Filed pursuant to Rule 424(b) (3)
File no. 333-52933
Prospectus Supplement
[Terex logo with crown]
TEREX CORPORATION
Up to 300,000 Shares
Common Stock
The offer and sale of up to 300,000 shares of Common Stock, par value $.01 per
share, of Terex Corporation ("Terex") pursuant to this prospectus supplement are
being made by Terex from time to time to Thomas H. Coleman, Jr. and Blanchard E.
Tual, as trustee for the Thomas H. Coleman, Jr. Trust, the Stephen Thomas
Coleman Trust and the Michael Wayne Coleman Trust (collectively, the "Coleman
Shareholders"), in accordance with the terms of that certain Agreement of Merger
and Reorganization (the "Merger Agreement") to be entered into among Terex,
Terex Generation, Inc., Coleman Engineering, Inc. and the Coleman Shareholders.
The Common Stock will be offered and sold at a price per share equal to the
average closing price per share of the Common Stock on the New York Stock
Exchange for the ten consecutive trading days ending on the fifth trading day
prior to the date the shares of Common Stock are issued pursuant to this
Prospectus Supplement as provided for in the Merger Agreement.
The last reported sale price of the Common Stock, par value $.01 per share,
which is listed on the New York Stock Exchange under the symbol "TEX," on
October 17, 2000, was $12.00 per share.
Investing in the Common Stock involves certain risks. See "Risk Factors" on page
S-8.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
Prospectus Supplement or the Prospectus to which it relates is truthful or
complete. Any representation to the contrary is a criminal offense.
Prospectus Supplement dated October 18, 2000
This Prospectus Supplement relates to an effective registration statement under
the Securities Act of 1933, as amended, but is not complete and may be changed.
This Prospectus Supplement is not an offer to sell these securities and it is
not soliciting an offer to buy these securities in any state where the offer or
sale is not permitted.
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TABLE OF CONTENTS
Prospectus Supplement
Page
FORWARD-LOOKING STATEMENTS............................................. S-4
THE COMPANY............................................................ S-5
RISK FACTORS........................................................... S-8
Debt of Terex.................................................. S-8
Restrictive Debt Covenants..................................... S-8
Acquisition Strategy; Integration of New
Businesses.................................................. S-8
Industry Cycles and Competition................................ S-9
Ability to Use Net Operating Loss
Carryovers.................................................. S-9
Reliance on Key Management..................................... S-9
Foreign Currencies; International
Operations.................................................. S-9
Environmental and Related Matters.............................. S-10
Restrictions on Dividends...................................... S-10
USE OF PROCEEDS........................................................ S-10
PRICE RANGE OF COMMON STOCK AND DIVIDEND
POLICY............................................................. S-11
DESCRIPTION OF COMMON STOCK............................................ S-11
PLAN OF DISTRIBUTION................................................... S-12
EXPERTS................................................................ S-12
S-2
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Prospectus
Page
AVAILABLE INFORMATION.................................................. 2
INCORPORATION OF DOCUMENTS BY REFERENCE................................ 2
THE COMPANY............................................................ 3
RATIOS OF EARNINGS TO FIXED CHARGES.................................... 4
USE OF PROCEEDS........................................................ 5
DESCRIPTION OF DEBT SECURITIES......................................... 5
DESCRIPTION OF PREFERRED STOCK......................................... 22
DESCRIPTION OF COMMON STOCK............................................ 27
DESCRIPTION OF WARRANTS................................................ 28
DESCRIPTION OF RIGHTS.................................................. 28
PLAN OF DISTRIBUTION................................................... 29
ERISA MATTERS.......................................................... 30
LEGAL OPINIONS......................................................... 30
EXPERTS................................................................ 30
You should rely only on the information contained in this document or to which
we have referred you. We have not authorized anyone to provide you with
information that is different. This document may only be used where it is legal
to sell these securities. The information in this document may only be accurate
on the date of this document.
