizing appearing in the seventh paragraph under the caption of "Plan of
Distribution"; and
(ii) the following information in the Offering
Document furnished on behalf of the Purchasers:
Credit Suisse First Boston, an affiliate of Credit
Suisse First Boston Corporation, is a lender and the
Administrative Agent under Terex's Bank Credit
Facility, Canadian Imperial Bank of Commerce, an
affiliate of CIBC Oppenheimer Corp., is a lender and
a Co-Documentation Agent under Terex's Bank Credit
Facility, and CIBC Inc., an affiliate of CIBC
Oppenheimer Corp., is a lender under Terex's Bank
Credit Facility. As a result, Credit Suisse First
Boston, Canadian Imperial Bank of Commerce and CIBC
Inc. will receive a portion of the proceeds from the
offering of the Notes.
(iii) the following information in the Offering
Document furnished on behalf of CIBC Oppenheimer Corp.:
Bruce I. Raben, a director of the Company, is a
managing director of CIBC Oppenheimer Corp.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under subsection (a) or (b) above, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under subsection (a) or (b) above. In case any such action is
brought against any indemnified party and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party (who shall not, except with the consent
of the indemnified party, be counsel to the indemnifying party), and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation. In no event shall an
indemnifying party be liable for fees and expenses of more than one counsel (in
addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened action in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party unless such settlement includes an unconditional release of such
indemnified party from all liability on any claims that are the subject matter
of such action. An indemnifying party shall not be liable for any settlement of
any proceeding effected without its prior written consent; provided, however,
that if at any time an indemnified party shall have requested an indemnifying
party to reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees it shall be liable for any settlement effected without
its written consent if (i) such settlement is entered into more than 45 days
after receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
18
<PAGE>
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Issuers on the one hand and the Purchasers on the other from the offering of
the Offered Securities or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Issuers on the one hand and the Purchasers on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Issuers on the one hand
and the Purchasers on the other shall be deemed to be in the same proportion as
the total net proceeds from the offering (before deducting expenses) received by
the Issuers bear to the total discounts and commissions received by the
Purchasers from the Issuers under this Agreement. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Issuers or the Purchasers
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The amount
paid by an indemnified party as a result of the losses, claims, damages or
liabilities referred to in the first sentence of this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any action or
claim which is the subject of this subsection (d). Notwithstanding the
provisions of this subsection (d), no Purchaser shall be required to contribute
any amount in excess of the amount by which the total price at which the Offered
Securities purchased by it were resold exceeds the amount of any damages which
such Purchaser has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. The Purchasers'
obligations in this subsection (d) to contribute are several in proportion to
their respective purchase obligations and not joint. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
19
<PAGE>
(e) The obligations of the Issuers under this Section shall be
in addition to any liability which the Issuers may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who controls
any Purchaser within the meaning of the Securities Act or the Exchange Act; and
the obligations of the Purchasers under this Section shall be in addition to any
liability which the respective Purchasers may otherwise have and shall extend,
upon the same terms and conditions to each person, if any, who controls the
Issuers within the meaning of the Securities Act or the Exchange Act.
8. Default of Purchasers. If either of the Purchasers defaults in its
obligation to purchase Offered Securities hereunder and the aggregate principal
amount of Offered Securities that such defaulting Purchaser agreed but failed to
purchase does not exceed 10% of the total principal amount of Offered
Securities, CSFBC may make arrangements satisfactory to the Company for the
purchase of such Offered Securities by other persons, including the other
Purchaser, but if no such arrangements are made by the Closing Date, the
non-defaulting Purchaser shall be obligated to purchase the Offered Securities
that such defaulting Purchaser agreed but failed to purchase. If one Purchaser
so defaults and the aggregate principal amount of Offered Securities with
respect to which such default occurs exceeds 10% of the total principal amount
of Offered Securities and arrangements satisfactory to CSFBC and the Company for
the purchase of such Offered Securities by other persons are not made within 36
hours after such default, this Agreement will terminate without liability on the
part of the non-defaulting Purchaser or the Company, except as provided in
Section 9. As used in this Agreement, the term APurchaser@ includes any person
substituted for a Purchaser under this Section. Nothing herein will relieve the
defaulting Purchaser from liability for its default.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of
each of the Issuers or its officers and of the several Purchasers set forth in
or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation, or statement as to the results thereof, made by
or on behalf of any Purchaser, the Issuers or any of their respective
representatives, officers or directors or any controlling person, and will
survive delivery of and payment for the Offered Securities. If this Agreement is
terminated pursuant to Section 8 or if for any reason the purchase of the
Offered Securities by the Purchasers is not consummated, the Issuers shall
remain responsible for the expenses to be paid or reimbursed by them pursuant to
Section 5 and the respective obligations of the Issuers and the Purchasers
pursuant to Section 7 shall remain in effect; if any Offered Securities have
been purchased hereunder, the Issuers shall remain responsible for the expenses
to be paid or reimbursed by them pursuant to Section 5 and the respective
obligations of the Issuers and the Purchasers pursuant to Section 7 shall remain
in effect, and the representations and warranties in Section 2 and all other
obligations under Section 5 shall also remain in effect. If the purchase of the
Offered Securities by the Purchasers is not consummated other than solely
because of the termination of this Agreement pursuant to Section 8 or the
occurrence of any event specified in clause (C), (D) or (E) of Section 6(b), the
Company will reimburse the Purchasers for all out-of-pocket expenses (including
fees and disbursements of counsel) reasonably incurred by them in connection
with the offering of the Offered Securities.
10. Notices. All communications hereunder will be in writing and, if
sent to the Purchasers will be mailed, delivered or telegraphed and confirmed to
the Purchasers, c/o Credit Suisse First Boston Corporation, Eleven Madison
Avenue, New York, N.Y. 10010-3629, Attention: Investment Banking Department B
Transactions Advisory Group, or, if sent to the Company, will be mailed,
delivered or telegraphed and confirmed to it at Terex Corporation, 500 Post Road
East, Westport, CT 06880, Attention: Eric I Cohen; provided, however, that any
notice to a Purchaser pursuant to Section 7 will be mailed, delivered or
telegraphed and confirmed to such Purchaser.
20
<PAGE>
11. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
controlling persons referred to in Section 7, and no other person will have any
right or obligation hereunder, except that holders of Offered Securities shall
be entitled to enforce the agreements for their benefit contained in the second
and third sentences of Section 5(b) hereof against the Company as if such
holders were parties thereto.
12. Representation of Purchasers. You will act for the several
Purchasers in connection with the transactions contemplated by this Agreement,
and any action under this Agreement taken by the Purchasers jointly or by CSFBC
will be binding on each of the Purchasers.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. Applicable Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York without regard to
principles of conflicts of laws.
EACH OF THE ISSUERS HEREBY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF
THE FEDERAL AND STATE COURTS IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK
IN ANY SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
21
<PAGE>
If the foregoing is in accordance with the Purchasers' understanding of
our agreement, kindly sign and return to us one of the counterparts hereof,
whereupon it will become a binding agreement between the Issuers and the several
Purchasers in accordance with its terms.
Very truly yours,
TEREX CORPORATION
By /s/ Eric I Cohen
-------------------
Name: Eric I Cohen
Title: Senior Vice President
KOEHRING CRANES, INC.
By /s/ Eric I Cohen
------------------
Name: Eric I Cohen
Title: Vice President
PAYHAULER CORP.
By /s/ Eric I Cohen
------------------
Name: Eric I Cohen
Title: Vice President
PPM CRANES, INC.
By /s/ Eric I Cohen
------------------
Name: Eric I Cohen
Title: Vice President
0
<PAGE>
TEREX AERIALS, INC.
By /s/ Eric I Cohen
------------------
Name: Eric I Cohen
Title: Vice President
TEREX CRANES, INC.
By /s/ Eric I Cohen
------------------
Name: Eric I Cohen
Title: Vice President
TEREX MINING EQUIPMENT, INC.
By /s/ Eric I Cohen
------------------
Name: Eric I Cohen
Title: Vice President
TEREX-RO CORPORATION
By /s/ Eric I Cohen
------------------
Name: Eric I Cohen
Title: Vice President
TEREX-TELELECT, INC.
By /s/ Eric I Cohen
------------------
Name: Eric I Cohen
Title: Vice President
THE AMERICAN CRANE CORPORATION
By /s/ Eric I Cohen
------------------
Name: Eric I Cohen
Title: Vice President
O&K ORENSTEIN & KOPPEL, INC.