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FORWARD-LOOKING STATEMENTS
This Prospectus Supplement, the accompanying Prospectus and the
documents incorporated by reference contain and refer to forward-looking
statements that involve risks and uncertainties. Generally, the words "may,"
"expects," "intends," "anticipates," "plans," "projects," "estimates" or similar
words are intended to identify forward-looking statements. However, the absence
of these words does not mean that the statement is not forward-looking. We have
based these forward-looking statements on our current expectations and
projections about future events. These statements are not guarantees of future
performance. It is possible that actual events and results will differ
materially as future events are difficult to predict. In addition, many of the
risks, uncertainties and assumptions about Terex are beyond our control. Some of
these risks, uncertainties and assumptions are:
o construction and mining activity are affected by interest rates,
government spending and general economic conditions;
o our ability to successfully integrate new businesses may affect our
future performance;
o changes in our key management personnel;
o our businesses are in very competitive industries and may be affected
by pricing, product and other actions taken by our competitors;
o changes in laws and regulations;
o we manufacture and sell our products in many countries and we may be
affected by changes in exchange rates between currencies, as well as
international politics;
o our ability to timely manufacture and deliver our products to
customers;
o the ability of our suppliers to timely supply us with parts and
components at competitive prices;
o continued use of net operating loss carryovers;
o our ability to pay dividends may be limited by the terms of our
existing debt agreements and state law;
o we have a significant amount of debt and our debt agreements contain a
number of restrictive covenants; and
o we are subject to various environmental laws and regulations.
The forward-looking statements made or referred to in this Prospectus
Supplement, the accompanying Prospectus and the documents incorporated by
reference reflect our expectations and projections at the time the statement was
made. We do not undertake any obligation to update publicly any forward-looking
statement which may result from changes in events, conditions, circumstances or
expectations on which we have based any forward-looking statement.
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THE COMPANY
General
Terex Corporation ("Terex") is a diversified global manufacturer of a
broad range of equipment for the construction, infrastructure and mining
industries. Terex strives to build a growing franchise under the Terex brand
name. Terex remains focused on its mission of delivering products that are
reliable, productive and cost-effective, and of producing equipment that
improves our customers' return on invested capital. Terex organizes itself into
two business segments, Terex Lifting and Terex Earthmoving. Terex's products are
manufactured at 35 plants in the United States, Europe and Australia, and are
sold primarily through a worldwide distribution network with over 1,000
locations to the global construction, infrastructure and surface mining markets.
Over the past several years, Terex has implemented a series of
interrelated operational and strategic initiatives designed to create a
competitive advantage in the marketplace. These include (i) increasing the
variable portion of its manufacturing costs to over 80%; (ii) reducing operating
expenses as a percentage of revenues substantially below the industry's average
and eliminating non value-added functions throughout the organization; (iii)
providing our customers with a cost-effective product line; and (iv)
diversifying Terex's product line in order to maximize financial performance.
Terex has continued to diversify its product offerings. In mid-1999
Terex expanded its presence in the aggregates industry with the acquisitions of
Powerscreen International plc ("Powerscreen") and Cedarapids, Inc.
("Cedarapids"). These two acquisitions make Terex one of the world's leaders in
the markets for screening and crushing equipment for the quarrying,
infrastructure development, demolition and recycling industries. During 1999,
Terex also acquired Amida Industries, Inc. ("Amida") and Bartell Industries Inc.
("Bartell"). These two companies, which manufacture and sell floodlighting
systems, concrete power trowels, concrete placement systems and traffic control
products designed for the rental distribution business, have created the base
for a new business designed to serve the growing needs of this customer base.
These businesses have been integrated with various other smaller construction
products manufactured and sold by Terex (including compaction machines, rollers
and access equipment) to form the Terex Light Construction product line.
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 boom
material handlers (including container stackers and rough terrain), 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, Terex believes it is the leading manufacturer of mobile cranes in
France, Italy and Spain and is the second largest manufacturer in the United
States. Terex 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.
Terex Lifting has 15 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) Terex Italia
srl, located in Crespellano, Italy, at which mobile cranes are manufactured
under the TEREX, BENDINI and PPM brand names; (iii) PPM Cranes, Inc., located in
Conway, South Carolina, at which rough terrain hydraulic telescoping mobile
cranes and truck cranes are manufactured under the P&H (a licensed trademark of
Harnischfeger Corporation) and TEREX brand names; (iv) Terex Lifting - Waverly
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Operations, located in Waverly, Iowa, at which rough terrain hydraulic
telescoping mobile cranes and truck cranes are manufactured under the brand
names TEREX and LORAIN, and aerial lift equipment is manufactured under the
brand names TEREX AERIALS and TEREX; (v) Terex-Telelect, Inc. ("Telelect"),
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 Limited, located in Cork, Ireland, at which aerial platforms are
manufactured under the TEREX brand name; (vii) Terex RO Corporation ("Terex
RO"), located in Olathe, Kansas, at which truck mounted cranes are manufactured
under the RO-STINGER brand name; (viii) Terex Handlers, located in Baraga,
Michigan, at which rough terrain telescopic boom material handlers are
manufactured under the SQUARE SHOOTER and TEREX brand names; (ix) Holland Lift,
located in Hoorn, the Netherlands, at which aerial platforms are manufactured
under the HOLLAND LIFT brand name; (x) The American Crane Corporation ("American
Crane") located in Wilmington, North Carolina, at which lattice boom cranes are
manufactured under the AMERICAN brand name; (xi) Italmacchine SpA
("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; (xii) Terex Peiner GmbH ("Peiner"), located in Trier, Germany, at
which tower cranes are manufactured under the PEINER trade name; (xiii) Gru
Comedil SpA ("Comedil"), located in Fontanafredda, Italy, at which tower cranes
are manufactured under the COMEDIL trade name; (xiv) Matbro Limited ("Matbro"),
located in Tetbury, England, at which material handlers are manufactured under
the MATBRO trade name; and (xv) Franna Cranes Pty. Ltd. ("Franna Cranes"),
located in Brisbane, Australia, at which all terrain mobile cranes are
manufactured under the FRANNA trade name.
On September 30, 2000, Terex completed the sale of its truck-mounted
forklift businesses to subsidiaries of Partek Corporation of Finland ("Partek")
for approximately $144 million in cash. The units divested by Terex included
Moffett Engineering Limited ("Moffett") (a subsidiary of Powerscreen that was
acquired by Terex in July 1999) and Terex's Princeton and Kooi units (acquired
by Terex from Allegheny Teledyne in November 1999). Moffett, Princeton and Kooi
manufacture truck mounted material handlers that are mounted on delivery
vehicles and are used to unload materials at delivery sites. This equipment is
used primarily in the building material industry. Terex used approximately $125
million of after-tax proceeds from this transaction to repay long-term bank
debt.
Terex Earthmoving
Terex Earthmoving currently manufactures and sells large hydraulic
excavators, articulated and rigid off-highway trucks, high capacity surface
mining trucks, scrapers, crushing and screening equipment, asphalt pavers,
asphalt mixing plants, and related components and replacement parts. These
products are used primarily by construction, mining, quarrying and government
customers. Terex Earthmoving believes that it has the leading market share for
large hydraulic excavator models having machine weights in excess of 200 tons,
that it is a significant competitor in the market for large capacity off highway
haulers and scrapers, and that it had the leading market share in high capacity
surface mining trucks in 1999. Terex Earthmoving has eleven significant
manufacturing operations: (i) Terex Equipment Limited ("TEL"), located in
Motherwell, Scotland; (ii) Unit Rig ("Unit Rig") and Payhauler Corporation
("Payhauler"), located in Tulsa, Oklahoma; (iii) O&K Mining GmbH ("O&K Mining"),
located in Dortmund, Germany; (iv) Powerscreen, located in Dungannon, Northern
Ireland and Kilbeggan, Ireland; (v) Finlay Hydrascreens (Omagh) Limited
("Finlay"), located in Omagh, Ireland; (vi) B.L. Pegson Limited ("B.L. Pegson"),
located in Coalville, England; (vii) Simplicity Engineering ("Simplicity"),
located in Durand, Michigan; (viii) Re-Tech, located in Lebanon, Pennsylvania;
(ix) Benford Limited ("Benford"), located in Warwick, England; (x) Cedarapids,
located in Cedar Rapids, Iowa; and (xi) Standard Havens, Inc. ("Standard
Havens"), located in Glasgow, Missouri.