By /s/ Eric I Cohen
------------------
Name: Eric I Cohen
Title: Vice President
Title:
<PAGE>
The foregoing Purchase Agreement is hereby confirmed and accepted as of the date
first above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
CIBC OPPENHEIMER CORP.
By: CREDIT SUISSE FIRST BOSTON CORPORATION
By /s/ Richard Gallant
Name: Richard Gallant
Title: Director
<PAGE>
SCHEDULE A
Principal Amount of
Initial Purchaser Offered Securities
----------------- ------------------
Credit Suisse First Boston Corporation............ $ 75,000,000
CIBC Oppenheimer Corp............................. 25,000,000
----------
Total......................... $ 100,000,000
===========
$100,000,000
Terex Corporation
8-7/8% Series C Senior Subordinated Notes due 2008
REGISTRATION RIGHTS AGREEMENT
-----------------------------
March 9, 1999
Credit Suisse First Boston Corporation
CIBC Oppenheimer Corp.
c/o Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, New York 10010-3629
Dear Sirs:
Terex Corporation, a Delaware corporation (the "Issuer"),
proposes to issue and sell to Credit Suisse First Boston Corporation and CIBC
Oppenheimer Corp. (collectively, the "Initial Purchasers"), upon the terms set
forth in a purchase agreement dated March 4, 1999 (the "Purchase Agreement"),
$100.0 million aggregate principal amount of its 8-7/8% Series C Senior
Subordinated Notes due 2008 (the "Initial Securities") to be unconditionally
guaranteed (the "Guaranties") by Koehring Cranes, Inc., Payhauler Corp., PPM
Cranes, Inc., Terex Aerials, Inc., Terex Cranes, Inc., Terex Mining Equipment,
Inc., Terex-RO Corporation, Terex-Telelect, Inc., The American Crane Corporation
and O&K Orenstein & Koppel, Inc. (the "Guarantors" and together with the Issuer,
the "Company"). The Initial Securities will be issued pursuant to an Indenture,
dated the date hereof (the "Indenture"), among the Issuer, the Guarantors named
therein and United States Trust Company of New York, as trustee (the "Trustee").
As an inducement to the Initial Purchasers, the Company agrees with the Initial
Purchasers, for the benefit of the holders of the Initial Securities (including,
without limitation, the Initial Purchasers), the Exchange Securities (as defined
below) and the Private Exchange Securities (as defined below) (collectively, the
"Holders"), as follows:
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<PAGE>
1. Registered Exchange Offer. The Company shall, at its own
cost, prepare and, not later than 60 days after (or if the 60th day is not a
business day, the first business day thereafter) the date of original issue of
the Initial Securities (the "Issue Date"), file with the Securities and Exchange
Commission (the "Commission") a registration statement (the "Exchange Offer
Registration Statement") on an appropriate form under the Securities Act of
1933, as amended (the "Securities Act"), with respect to a proposed offer (the
"Registered Exchange Offer") to the Holders of Transfer Restricted Securities
(as defined in Section 6 hereof), who are not prohibited by any law or policy of
the Commission from participating in the Registered Exchange Offer, to issue and
deliver to such Holders, in exchange for the Initial Securities, a like
aggregate principal amount of 8-7/8% Series D Senior Subordinated Notes due 2008
(the "Exchange Securities") of the Company issued under the Indenture that would
be registered under the Securities Act and identical in all material respects to
the Initial Securities (except for the transfer restrictions relating to the
Initial Securities and the provisions relating to the matters described in
Section 6 hereof). The Company shall use its best efforts to cause such Exchange
Offer Registration Statement to become effective under the Securities Act within
150 days (or if the 150th day is not a business day, the first business day
thereafter) after the Issue Date of the Initial Securities and shall keep the
Exchange Offer Registration Statement effective for not less than 30 days (or
longer, if required by applicable law) after the date notice of the Registered
Exchange Offer is mailed to the Holders (such period being called the "Exchange
Offer Registration Period").
If the Company effects the Registered Exchange Offer, the
Company will be entitled to close the Registered Exchange Offer 30 days after
the commencement thereof provided that the Company has accepted all the Initial
Securities theretofore validly tendered in accordance with the terms of the
Registered Exchange Offer.
Following the declaration of the effectiveness of the Exchange
Offer Registration Statement, the Company shall promptly commence the Registered
Exchange Offer, it being the objective of such Registered Exchange Offer to
enable each Holder of Transfer Restricted Securities (as defined in Section 6
hereof) electing to exchange the Initial Securities for Exchange Securities
(assuming that such Holder is not an affiliate of the Company within the meaning
of the Securities Act, acquires the Exchange Securities in the ordinary course
of such Holder's business and has no arrangements or understandings with any
person to participate in the distribution of the Exchange Securities and is not
prohibited by any law or policy of the Commission from participating in the
Registered Exchange Offer) to trade such Exchange Securities from and after
their receipt without any limitations or restrictions under the Securities Act
and without material restrictions under the securities laws of the several
states of the United States.
The Company acknowledges that, pursuant to current
interpretations by the Commission's staff of Section 5 of the Securities Act, in
the absence of an applicable exemption therefrom, (i) each Holder which is a
broker-dealer electing to exchange Securities (as defined below) acquired for
its own account as a result of market making activities or other trading
activities, for Exchange Securities (an "Exchanging Dealer"), is required to
deliver a prospectus containing the information set forth in (a) Annex A hereto
in the foreportion thereof, (b) Annex B hereto in the "Exchange Offer
Procedures" section and the "Purpose of the Exchange Offer" section, and (c)
Annex C hereto in the "Plan of Distribution" section of such prospectus in
connection with a sale of any such Exchange Securities received by such
Exchanging Dealer pursuant to the Registered Exchange Offer and (ii) an Initial
Purchaser that elects to sell Exchange Securities acquired in exchange for
Securities constituting any portion of an unsold allotment is required to
deliver a prospectus containing the information required by Items 507 or 508 of
Regulation S-K under the Securities Act, as applicable, in connection with such
sale.
2
<PAGE>
The Company shall use its best efforts to keep the Exchange
Offer Registration Statement effective and to amend and supplement the
prospectus contained therein, in order to permit such prospectus to be lawfully
delivered by all persons subject to the prospectus delivery requirements of the
Securities Act for such period of time as such persons must comply with such
requirements in order to resell the Exchange Securities; provided, however, that
in the case where such prospectus and any amendment or supplement thereto must
be delivered by an Exchanging Dealer or an Initial Purchaser, such period shall
be the lesser of 180 days and the date on which all Exchanging Dealers and the
Initial Purchasers have sold all Exchange Securities held by them (unless such
period is extended pursuant to Section 3(j) below).
If, upon consummation of the Registered Exchange Offer, any
Initial Purchaser holds Initial Securities acquired by it and having the status
of an unsold allotment in the initial distribution, the Company, simultaneously
with the delivery of the Exchange Securities pursuant to the Registered Exchange
Offer, shall issue and deliver to such Initial Purchaser upon the written
request of such Initial Purchaser, in exchange (the "Private Exchange") for the
Initial Securities held by such Initial Purchaser, a like principal amount of
debt securities of the Company issued under the Indenture and identical in all
material respects (including the existence of restrictions on transfer under the
Securities Act and the securities laws of the several states of the United
States, but excluding provisions relating to the matters described in Section 6
hereof) to the Initial Securities (the "Private Exchange Securities"). The
Initial Securities, the Exchange Securities and the Private Exchange Securities
are herein collectively called the "Securities".
In connection with the Registered Exchange Offer, the Company
shall:
(a) mail to each Holder a copy of the prospectus forming part
of the Exchange Offer Registration Statement, together with an
appropriate letter of transmittal (the "Letter of Transmittal") and
related documents;
(b) keep the Registered Exchange Offer open for not less than
30 days (or longer, if required by applicable law) after the date
notice thereof is mailed to the Holders;
(c) utilize the services of a depositary for the Registered
Exchange Offer with an address in the Borough of Manhattan, The City of
New York, which may be the Trustee or an affiliate of the Trustee;
(d) permit Holders to withdraw tendered Securities at any time
prior to the close of business, New York time, on the last business day
on which the Registered Exchange Offer shall remain open; and
(e) otherwise comply in all material respects with all
applicable laws.