TEL manufactures, sells and markets off-highway rigid haulers and
articulated haulers, 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 TEREX brand name. Unit Rig
and Payhauler manufacture, sell and market electric rear hauler trucks with
payload capacities ranging from 50 to 340 tons and bottom dump haulers with
capacities ranging from 180 to 270 tons, principally sold to copper, gold, iron
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ore and coal mining industry customers, as well as all wheel drive rigid
off-highway trucks. O&K Mining manufactures and sells large hydraulic mining
shovels. Cedarapids, Finlay, Powerscreen, B.L. Pegson, Simplicity and Re-Tech
manufacture, sell and market crushing and screening equipment. Cedarapids also
manufactures, sells and markets a line of asphalt pavers and associated
equipment. Standard Havens manufactures, sells and markets asphalt plants.
Benford manufactures, sells and markets dumpers and compactors. These products
are sold under Terex's TEREX, UNIT RIG, LECTRA HAUL, O&K, PAYHAULER,
POWERSCREEN, FINLAY, SIMPLICITY, CEDARAPIDS, BENFORD, BROWN LENOX, PEGSON,
ROYER, RE-TECH, ENVIROQUIP and CEDARAPIDS/STANDARD HAVENS brand names. TEL's
North, Central and South American sales and distribution are managed by Terex
Americas, a division of Terex, located in Tulsa, Oklahoma. 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, and the
People's Republic of China.
During 1999, Terex entered the aggregates industry with the
acquisitions of Powerscreen and Cedarapids. Terex acquired Powerscreen and its
subsidiaries in July 1999 for an aggregate price of approximately $294 million
and Cedarapids in August 1999 for an aggregate price of approximately $170
million. These two acquisitions, which represent approximately $500 million in
combined revenues, provide Terex with a leading market position in the crushing
and screening equipment markets. Both acquisitions further Terex's strategy of
diversifying both its products and the geographic range of its customers.
Light Construction
Terex Light Construction currently manufactures and sells mobile and
portable floodlighting systems, concrete power trowels, concrete placement
systems, concrete finishing systems and traffic control products, and related
components and replacement parts. These products are typically used for rental
and construction applications. Terex Light Construction consists of Amida,
located in Rock Hill, South Carolina, and Bartell, located in Brampton, Ontario,
Canada. Terex Light Construction also distributes products in North America that
are manufactured in the Terex Benford facility in Warwick, England, including
dumpers and compaction machines. These products are sold under Terex's AMIDA,
BARTELL, BENFORD, MORRISON and TEREX brand names. These products are typically
used for rental and construction applications.
Terex Light Construction has two significant manufacturing operations:
(i) Amida, located in Rock Hill, South Carolina, which manufactures and sells
portable floodlighting systems, concrete power trowels, concrete placement
systems, concrete finishing systems and traffic control products under the
AMIDA, BARTELL, MORRISON, BENFORD and TEREX brand names; and (ii) Bartell,
located in Brampton, Ontario, Canada, which manufactures and sells concrete
power trowels and concrete finishing systems under the BARTELL brand name.
The light equipment concept originated in April 1999 with the
acquisition of Amida. Terex Light Construction is structured to capitalize on
the growing rental segment of the construction equipment industry. Terex's
strategy is to expand its product offerings to the national rental companies,
while maintaining its business with independent rental stores. Terex's
consolidation efforts are creating value for customers through the synergies of
Terex's sales force and elimination of costly distribution steps, such as
manufacturer's representatives, thus lowering the cost of Terex's products to
its customers.
The Terex Light Construction product line was broadened by the addition
of the Benford line of compaction equipment as part of the July 1999 acquisition
of Powerscreen, the acquisition of Bartell in September 1999 and the
consolidation of Terex's U.S. scissor lift business in December 1999.