As soon as practicable after the close of the Registered
Exchange Offer or the Private Exchange, as the case may be, the Company shall:
(x) accept for exchange all the Securities properly tendered
and not properly withdrawn pursuant to the Registered Exchange Offer
and the Private Exchange in accordance with the terms of the Exchange
Offer Registration Statement and the Letter of Transmittal filed as an
exhibit thereto;
3
<PAGE>
(y) deliver to the Trustee for cancellation all the Initial
Securities so accepted for exchange; and
(z) cause the Trustee to authenticate and deliver promptly
Exchange Securities or Private Exchange Securities, as the case may be,
to each Holder of the Initial Securities equal in aggregate principal
amount to the Initial Securities of such Holder so accepted for
exchange.
The Indenture will provide that the Exchange Securities will
not be subject to the transfer restrictions set forth in the Indenture and that
all the Initial Securities, Exchange Securities and Private Exchange Securities
will vote and consent together on all matters as one class and that none of the
such securities will have the right to vote or consent as a class separate from
one another on any matter.
Interest on each Exchange Security and Private Exchange
Security issued pursuant to the Registered Exchange Offer and in the Private
Exchange will accrue from the last interest payment date on which interest was
paid on the Initial Securities surrendered in exchange therefor or, if no
interest has been paid on the Initial Securities, from the date of original
issue of the Initial Securities. Each Exchange Security and Private Exchange
Security will bear interest at the rate set forth thereon; provided, that
interest with respect to the period prior to the issuance thereof shall accrue
at the rate or rates borne by the Initial Securities from time to time during
such period.
Each Holder participating in the Registered Exchange Offer
shall be required to represent to the Company that at the time of the
consummation of the Registered Exchange Offer (i) any Exchange Securities
received by such Holder will be acquired in the ordinary course of business,
(ii) such Holder will have no arrangements or understanding with any person to
participate in the distribution of the Securities or the Exchange Securities
within the meaning of the Securities Act or resale of the Securities or the
Exchange Securities in violation of the Securities Act, (iii) such Holder is not
an "affiliate," as defined in Rule 405 of the Securities Act, of the Company or
if it is an affiliate, such Holder will comply with the registration and
prospectus delivery requirements of the Securities Act to the extent applicable,
(iv) if such Holder is not a broker-dealer, that it is not engaged in, and does
not intend to engage in, the distribution of the Exchange Securities and (v) if
such Holder is a broker-dealer, that it will receive Exchange Securities for its
own account in exchange for Initial Securities that were acquired as a result of
market-making activities or other trading activities and that it will be
required to acknowledge that it will deliver a prospectus in connection with any
resale of such Exchange Securities.
Notwithstanding any other provisions hereof, the Company will
use its best efforts to ensure that (i) any Exchange Offer Registration
Statement and any amendment thereto and any prospectus forming part thereof and
any supplement thereto complies in all material respects with the Securities Act
and the rules and regulations thereunder, (ii) any Exchange Offer Registration
Statement and any amendment thereto does not, when it becomes effective, contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
and (iii) any prospectus forming part of any Exchange Offer Registration
Statement, and any supplement to such prospectus, does not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
4
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2. Shelf Registration. If, (i) because of any change in law or
in applicable interpretations thereof by the staff of the Commission, the
Company is not permitted to effect a Registered Exchange Offer, as contemplated
by Section 1 hereof, (ii) the Exchange Offer Registration Statement is not
declared effective within 150 days of the Issue Date (or if the 150th day is not
a business day, the first business day thereafter), (iii) any Initial Purchaser
so requests with respect to the Initial Securities (or the Private Exchange
Securities) not eligible to be exchanged for Exchange Securities in the
Registered Exchange Offer and held by it following consummation of the
Registered Exchange Offer or (iv) any Holder (other than an Exchanging Dealer)
is not eligible to participate in the Registered Exchange Offer and such Holder
notifies the Company within 60 days following consummation of the Registered
Exchange Offer or, in the case of any Holder (other than an Exchanging Dealer)
that participates in the Registered Exchange Offer, such Holder does not receive
freely tradeable Exchange Securities on the date of the exchange and such Holder
notifies the Company within 60 days following consummation of the Registered
Exchange Offer, the Company shall take the following actions:
(a) The Company shall, at its cost, as promptly as practicable
(but in no event more than 30 days after so required or requested
pursuant to this Section 2) file with the Commission and thereafter
shall use its best efforts to cause to be declared effective a
registration statement (the "Shelf Registration Statement" and,
together with the Exchange Offer Registration Statement, a
"Registration Statement") on an appropriate form under the Securities
Act relating to the offer and sale of the Transfer Restricted
Securities (as defined in Section 6 hereof) by the Holders thereof from
time to time in accordance with the methods of distribution set forth
in the Shelf Registration Statement and Rule 415 under the Securities
Act (hereinafter, the "Shelf Registration"); provided, however, that no
Holder (other than an Initial Purchaser) shall be entitled to have the
Transfer Restricted Securities held by it covered by such Shelf
Registration Statement unless such Holder agrees in writing to be bound
by all the provisions of this Agreement applicable to such Holder.
(b) The Company shall use its best efforts to keep the Shelf
Registration Statement continuously effective in order to permit the
prospectus included therein to be lawfully delivered by the Holders of
the relevant Securities, for a period of up to two years (or for such
longer period if extended pursuant to Section 3(j) below) from the date
of its effectiveness or such shorter period that will terminate when
all the Securities covered by the Shelf Registration Statement (i) have
been sold pursuant thereto or (ii) are no longer restricted securities
(as defined in Rule 144 under the Securities Act, or any successor rule
thereof) (the "Shelf Registration Period"). The Company shall be deemed
not to have used its best efforts to keep the Shelf Registration
Statement effective during the requisite period if it voluntarily takes
any action that would result in Holders of Securities covered thereby
not being able to offer and sell such Securities during that period,
unless such action is required by applicable law.
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<PAGE>
(c) Notwithstanding any other provisions of this Agreement to
the contrary, the Company shall use its best efforts to cause the Shelf
Registration Statement and the related prospectus and any amendment or
supplement thereto, as of the effective date of the Shelf Registration
Statement, amendment or supplement, (i) to comply in all material
respects with the applicable requirements of the Securities Act and the
rules and regulations of the Commission and (ii) not to contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading.
3. Registration Procedures. In connection with any Shelf
Registration contemplated by Section 2 hereof and, to the extent applicable, any
Registered Exchange Offer contemplated by Section 1 hereof, the following
provisions shall apply:
(a) The Company shall (i) furnish to each Initial Purchaser,
prior to the filing thereof with the Commission, a copy of the
Registration Statement and each amendment thereof and each supplement,
if any, to the prospectus included therein and, in the event that an
Initial Purchaser (with respect to any portion of an unsold allotment
from the original offering) is participating in the Registered Exchange
Offer or the Shelf Registration Statement, the Company shall use its
best efforts to reflect in each such document, when so filed with the
Commission, such comments as such Initial Purchaser reasonably may, on
a timely basis, propose; (ii) include substantially the information set
forth in Annex A hereto in the foreportion thereof, in Annex B hereto
in the "Exchange Offer Procedures" section and the "Purpose of the
Exchange Offer" section and in Annex C hereto in the "Plan of
Distribution" section of the prospectus forming a part of the Exchange
Offer Registration Statement and include the information set forth in
Annex D hereto in the Letter of Transmittal delivered pursuant to the
Registered Exchange Offer; (iii) if requested by an Initial Purchaser,
include the information required by Items 507 or 508 of Regulation S-K
under the Securities Act, as applicable, in the prospectus forming a
part of the Exchange Offer Registration Statement; (iv) include within
the prospectus contained in the Exchange Offer Registration Statement a
section entitled "Plan of Distribution," which shall contain a summary
statement of the positions taken or policies made by the staff of the
Commission with respect to the potential "underwriter" status of any
broker-dealer that is the beneficial owner (as defined in Rule 13d-3
under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) of Exchange Securities received by such broker-dealer in the
Registered Exchange Offer (a "Participating Broker-Dealer"), whether
such positions or policies have been publicly disseminated by the staff
of the Commission or such positions or policies, in the reasonable
judgment of the Initial Purchasers based upon advice of counsel (which
may be in-house counsel), represent the prevailing views of the staff
of the Commission; and (v) in the case of a Shelf Registration
Statement, include the names of the Holders, who propose to sell
Securities pursuant to the Shelf Registration Statement, as selling
securityholders. In connection with the preparation and filing of a
Shelf Registration Statement, the Company may require each Holder to
agree to (1) keep confidential any material non-public information
relating to the Company received by such Holders and not to publicly
disclose such information and (ii) to abstain from trading any
securities of the Company in violation of applicable securities laws on
the basis of any such material non-public information, in each case
until such information has been made generally available to the public.
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<PAGE>
(b) The Company shall give written notice to the selling
Holders of the Securities and any Participating Broker-Dealer from whom
the Company has received prior written notice that it will be a
Participating Broker-Dealer in the Registered Exchange Offer (which
notice pursuant to clauses (ii)-(v) hereof shall be accompanied by an
instruction to suspend the use of the prospectus until the requisite
changes have been made):
(i) when the Registration Statement or any amendment
thereto has been filed with the Commission and when the
Registration Statement or any post-effective amendment thereto
has become effective;
(ii) of any request by the Commission for amendments
or supplements to the Registration Statement or the prospectus
included therein or for additional information;
(iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that
purpose;
(iv) of the receipt by the Company or its legal
counsel of any notification with respect to the suspension of
the qualification of the Securities for sale in any
jurisdiction or the initiation or threatening of any
proceeding for such purpose; and
(v) of the happening of any event that requires the
Company to make changes in the Registration Statement or the
prospectus in order that the Registration Statement or the
prospectus do not contain an untrue statement of a material
fact nor omit to state a material fact required to be stated
therein or necessary to make the statements therein (in the
case of the prospectus, in light of the circumstances under
which they were made) not misleading.
(c) The Company shall make every reasonable effort to obtain
the withdrawal at the earliest possible time, of any order suspending
the effectiveness of the Registration Statement.
(d) The Company shall furnish to each Holder of Securities
included within the coverage of the Shelf Registration, without charge,
at least one copy of the Shelf Registration Statement and any
post-effective amendment thereto, including financial statements and
schedules, and, if the Holder so requests in writing, all exhibits
thereto (including those, if any, incorporated by reference).
(e) The Company shall deliver to each Exchanging Dealer and
each Initial Purchaser, and to any other Holder who so requests,
without charge, at least one copy of the Exchange Offer Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules, and, if any Initial Purchaser or any such
Holder requests, all exhibits thereto (including those incorporated by
reference).
7
<PAGE>
(f) The Company shall, during the Shelf Registration Period,
deliver to each Holder of Securities included within the coverage of
the Shelf Registration, without charge, as many copies of the
prospectus (including each preliminary prospectus) included in the
Shelf Registration Statement and any amendment or supplement thereto as
such person may reasonably request. The Company consents, subject to
the provisions of this Agreement, to the use of the prospectus or any
amendment or supplement thereto by each of the selling Holders of the
Securities in connection with the offering and sale of the Securities
covered by the prospectus, or any amendment or supplement thereto,
included in the Shelf Registration Statement.
(g) The Company shall deliver to each Initial Purchaser, any
Exchanging Dealer, any Participating Broker-Dealer and such other
persons required to deliver a prospectus following the Registered
Exchange Offer, without charge, as many copies of the final prospectus
included in the Exchange Offer Registration Statement and any amendment
or supplement thereto as such persons may reasonably request. The
Company consents, subject to the provisions of this Agreement, to the
use of the prospectus or any amendment or supplement thereto by any
Initial Purchaser, if necessary, any Exchanging Dealer, any
Participating Broker-Dealer and such other persons required to deliver
a prospectus following the Registered Exchange Offer in connection with
the offering and sale of the Exchange Securities covered by the
prospectus, or any amendment or supplement thereto, included in such
Exchange Offer Registration Statement.
(h) Prior to any public offering of the Securities, pursuant
to any Registration Statement, the Company shall register or qualify or
cooperate with the Holders of the Securities included therein and their
respective counsel in connection with the registration or qualification
of the Securities for offer and sale under the securities or "blue sky"
laws of such states of the United States as any Holder of the
Securities reasonably requests in writing and do any and all other acts
or things necessary or advisable to enable the offer and sale in such
jurisdictions of the Securities covered by such Registration Statement;
provided, however, that the Company shall not be required to (i)
qualify to do business in any jurisdiction where it is not then so
qualified or (ii) take any action which would subject it to service of
process or to taxation in any jurisdiction where it is not then so
subject.
(i) The Company shall cooperate with the Holders of the
Securities to facilitate the timely preparation and delivery of
certificates representing the Securities to be sold pursuant to any
Registration Statement free of any restrictive legends and in such
denominations and registered in such names as the Holders may request a
reasonable period of time prior to sales of the Securities pursuant to
such Registration Statement.
8
<PAGE>
(j) Upon the occurrence of any event contemplated by
paragraphs (ii) through (v) of Section 3(b) above during the period for
which the Company is required to maintain an effective Registration
Statement, the Company shall promptly prepare and file a post-effective
amendment to the Registration Statement or a supplement to the related
prospectus and any other required document so that, as thereafter
delivered to Holders of the Securities or purchasers of Securities, the
prospectus will not contain an untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. If the Company notifies the
Initial Purchasers, the Holders of the Securities and any known
Participating Broker-Dealer in accordance with paragraphs (ii) through
(v) of Section 3(b) above to suspend the use of the prospectus until
the requisite changes to the prospectus have been made, then the
Initial Purchasers, the Holders of the Securities and any such
Participating Broker-Dealers shall suspend use of such prospectus, and
the period of effectiveness of the Shelf Registration Statement
provided for in Section 2(b) above and the Exchange Offer Registration
Statement provided for in Section 1 above shall each be extended by the
number of days from and including the date of the giving of such notice
to and including the date when the Initial Purchasers, the Holders of
the Securities and any known Participating Broker-Dealer shall have
received such amended or supplemented prospectus pursuant to this
Section 3(j).
(k) Not later than the effective date of the applicable
Registration Statement, the Company will provide a CUSIP number for the
Initial Securities, the Exchange Securities or the Private Exchange
Securities, as the case may be, and provide the applicable trustee with
printed certificates for the Initial Securities, the Exchange
Securities or the Private Exchange Securities, as the case may be, in a
form eligible for deposit with The Depository Trust Company.
(l) The Company will comply in all material respects with all
rules and regulations of the Commission to the extent and so long as
they are applicable to the Registered Exchange Offer or the Shelf
Registration and will make generally available to its security holders
(or otherwise provide in accordance with Section 11(a) of the
Securities Act) an earnings statement satisfying the provisions of
Section 11(a) of the Securities Act, no later than 45 days after the
end of a 12-month period (or 90 days, if such period is a fiscal year)
beginning with the first month of the Company's first fiscal quarter
commencing after the effective date of the Registration Statement,
which statement shall cover such 12-month period.
(m) To the extent required by applicable law, the Company
shall cause the Indenture to be qualified under the Trust Indenture Act
of 1939, as amended, in a timely manner and containing such changes, if
any, as shall be necessary for such qualification. In the event that
such qualification would require the appointment of a new trustee under
the Indenture, the Company shall appoint a new trustee thereunder
pursuant to the applicable provisions of the Indenture.
(n) The Company may require each Holder of Securities to be
sold pursuant to the Shelf Registration Statement to furnish to the
Company such information regarding the Holder and the distribution of
the Securities as the Company may from time to time reasonably require
for inclusion in the Shelf Registration Statement, and the Company may
exclude from such registration the Securities of any Holder that
unreasonably fails to furnish such information within a reasonable time
(but not more than ten days) after receiving such request.
(o) The Company shall enter into such customary agreements
(including, if requested in the case of a Shelf Registration, an
underwriting agreement in customary form) and take all such other
action, if any, as any Holder of the Securities shall reasonably
request in order to facilitate the disposition of the Securities
pursuant to any Shelf Registration.
9
<PAGE>
(p) In the case of any Shelf Registration, the Company shall
(i) make reasonably available for inspection by the Holders of the
Securities named in the Shelf Registration Statement, any underwriter
participating in any disposition pursuant to the Shelf Registration
Statement and any attorney, accountant or other agent retained by the
Holders of the Securities named in the Shelf Registration Statement or
any such underwriter all relevant financial and other records,
pertinent corporate documents and properties of the Company and (ii)
cause the Company's officers, directors, employees, accountants and
auditors to supply all relevant information reasonably requested by the
Holders of the Securities named in the Shelf Registration Statement or
any such underwriter, attorney, accountant or agent retained by the
Holders of the Securities named in the Shelf Registration Statement in
connection with the Shelf Registration Statement, in each case, as
shall be reasonably necessary to enable such persons, to conduct a
reasonable investigation within the meaning of Section 11 of the
Securities Act; provided, however, that the foregoing inspection and
information gathering shall be coordinated on behalf of the Initial
Purchasers by you and on behalf of the other parties by one counsel
designated by and on behalf of such other parties as described in, and
subject to the provisions of, Section 4 hereof.