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RISK FACTORS
Investing in shares of Common Stock can be risky. Before you invest in
shares of our Common Stock, you should carefully consider the following factors
and other information contained or incorporated in this Prospectus Supplement or
the accompanying Prospectus.
Debt of Terex
As of December 31, 1999, Terex had total debt of approximately $1,156
million, which represented approximately 73% of our total capitalization.
There are several important consequences of having debt, including the
following:
o a substantial portion of our cash from operating activities will be
dedicated to payment of principal and interest on our debt;
o competitive pressures and adverse economic conditions are more likely
to have a negative effect on our business; and
o our ability to make acquisitions and to take advantage of significant
business opportunities may be negatively affected.
Terex's ability to pay the required interest and principal payments on
our debt depends on the future performance of our business. The performance of
our business is subject to general economic conditions and other financial and
business factors. Many of these factors are beyond our control. If Terex does
not have enough cash flow in the future to pay the required interest or
principal payments on our debt, we may be required to refinance all or a part of
our debt or borrow additional amounts. Terex does not know if refinancing our
debt will be possible at that time or if we will be able to find someone who
will lend us more money.
In addition, because part of Terex's debt bears interest at floating
rates, an increase in interest rates could adversely affect our ability to make
the required interest and principal payments on our debt. Terex has entered into
agreements covering part of our floating rate debt which place a cap on the
applicable interest rates.
Restrictive Debt Covenants
Terex's existing debt agreements contain a number of significant
covenants. These covenants limit our ability to, among other things, borrow
additional money, make capital expenditures, pay dividends, dispose of assets
and acquire new businesses. These covenants also require us to meet certain
financial tests. Changes in economic or business conditions, results of
operations or other factors could cause us to default under our existing debt
agreements. If we are unable to comply with these covenants, there would be a
default under our existing debt agreements. A default, if not waived by our
lenders, could result in acceleration of Terex's debt and possibly bankruptcy.
Acquisition Strategy; Integration of New Businesses
Terex expects to continue its strategy of identifying and acquiring
businesses with complementary products and services which we believe will
enhance our operations and profitability. From time to time Terex identifies
potential acquisition prospects which, if concluded, could be material to Terex
and its business. Terex may pay for future acquisitions from internally
generated funds, bank borrowings, public offerings, private sales of stock or
bonds, or some combination of these methods. However, we cannot give any
assurance that Terex will be able to continue to find suitable businesses to
purchase or that Terex will be able to raise the money necessary to complete
future acquisitions. In addition, we cannot guarantee that we will be able to
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successfully integrate any business we purchase into our existing business or
that any acquired businesses will be profitable. The successful integration of
new businesses depends on our ability to manage these new businesses and cut
excess costs. If Terex is unable to complete the integration of new businesses
in a timely manner, it could have a materially adverse effect on our results of
operations and financial condition.
Industry Cycles and Competition
The demand for our products depends upon the general economic
conditions of the markets in which we compete. Downward economic cycles result
in reductions in sales of our products, which may reduce Terex's profits. We
have taken a number of steps to reduce our fixed costs of operations to decrease
the negative impact of these cycles.
Terex competes in a highly competitive industry. To compete
successfully, our products must excel in terms of quality, price, product line,
ease of use, safety and comfort, and we must also provide excellent customer
service. The greater financial resources of certain of our competitors may put
Terex at a competitive disadvantage.
Ability to Use Net Operating Loss Carryovers
As of December 31, 1999, Terex had federal net operating losses
("NOLs") of approximately $232 million. Currently there is no limitation on our
ability to use NOLs to reduce future income taxes. However, if an ownership
change as defined in Section 382 of the Internal Revenue Code of 1986, as
amended (the "Code"), occurs with respect to our capital stock, our ability to
use NOLs would be limited to specific annual amounts. Generally, an ownership
change occurs if certain persons or groups increase their aggregate ownership by
more than 50 percentage points of our total capital stock in any three-year
period.
If an ownership change occurs, our ability to use NOLs to reduce income
taxes is limited to an annual amount based on the fair market value of Terex
immediately prior to the ownership change multiplied by the long-term tax-exempt
interest rate. The long-term tax-exempt interest rate is published monthly by
the IRS. As of the date of this Prospectus Supplement, the rate is approximately
5.53%. The 15-year period to use NOLs is not affected by the ownership change
limitations. Our use of new NOLs arising after the date of an ownership change
would not be affected.
It is impossible for Terex to ensure that an ownership change will not
occur in the future. We do not have the ability to restrict the purchase or sale
of our capital stock so as to prevent an ownership change. At any time, the
actions of one or more persons or groups under certain circumstances could by
themselves cause an ownership change and result in a limitation on our ability
to use NOLs. In addition, we may decide in the future that it is necessary or in
our interest to take certain actions which result in an ownership change. If an
ownership change occurs, our future after-tax earnings per share and cash flow
may be reduced.
Reliance on Key Management
The success of Terex's business is dependent upon the management and
leadership skills of Ronald M. DeFeo, Chairman of the Board, President and Chief
Executive Officer. The loss of Mr. DeFeo could have a significant, negative
impact upon Terex.
Foreign Currencies; International Operations
Terex's products are sold in over 50 countries around the world. Thus,
our revenues are generated in foreign currencies, including the Euro, British
Pound Sterling, French Franc, Deutsche Mark, Italian Lira, Dutch Gilder and
Australian Dollar, while costs incurred to generate those revenues are only
partly incurred in the same currencies. Since Terex's financial statements are
denominated in U.S. dollars, changes in currency exchange rates between the U.S.
dollar and other currencies have had, and will continue to have, an impact on
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Terex's earnings. To date, this impact has not been material on the earnings of
Terex. To reduce this currency exchange risk, Terex may buy protecting or
offsetting positions (known as "hedges") in certain currencies to reduce the
risk of an adverse currency exchange movement. Terex has not engaged in any
speculative or profit motivated hedging activities. Although Terex partially
hedges its revenues and costs, currency fluctuations will impact Terex's
financial performance in the future.
Terex's international operations are also subject to a number of
potential risks. Such risks include, among others, currency exchange controls,
labor unrest, regional economic uncertainty, political instability, restrictions
on the transfer of funds into or out of a country, export duties and quotas,
domestic and foreign customs and tariffs, current and changing regulatory
environments, difficulty in obtaining distribution support and potentially
adverse tax consequences. These factors may have an adverse effect on Terex or
its international operations in the future.
Environmental and Related Matters
Terex generates hazardous and non-hazardous wastes in the normal course
of its manufacturing operations. As a result, Terex is subject to a wide range
of federal, state, local and foreign environmental laws and regulations. These
laws and regulations govern actions that may have adverse environmental effects
and also require compliance with certain practices when handling and disposing
of hazardous and non-hazardous wastes. These laws and regulations also impose
liability for the costs of, and damages resulting from, cleaning up sites, past
spills, disposals and other releases of hazardous substances.
Compliance with these laws and regulations has, and will continue to
require, Terex to make expenditures. Terex does not expect that these
expenditures will have a material adverse effect on its business or
profitability.
Restrictions on Dividends
Terex's ability to pay dividends on its Common Stock is limited under
the terms of Terex's existing debt agreements. In addition, Delaware law
generally restricts Terex from paying dividends in circumstances where the
payment would make our liabilities exceed our assets or where the payment would
make us unable to pay our debts as they become due.
Terex does not plan on paying dividends on its Common Stock in the near
term. Instead, we intend to retain any earnings to repay indebtedness and to
fund the development and growth of our business. Any future payments of cash
dividends will depend on our financial condition, capital requirements and
earnings, as well as other factors that the Board of Directors may consider.
USE OF PROCEEDS
Terex will not receive any cash proceeds from the sale of the Common
Stock.
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PRICE RANGE OF COMMON STOCK
AND DIVIDEND POLICY
Our Common Stock is listed on the New York Stock Exchange under the
symbol "TEX." The following table sets forth for the quarters indicated, the
high and low sales prices of our Common Stock as reported on the NYSE Composite
Tape.