(q) In the case of any Shelf Registration, the Company, if
requested by any Holder of Securities named in the Shelf Registration
Statement, shall cause (i) its counsel to deliver an opinion and
updates thereof relating to the Securities in customary form addressed
to such Holders and the managing underwriters, if any, thereof and
dated, in the case of the initial opinion, the effective date of such
Shelf Registration Statement (it being agreed that the matters to be
covered by such opinion shall include, without limitation, the due
incorporation and good standing of the Company and its subsidiaries;
the qualification of the Company and its subsidiaries to transact
business as foreign corporations; the due authorization, execution and
delivery of the relevant agreement of the type referred to in Section
3(o) hereof; the due authorization, execution, authentication and
issuance, and the validity and enforceability, of the applicable
Securities; the absence of material legal or governmental proceedings
involving the Company and its subsidiaries; the absence of governmental
approvals required to be obtained in connection with the Shelf
Registration Statement, the offering and sale of the applicable
Securities, or any agreement of the type referred to in Section 3(o)
hereof; the compliance in all material respects as to form of such
Shelf Registration Statement and any documents incorporated by
reference therein and of the Indenture with the requirements of the
Securities Act and the Trust Indenture Act, respectively; and, as of
the date of the opinion and as of the effective date of the Shelf
Registration Statement or most recent post-effective amendment thereto,
as the case may be, the absence from such Shelf Registration Statement
and the prospectus included therein, as then amended or supplemented,
and from any documents incorporated by reference therein of an untrue
statement of a material fact or the omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading (in the case of any such documents,
in the light of the circumstances existing at the time that such
documents were filed with the Commission under the Exchange Act); (ii)
its officers to execute and deliver all customary documents and
certificates and updates thereof requested by any underwriters of the
applicable Securities and (iii) its independent public accountants and
the independent public accountants with respect to any other entity for
which financial information is provided in the Shelf Registration
Statement to provide to the selling Holders of the applicable
Securities and any underwriter therefor a comfort letter in customary
form and covering matters of the type customarily covered in comfort
letters in connection with primary underwritten offerings, subject to
receipt of appropriate documentation as contemplated, and only if
permitted, by Statement of Auditing Standards No. 72.
10
<PAGE>
(r) In the case of the Registered Exchange Offer, if requested
by any Initial Purchaser or any known Participating Broker-Dealer, the
Company shall cause (i) its counsel to deliver to such Initial
Purchaser or such Participating Broker-Dealer a signed opinion in the
form set forth in Sections 6(c) and (d) of the Purchase Agreement with
such changes as are customary in connection with the preparation of a
Registration Statement and (ii) its independent public accountants to
deliver to such Initial Purchaser or such Participating Broker-Dealer a
comfort letter, in customary form, meeting the requirements as to the
substance thereof as set forth in Section 6(a) of the Purchase
Agreement, with appropriate date changes.
(s) If a Registered Exchange Offer or a Private Exchange is to
be consummated, upon delivery of the Initial Securities by Holders to
the Company (or to such other Person as directed by the Company) in
exchange for the Exchange Securities or the Private Exchange
Securities, as the case may be, the Company shall mark, or caused to be
marked, on the Initial Securities so exchanged that such Initial
Securities are being canceled in exchange for the Exchange Securities
or the Private Exchange Securities, as the case may be; in no event
shall the Initial Securities be marked as paid or otherwise satisfied.
(t) The Company will use its best efforts to (a) if the
Initial Securities have been rated prior to the initial sale of such
Initial Securities, confirm that such ratings will apply to the
Securities covered by a Registration Statement, or (b) if the Initial
Securities were not previously rated, cause the Securities covered by a
Registration Statement to be rated with the appropriate rating
agencies, if so requested by Holders of a majority in aggregate
principal amount of Securities covered by such Registration Statement,
or by the managing underwriters, if any.
(u) In the event that any broker-dealer registered under the
Exchange Act shall underwrite any Securities or participate as a member
of an underwriting syndicate or selling group or "assist in the
distribution" (within the meaning of the Conduct Rules (the ARules@) of
the National Association of Securities Dealers, Inc. ("NASD")) thereof,
whether as a Holder of such Securities or as an underwriter, a
placement or sales agent or a broker or dealer in respect thereof, or
otherwise, the Company will assist such broker-dealer in complying with
the requirements of such Rules, including, without limitation, by (i)
if such Rules, including Rule 2720, shall so require, engaging a
"qualified independent underwriter" (as defined in Rule 2720) to
participate in the preparation of the Registration Statement relating
to such Securities, to exercise usual standards of due diligence in
respect thereto and, if any portion of the offering contemplated by
such Registration Statement is an underwritten offering or is made
through a placement or sales agent, to recommend the yield of such
Securities, (ii) indemnifying any such qualified independent
underwriter to the extent of the indemnification of underwriters
provided in Section 5 hereof and (iii) providing such information to
such broker-dealer as may be required in order for such broker-dealer
to comply with the requirements of the Rules.
(v) The Company shall use its best efforts to take all other
steps necessary to effect the registration of the Securities covered by
a Registration Statement contemplated hereby.
11
<PAGE>
4. Registration Expenses. The Company shall bear all fees and
expenses incurred by it in connection with the performance of its obligations
under Sections 1 through 3 hereof (including the reasonable fees and expenses,
if any, of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the Initial
Purchasers, incurred in connection with the Registered Exchange Offer, which
fees and expenses shall not exceed $10,000), whether or not the Registered
Exchange Offer or a Shelf Registration is filed or becomes effective, and, in
the event of a Shelf Registration, shall bear or reimburse the Holders of the
Securities covered thereby for the reasonable fees and disbursements of not more
than one firm of counsel designated by the Holders of a majority in principal
amount of the Initial Securities covered thereby to act as counsel for the
Holders of the Initial Securities in connection therewith.
5. Indemnification. (a) The Company agrees to indemnify and
hold harmless each Holder of the Securities, any Participating Broker-Dealer and
each person, if any, who controls such Holder or such Participating
Broker-Dealer within the meaning of the Securities Act or the Exchange Act (each
Holder, any Participating Broker-Dealer and such controlling persons are
referred to collectively as the "Holder Indemnified Parties") from and against
any losses, claims, damages or liabilities, joint or several, or any actions in
respect thereof (including, but not limited to, any losses, claims, damages,
liabilities or actions relating to purchases and sales of the Securities) to
which each Holder Indemnified Party may become subject under the Securities Act,
the Exchange Act or otherwise, insofar as such losses, claims, damages,
liabilities or actions arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in a Registration
Statement or in a prospectus contained in a Registration Statement (a
"Prospectus") or in any amendment or supplement thereto or in any preliminary
prospectus relating to a Shelf Registration Statement, or arise out of, or are
based upon, the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and shall reimburse, as incurred, the Indemnified Parties for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action in
respect thereof; provided, however, that (i) the Company shall not be liable in
any such case to the extent that such loss, claim, damage, liability or actions
in respect thereof arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in a Registration
Statement or Prospectus or in any amendment or supplement thereto or in any
preliminary prospectus relating to a Shelf Registration in reliance upon and in
conformity with written information pertaining to such Holder or its
distribution and furnished to the Company by or on behalf of such Holder
specifically for inclusion therein and (ii) with respect to any untrue statement
or omission or alleged untrue statement or omission made in any preliminary
prospectus relating to a Shelf Registration Statement, the indemnity agreement
contained in this subsection (a) shall not inure to the benefit of any Holder or
Participating Broker-Dealer from whom the person asserting any such losses,
claims, damages, liabilities or actions in respect thereof purchased the
Securities concerned, to the extent that a prospectus relating to such
Securities was required to be delivered by such Holder or Participating
Broker-Dealer under the Securities Act in connection with such purchase and any
such loss, claim, damage, liability or action in respect thereof of such Holder
or Participating Broker-Dealer results from the fact that there was not sent or
given to such person, at or prior to the written confirmation of the sale of
such Securities to such person, a copy of the final prospectus if the Company
had previously furnished copies thereof to such Holder or Participating
Broker-Dealer; provided further, however, that this indemnity agreement will be
in addition to any liability which the Company may otherwise have to such Holder
Indemnified Party. The Company shall also indemnify underwriters, their officers
and directors and each person who controls such underwriters within the meaning
of the Securities Act or the Exchange Act to the same extent as provided above
with respect to the indemnification of the Holders of the Securities if
requested by such Holders.