Price Range
Low High
1998
First Quarter ended March 31, 1998...................... $20 $27 7/16
Second Quarter ended June 30, 1998...................... $26 7/8 $31 1/2
Third Quarter ended September 30, 1998.................. $14 $29 9/16
Fourth Quarter ended December 31, 1998.................. $13 3/8 $28 15/16
1999
First Quarter ended March 31, 1999...................... $22 1/8 $28 1/2
Second Quarter ended June 30, 1999...................... $23 1/4 $35 1/2
Third Quarter ended September 30, 1999.................. $24 1/4 $31 7/8
Fourth Quarter ended December 31, 1999.................. $24 13/16 $31 1/2
2000
First Quarter ended March 31, 2000...................... $11 1/8 $28 7/8
Second Quarter ended June 30, 2000...................... $12 3/8 $17 1/4
Third Quarter ended September 30, 2000.................. $12 $19 1/2
Fourth Quarter (through October 17, 2000)............... $12 $13 3/4
The last reported sale of our Common Stock on the NYSE Composite Tape on
October 17, 2000 was $12.00 per share. As of September 30, 2000, there were
approximately 712 record holders of our Common Stock.
No dividends were declared or paid in 1997, 1998 or 1999. Certain of
Terex's debt agreements contain restrictions as to the payment of cash
dividends. In addition, payment of dividends is limited by Delaware law. Terex
intends generally to retain any earnings to repay indebtedness and to fund the
development and growth of its business. Terex does not plan on paying dividends
on the Common Stock in the near term. Any future payments of cash dividends will
depend on the financial condition, capital requirements and earnings of Terex,
as well as other factors that the Board of Directors may consider.
DESCRIPTION OF COMMON STOCK
Each outstanding share of Common Stock entitles the holder to one vote,
either in person or by proxy, on all matters submitted to a vote of
stockholders, including the election of directors. There is no cumulative voting
in the election of directors, which means that the holders of a majority of the
outstanding shares of Common Stock can elect all of the directors then standing
for election. Subject to preferences which may be applicable to any outstanding
shares of preferred stock, holders of Common Stock have equal ratable rights to
any dividends that may be declared by the Board of Directors out of legally
available funds.
Holders of Common Stock have no conversion, redemption or preemptive
rights to subscribe for any securities of Terex. All outstanding shares of
Common Stock are fully paid and nonassessable. In the event of any liquidation,
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dissolution or winding-up of the affairs of Terex, holders of Common Stock will
be entitled to share ratably in the assets of Terex remaining after providing
for the payment of liabilities to creditors and preferences applicable to
outstanding shares of preferred stock. The rights, preferences and privileges of
holders of Common Stock are subject to the rights of the holders of any
outstanding shares of preferred stock.
Terex's Restated Certificate of Incorporation provides that directors
of Terex shall not be personally liable to Terex or its stockholders for
monetary damages for breach of fiduciary duties as directors except to the
extent otherwise required by Delaware law. The Amended and Restated By-laws of
Terex provide for indemnification of the officers and directors of Terex to the
fullest extent permitted by Delaware law.
PLAN OF DISTRIBUTION
The offer and sale of up to 300,000 shares of Common Stock, par value
$.01 per share, of Terex pursuant to this prospectus supplement are being made
by Terex from time to time to Thomas H. Coleman, Jr. and Blanchard E. Tual, as
trustee for the Thomas H. Coleman, Jr. Trust, the Stephen Thomas Coleman Trust
and the Michael Wayne Coleman Trust (collectively, the "Coleman Shareholders"),
in accordance with the terms of that certain Merger and Reorganization Agreement
to be entered into among Terex, Terex Generation, Inc., Coleman Engineering,
Inc. and the Coleman Shareholders. The Common Stock will be offered and sold at
a price per share equal to the average closing price per share of the Common
Stock on the New York Stock Exchange for the ten consecutive trading days ending
on the fifth trading day prior to the date the shares of Common Stock are issued
to pursuant to this Prospectus Supplement as provided for in the Merger and
Reorganization Agreement.