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<PAGE>
(b) Each Holder of the Securities, severally and not jointly,
will indemnify and hold harmless the Company and each person, if any, who
controls the Company within the meaning of the Securities Act or the Exchange
Act from and against any losses, claims, damages or liabilities or any actions
in respect thereof, to which the Company or any such controlling person may
become subject under the Securities Act, the Exchange Act or otherwise, insofar
as such losses, claims, damages, liabilities or actions arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
contained in a Registration Statement or prospectus or in any amendment or
supplement thereto or in any preliminary prospectus relating to a Shelf
Registration, or arise out of or are based upon the omission or alleged omission
to state therein a material fact necessary to make the statements therein not
misleading, in each case only to the extent that such untrue statement or
omission or alleged untrue statement or omission was made in reliance upon and
in conformity with written information pertaining to such Holder or its
distribution and furnished to the Company by or on behalf of such Holder
specifically for inclusion therein; and, subject to the limitation set forth in
the immediately preceding clause, shall reimburse, as incurred, the Company for
any legal or other expenses reasonably incurred by the Company or any such
controlling person in connection with investigating or defending any loss,
claim, damage, liability or action in respect thereof. This indemnity agreement
will be in addition to any liability which such Holder may otherwise have to the
Company or any of its controlling persons.
(c) Promptly after receipt by an indemnified party under this
Section 5 of notice of the commencement of any action or proceeding (including a
governmental investigation), such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under Section 5(a) or (b)
above, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not, in any event, relieve the
indemnifying party from any liabilities to any indemnified party otherwise than
under paragraph (a) or (b) above. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof the indemnifying party will not be liable to such
indemnified party under this Section 5 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof, other than reasonable costs of investigation. In no event shall an
indemnifying party be liable for fees and expenses of more than one counsel (in
addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened action in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party unless such settlement includes an unconditional release of such
indemnified party from all liability on any claims that are the subject matter
of such action. An indemnifying party shall not be liable for any settlement of
any proceeding effected without its prior written consent; provided, however,
that if at any time an indemnified party shall have requested an indemnifying
party to reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees it shall be liable for any settlement effected without
its written consent if (i) such settlement is entered into more than 45 days
after receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
13
<PAGE>
(d) If the indemnification provided for in this Section 5 is
unavailable or insufficient to hold harmless an indemnified party under
subsections (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to in
subsection (a) or (b) above (i) in such proportion as is appropriate to reflect
the relative benefits received by the indemnifying party or parties on the one
hand and the indemnified party or parties on the other from the exchange of the
Securities, pursuant to the Registered Exchange Offer, or (ii) if the allocation
provided by the foregoing clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the indemnifying party or
parties on the one hand and the indemnified party or parties on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof) as well as any
other relevant equitable considerations. The relative fault of the parties shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by such indemnifying party on
the one hand or such Holder or such indemnified party, on the other, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid by an indemnified
party as a result of the losses, claims, damages or liabilities referred to in
the first sentence of this subsection (d) shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any action or claim which is the subject of this
subsection (d). Notwithstanding any other provision of this Section 5(d), the
Holders of the Securities shall not be required to contribute any amount in
excess of the amount by which the net proceeds received by such Holders from the
sale of the Securities pursuant to a Registration Statement exceeds the amount
of damages which such Holders have otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of this
paragraph (d), each person, if any, who controls such Holder Indemnified Party
within the meaning of the Securities Act or the Exchange Act shall have the same
rights to contribution as such Holder Indemnified Party and each person, if any,
who controls the Company within the meaning of the Securities Act or the
Exchange Act shall have the same rights to contribution as the Company.
(e) The agreements contained in this Section 5 shall survive
the sale of the Securities pursuant to a Registration Statement and shall remain
in full force and effect, regardless of any termination or cancellation of this
Agreement or any investigation made by or on behalf of any indemnified party.
14
<PAGE>
6. Additional Interest Under Certain Circumstances. (a)
Additional interest (the "Additional Interest") with respect to the Initial
Securities shall be assessed as follows if any of the following events occur
(each such event in clauses (i) through (iii) below a "Registration Default":
(i) If by May 8, 1999 (or if such day is not a
business day, the first business day thereafter) neither the Exchange
Offer Registration Statement nor a Shelf Registration Statement has
been filed with the Commission;
(ii) If by September 5, 1999 (or if such day is not a
business day, the first business day thereafter) neither the Registered
Exchange Offer is consummated nor, if required in lieu thereof, the
Shelf Registration Statement is declared effective by the Commission;
or
(iii) If after either the Exchange Offer Registration
Statement or the Shelf Registration Statement is declared effective (A)
such Registration Statement thereafter ceases to be effective; or (B)
such Registration Statement or the related prospectus ceases to be
usable (except as permitted in paragraph (b)) in connection with
resales of Transfer Restricted Securities during the periods specified
herein because either (1) any event occurs as a result of which the
related prospectus forming part of such Registration Statement would
include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein in the light of
the circumstances under which they were made not misleading, or (2) it
shall be necessary to amend such Registration Statement or supplement
the related prospectus, to comply with the Securities Act or the
Exchange Act or the respective rules thereunder.
Additional Interest shall accrue on the Initial Securities over and above the
interest set forth in the title of the Securities from and including the date on
which any such Registration Default shall occur to but excluding the date on
which all such Registration Defaults have been cured, at a rate of 0.50% per
annum.
(b) A Registration Default referred to in Section 6(a)(iii)(B)
hereof shall be deemed not to have occurred and be continuing in relation to a
Shelf Registration Statement or the related prospectus if (i) such Registration
Default has occurred solely as a result of (x) the filing of a post-effective
amendment to such Shelf Registration Statement to incorporate annual audited
financial information with respect to the Company where such post-effective
amendment is not yet effective and needs to be declared effective to permit
Holders to use the related prospectus or (y) other material events, with respect
to the Company that would need to be described in such Shelf Registration
Statement or the related prospectus and (ii) in the case of clause (y), the
Company is proceeding promptly and in good faith to amend or supplement such
Shelf Registration Statement and related prospectus to describe such events;
provided, however, that in any case if such Registration Default occurs for a
continuous period in excess of 30 days, Additional Interest shall be payable in
accordance with the above paragraph from the day such Registration Default
occurs until such Registration Default is cured.
(c) Any amounts of Additional Interest due pursuant to clause
(i), (ii) or (iii) of Section 6(a) above will be payable in cash on the regular
interest payment dates with respect to the Initial Securities. The amount of
Additional Interest will be determined by multiplying the applicable Additional
Interest rate by the principal amount of the Initial Securities, multiplied by a
fraction, the numerator of which is the number of days such Additional Interest
rate was applicable during such period (determined on the basis of a 360-day
year comprised of twelve 30-day months), and the denominator of which is 360.
15
<PAGE>
(d) "Transfer Restricted Securities" means each Security until
(i) the date on which such Transfer Restricted Security has been exchanged by a
person other than a broker-dealer for a freely transferable Exchange Security in
the Registered Exchange Offer, (ii) following the exchange by a broker-dealer in
the Registered Exchange Offer of an Initial Security for an Exchange Security,
the date on which such Exchange Security is sold to a purchaser who receives
from such broker-dealer on or prior to the date of such sale a copy of the
prospectus contained in the Exchange Offer Registration Statement, (iii) the
date on which such Initial Security has been effectively registered under the
Securities Act and disposed of in accordance with the Shelf Registration
Statement or (iv) the date on which such Initial Securities is distributed to
the public pursuant to Rule 144 under the Securities Act or is saleable pursuant
to Rule 144(k) under the Securities Act.
7. Rules 144 and 144A. The Company shall use its best efforts
to file the reports required to be filed by it under the Securities Act and the
Exchange Act in a timely manner and, if at any time the Company is not required
to file such reports, it will, upon the request of any Holder of Initial
Securities, make publicly available other information so long as necessary to
permit sales of their securities pursuant to Rules 144 and 144A. The Company
covenants that it will take such further action as any Holder of Initial
Securities may reasonably request, all to the extent required from time to time
to enable such Holder to sell Initial Securities without registration under the
Securities Act within the limitation of the exemptions provided by Rules 144 and
144A (including the requirements of Rule 144A(d)(4)). The Company will provide a
copy of this Agreement to prospective purchasers of Initial Securities
identified to the Company by the Initial Purchasers upon request. Upon the
request of any Holder of Initial Securities, the Company shall deliver to such
Holder a written statement as to whether it has complied with such requirements.
Notwithstanding the foregoing, nothing in this Section 7 shall be deemed to
require the Company to register any of its securities pursuant to the Exchange
Act.
8. Underwritten Registrations. If any of the Transfer
Restricted Securities covered by any Shelf Registration are to be sold in an
underwritten offering, the investment banker or investment bankers and manager
or managers that will administer the offering ("Managing Underwriters") will be
selected by the Holders of a majority in aggregate principal amount of such
Transfer Restricted Securities to be included in such offering with the consent
of the Company, which consent shall not be unreasonably withheld.
No person may participate in any underwritten registration
hereunder unless such person (i) agrees to sell such person's Transfer
Restricted Securities on the basis reasonably provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
16
<PAGE>
9. Miscellaneous.
(a) Amendments and Waivers. The provisions of this Agreement
may not be amended, modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given, except by the Company
and the written consent of the Holders of a majority in principal amount of the
Securities affected by such amendment, modification, supplement, waiver or
consents.
(b) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand delivery, first-class
mail, facsimile transmission, or air courier which guarantees overnight
delivery:
(1) if to a Holder of the Securities, at the most current
address given by such Holder to the Company.
(2) if to the Initial Purchasers:
Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, NY 10010-3629
Fax No.: (212) 325-8278
Attention: Transactions Advisory Group
with a copy to:
Skadden, Arps, Slate, Meagher and Flom LLP
919 Third Avenue
New York, New York 10022
Attention: Mark C. Smith, Esq.
(3) if to the Company, at its address as follows:
Terex Corporation
500 Post Road East
Suite 320
Westport, Connecticut 06880
Attention: Eric I Cohen, Esq.
with a copy to:
Robinson Silverman Pearce Aronsohn & Berman LLP
1290 Avenue of the Americas
New York, New York 10104
Attention: Stuart A. Gordon, Esq.
All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; three
business days after being deposited in the mail, postage prepaid, if mailed;
when receipt is acknowledged by recipient's facsimile machine operator, if sent
by facsimile transmission; and on the day delivered, if sent by overnight air
courier guaranteeing next day delivery.
17
<PAGE>
(c) No Inconsistent Agreements. The Company hereby agrees that
any Registration Statement shall, unless otherwise agreed upon by the Initial
Purchasers, include only those Securities required to be included thereunder
pursuant to the terms of this Agreement. The Company has not, as of the date
hereof, entered into, nor shall it, on or after the date hereof, enter into, any
agreement with respect to its securities that is inconsistent with the rights
granted to the Holders herein or otherwise conflicts with the provisions hereof.
(d) Successors and Assigns. This Agreement shall be binding
upon each of the parties and their respective successors and assigns.
(e) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAWS.
(h) Severability. If any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(i) Securities Held by the Company or its Affiliates. Whenever
the consent or approval of Holders of a specified percentage of principal amount
of Securities is required hereunder, Securities held by the Company or its
affiliates (other than subsequent Holders of Securities if such subsequent
Holders are deemed to be affiliates solely by reason of their holdings of such
Securities) shall not be counted in determining whether such consent or approval
was given by the Holders of such required percentage.
(j) Agent for Service; Submission to Jurisdiction; Waiver of
Immunities. By the execution and delivery of this Agreement, the Company (i)
acknowledges that it has, by separate written instrument, irrevocably designated
and appointed Terex Corporation (and any successor entity), as its authorized
agent upon which process may be served in any suit or proceeding arising out of
or relating to this Agreement that may be instituted in any federal or state
court in the State of New York or brought under federal or state securities
laws, and acknowledges that Terex Corporation has accepted such designation,
(ii) submits to the nonexclusive jurisdiction of any such court in any such suit
or proceeding, and (iii) agrees that service of process upon Terex Corporation
and written notice of said service to the Company shall be deemed in every
respect effective service of process upon it in any such suit or proceeding. The
Company further agrees to take any and all action, including the execution and
filing of any and all such documents and instruments, as may be necessary to
continue such designation and appointment of Terex Corporation in full force and
effect so long as any of the Securities shall be outstanding. To the extent that
the Company may acquire any immunity from jurisdiction of any court or from any
legal process (whether through service of notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to itself
or its property, it hereby irrevocably waives such immunity in respect of this
Agreement, to the fullest extent permitted by law.
18
<PAGE>
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement among the several Initial Purchasers, the Issuer and the Guarantors in
accordance with its terms.
Very truly yours,
TEREX CORPORATION
By: /s/ Eric I Cohen
--------------------
Name: Eric I Cohen
Title: Senior Vice President
KOEHRING CRANES, INC.
By: /s/ Eric I Cohen
--------------------
Name: Eric I Cohen
Title: Vice President
PAYHAULER CORP.
By: /s/ Eric I Cohen
--------------------
Name: Eric I Cohen
Title: Vice President
19
<PAGE>
PPM CRANES, INC.
By: /s/ Eric I Cohen
--------------------
Name: Eric I Cohen
Title: Vice President
TEREX AERIALS, INC.
By: /s/ Eric I Cohen
--------------------
Name: Eric I Cohen
Title: Vice President
TEREX CRANES, INC.
By: /s/ Eric I Cohen
--------------------
Name: Eric I Cohen
Title: Vice President
TEREX MINING EQUIPMENT, INC.
By: /s/ Eric I Cohen
--------------------
Name: Eric I Cohen
Title: Vice President
<PAGE>
TEREX-RO CORPORATION
By: /s/ Eric I Cohen
--------------------
Name: Eric I Cohen
Title: Vice President
TEREX-TELELECT, INC.
By: /s/ Eric I Cohen
--------------------
Name: Eric I Cohen
Title: Vice President
THE AMERICAN CRANE CORPORATION
By: /s/ Eric I Cohen
--------------------
Name: Eric I Cohen
Title: Vice President
O&K ORENSTEIN & KOPPEL, INC.
By: /s/ Eric I Cohen
--------------------
Name: Eric I Cohen
Title: Vice President
<PAGE>
The foregoing Registration
Rights Agreement is hereby confirmed
and accepted as of the date first
above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
CIBC OPPENHEIMER CORP.
By: CREDIT SUISSE FIRST BOSTON CORPORATION
By: /s/ Richard Gallant
-----------------------
Name: Richard Gallant
Title: Director
<PAGE>
ANNEX A
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Securities. The Letter
of Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. 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 Exchange Securities received in exchange for Initial Securities
where such Initial Securities were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the Expiration Date (as defined herein), it
will make this Prospectus available to any broker-dealer for use in connection
with any such resale. See "Plan of Distribution."
<PAGE>
ANNEX B
Each broker-dealer that receives Exchange Securities for its own
account in exchange for Securities, where such Initial Securities 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 Exchange Securities. See "Plan of Distribution."
<PAGE>
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Securities. 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 Exchange Securities received in
exchange for Initial Securities where such Initial Securities were acquired as a
result of market-making activities or other trading activities. The Company has
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.
The Company will not receive any proceeds from any sale of Exchange
Securities by broker-dealers. Exchange Securities 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 Exchange Securities 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 or the purchasers of any such Exchange
Securities. Any broker-dealer that resells Exchange Securities 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 Exchange Securities may be
deemed to be an "underwriter" within the meaning of the Securities Act and any
profit on any such resale of Exchange Securities and any commission 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 180 days after the Expiration Date the Company will
promptly 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. The Company has agreed to pay all expenses
incident to the Exchange Offer (including the expenses of one counsel for the
Holders of the Securities) other than commissions or concessions of any brokers
or dealers and will indemnify the Holders of the Securities (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
<PAGE>
ANNEX D
_____ CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS
OR SUPPLEMENTS THERETO.
Name: ____________________________________________
Address: ____________________________________________
____________________________________________
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Initial Securities that were
acquired as a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
EXHIBIT 11.1
(Page 1 of 2)
TEREX CORPORATION AND SUBSIDIARIES
Computation of Earnings per Common Share
(in millions except per share amounts)
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------
1998 1997 1996
--------------- ------------------------------
BASIC:
<S> <C> <C> <C>
Income (loss) from continuing operations before extraordinary items....$ 72.8 $ 30.3 $ (54.3)
Income from discontinued operations.................................... --- --- 102.0
--------------- -------------- ---------------
Income before extraordinary items..................................... 72.8 30.3 47.7
Less: Accretion of Preferred Stock................................. --- (4.8) (22.9)
--------------- -------------- ---------------
Income before extraordinary item applicable to common stock............ 72.8 25.5 24.8
Extraordinary loss on retirement of debt............................... (38.3) (14.8) ---
--------------- -------------- ---------------
Net income applicable to common stock..................................$ 34.5 $ 10.7 $ 24.8
=============== ============== ===============
Basic shares outstanding............................................... 20.7 16.2 11.8
=============== ============== ===============
Basic income per common share
Income (loss) from continuing operations before extraordinary item..$ 3.52 $ 1.57 $ (6.54)
Income from discontinued operations................................. --- --- 8.64
--------------- -------------- ---------------
Income before extraordinary items.................................. 3.52 1.57 2.10
Extraordinary loss.................................................. (1.85) (0.91) ---
--------------- -------------- ---------------
Net income..........................................................$ 1.67 $ 0.66 $ 2.10
=============== ============== ===============
</TABLE>
<PAGE>
EXHIBIT 11.1
(Page 2 of 2)
TEREX CORPORATION AND SUBSIDIARIES
Computation of Earnings per Common Share
(in millions except per share amounts)
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------
1998 1997 1996
--------------- -------------- ---------------
DILUTED:
<S> <C> <C> <C>
Income (loss) from continuing operations before extraordinary items....$ 72.8 $ 30.3 $ (54.3)
Income from discontinued operations.................................... --- --- 102.0
--------------- -------------- ---------------
Income before extraordinary items..................................... 72.8 30.3 47.7
Less: Accretion of Preferred Stock................................. --- (4.8) (22.9)
--------------- -------------- ---------------
Income before extraordinary item applicable to common stock............ 72.8 25.5 24.8
Add: Accretion of Preferred Stock assumed converted at
beginning of period............................................... --- --- --- (a)
--------------- -------------- ---------------
72.8 25.5 24.8
Extraordinary loss on retirement of debt............................... (38.3) (14.8) ---
--------------- -------------- ---------------
Net income (loss) applicable to common stock...........................$ 34.5 $ 10.7 $ 24.8
=============== ============== ===============
Weighted average shares outstanding during the period.................. 20.7 16.2 11.8
Assumed exercise of warrants at ratio determined as of
December 31, 1998................................................. 0.1 0.3 1.2
Assumed conversion of Preferred Stock.................................. --- --- --- (a)
Assumed exercise of equity rights...................................... 0.8 0.5 ---
Assumed exercise of stock options...................................... 0.8 0.7 0.3
=============== ============== ===============
Diluted shares outstanding............................................. 22.4 17.7 13.3
=============== ============== ===============
Diluted income per common share
Income (loss) from continuing operations before extraordinary item..$ 3.25 $ 1.44 $ (5.81)
Income from discontinued operations................................. --- --- 7.67
--------------- -------------- ---------------
Income (loss) before extraordinary items............................ 3.25 1.44 1.86
Extraordinary loss.................................................. (1.71) (0.84) ---
=============== ============== ===============
Net income (loss)...................................................$ 1.54 $ 0.60 $ 1.86
=============== ============== ===============
</TABLE>
(a) Excluded from the computation because the effect is anti-dilutive.
<PAGE>
Exhibit 21.1
(Page 1 of 2)
CONSOLIDATED SUBSIDIARIES OF TEREX CORPORATION
Name of Subsidiary Jurisdiction of Incorporation
The American Crane Corporation North Carolina
American Crane International B.V. The Netherlands
BCP Construction Products, Inc. Delaware
Brimont S.A. France
Bucyrus Construction Products, Inc. Delaware
CMP Limited United Kingdom
Gatewood Engineers United Kingdom
Gru Comedil S.p.A. Italy
Holland Lift International B.V. The Netherlands
IMACO Blackwood Hodge Group Limited United Kingdom
IMACO Blackwood Hodge Limited United Kingdom
IMACO Construction Equipment Limited United Kingdom
IMACO Trading Limited United Kingdom
International Machinery Company Limited United Kingdom
Italmacchine S.p.A. Italy
Koehring Cranes, Inc. Delaware
(including Mark Industries, a division)
New Terex Holdings Corporation Delaware
New Terex Holdings UK Limited United Kingdom
NGW Supplies Limited United Kingdom
O & K Mining GmbH Germany
O & K Orenstein & Koppel Limited United Kingdom
O & K Orenstein & Koppel, Inc. Delaware
O & K Orenstein & Koppel, Inc. Canada
O & K Orenstein & Koppel South Africa Pty. Ltd. South Africa
Orenstein & Koppel Australia Pty Ltd. Australia
O & K Far East Pte. Ltd. Singapore
Payhauler Corp. Illinois
Picadilly Maschinenhandels GmbH & Co. KG Germany
PPM Cranes, Inc. Delaware
PPM S.A. France
Brimont Engins (division)
PPM S.p.A. Italy
PPM Deutschland GmbH Germany
PPM Far East Ltd. Singapore
Progressive Components, Inc. Illinois
Sim-Tech Management Limited Hong Kong
Simon-Tomen Engineering Co., Ltd. Japan
Terex Aerials, Inc. Wisconsin
Terex Aerials Limited Ireland
Terex Atlantico, Inc. Pennsylvania
Terex Aviation Ground Equipment, Inc. Delaware
Terex Cranes, Inc. Delaware
Terex Cranes Pty. Ltd. Australia
Terex Credit Corporation Delaware
Terex Equipment Limited United Kingdom
Terex International Exports, Inc. Delaware
Terex Italia S.r.l. Italy
<PAGE>
Exhibit 21.1
(Page 2 of 2)
Name of Subsidiary Jurisdiction of Incorporation
Terex Material Handling Corp. Kentucky
Terex Mining Equipment, Inc. Delaware
Terex -Peiner GmbH Germany
Terex-RO Corporation Kansas
Terex-Telelect, Inc. Delaware
Terex West Coast, Inc. South Dakota
Terex of Western Michigan, Inc. Michigan
Tower Cranes, Inc. New York
Unit Rig (Canada) Ltd. Delaware
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (Nos. 33-21483, 33-00949 and 33-03983) and on Form S-3
(No. 33-52297) of Terex Corporation of our report dated March 1, 1999 appearing
on page F-2 of this Form 10-K.
PricewaterhouseCoopers LLP
Stamford, Connecticut
March 30, 1999
<PAGE>
Exhibit 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below hereby constitutes and appoints Ronald M. DeFeo and Eric I Cohen,
or either of them, as his true and lawful attorneys-in-fact and agents with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign the Terex Corporation Annual Report on
Form 10-K for the year ended December 31, 1998 (including, without limitation,
amendments), and to file the same with all exhibits thereto, and all document in
connection therewith, with the Securities and Exchange Commission, granting said
attorney-in-fact and agent, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be done, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Signature Title Date
--------- ----- ----
/s/ Ronald M. DeFeo Chairman, Chief Executive Officer March 30, 1999
Ronald M. DeFeo and Director
(Principal Executive Officer)
/s/ Joseph F. Apuzzo Vice President - Corporate Finance March 30, 1999
Joseph F. Apuzzo (Principal Financial Officer)
/s/ Kevin M. O'Reilly Controller March 30, 1999
Kevin M. O'Reilly (Principal Accounting Officer)
/s/ G. Chris Andersen Director March 30, 1999
G. Chris Andersen
/s/ William H. Fike Director March 30, 1999
William H. Fike
/s/ Donald P. Jacobs Director March 30, 1999
Donald P. Jacobs
/s/ Bruce I. Raben Director March 30, 1999
Bruce I. Raben
/s/ Marvin B. Rosenberg Director March 30, 1999
Marvin B. Rosenberg
/s/ David A. Sachs Director March 30, 1999
David A. Sachs
<PAGE>
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0
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