EXPERTS
The consolidated financial statements of Terex Corporation and PPM
Cranes, Inc. incorporated in the accompanying Prospectus by reference to the
Annual Report on Form 10-K of Terex Corporation for the year ended December 31,
1999 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
S-12
<PAGE>
PROSPECTUS
TEREX CORPORATION
$300,000,000
Debt Securities, Preferred Stock,
Common Stock, Warrants and Rights
Terex Corporation ("Terex" or the "Company") may from time to time offer
and/or issue in one or more series its (i) unsecured debt securities, which may
be either senior debt securities ("Senior Securities") or subordinated debt
securities ("Subordinated Securities," and together with Senior Securities, the
"Debt Securities"), (ii) preferred stock, par value $.01 per share ("Preferred
Stock"), (iii) common stock, par value $.01 per share ("Common Stock"), (iv)
warrants to purchase Debt Securities, Preferred Stock or Common Stock
(collectively, "Warrants"), or (v) rights to purchase Preferred Stock or Common
Stock ("Rights"), with an aggregate initial public offering price of up to
$300,000,000 on terms to be determined at the time of offering. Debt Securities,
Preferred Stock, Common Stock, Warrants and Rights (collectively, the "Offered
Securities") may be offered, separately or together, in separate series in
amounts, at prices and on terms to be set forth in a supplement to this
Prospectus (a "Prospectus Supplement").
The specific terms of the Offered Securities in respect of which this
Prospectus is being delivered will be set forth in the applicable Prospectus
Supplement and will include, where applicable: (i) in the case of Debt
Securities, the specific title, aggregate principal amount, ranking, currency,
form (which may be registered or bearer, or certificated or global), authorized
denominations, maturity, rate (or manner of calculation thereof) and time of
payment of interest, terms for redemption at the option of the Company or
repayment at the option of the holder, terms for sinking fund payments, terms
for conversion into Preferred Stock or Common Stock, certain covenants, other
terms and conditions, and the initial public offering price; (ii) in the case of
Preferred Stock, the number, specific title and stated value, any distribution,
liquidation, redemption, conversion, voting and other terms and conditions, and
the initial public offering price; (iii) in the case of Common Stock, any
initial public offering price; (iv) in the case of Warrants, the number and
terms thereof, the designation and the number of securities issuable upon their
exercise, the exercise price, the terms of the offering and sale thereof and,
where applicable, the duration and detachability thereof; and (v) in the case of
Rights, the duration, exercise price and transferability thereof.
The applicable Prospectus Supplement will also contain information, where
applicable, about certain United States federal income tax considerations
relating to, and any listing on a securities exchange of, the Offered Securities
covered by such Prospectus Supplement.
The Offered Securities may be offered directly, through agents designated
from time to time by the Company, or to or through underwriters or dealers. If
any agents or underwriters are involved in the sale of any of the Offered
Securities, their names, and any applicable purchase price, fee, commission or
discount arrangement between or among them, will be set forth, or will be
calculable from the information set forth, in the applicable Prospectus
Supplement. See "Plan of Distribution." No Offered Securities may be sold
without delivery of the applicable Prospectus Supplement describing the method
and terms of the offering of such series of Offered Securities.
----------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
----------------------
The date of this Prospectus is July 9, 1998.
<PAGE>
AVAILABLE INFORMATION
Terex Corporation is subject to the informational requirements of the
Exchange Act, and in accordance therewith files reports, proxy statements and
other information with the Commission. Such reports, proxy statements and other
information may be inspected and copied at the public reference facilities
maintained by the Commission at its offices at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549 and at the regional offices of the
Commission located at Seven World Trade Center, 13th Floor, New York, New York
10048 and at Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such materials may also be obtained by mail
from the Public Reference Section of the Commission at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Additionally,
the Commission maintains a Web site containing reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission. The address for such Web site is http://www.sec.gov.
In addition, the Common Stock is listed on the New York Stock Exchange,
Inc. ("NYSE") under the symbol "TEX" and reports, proxy statements and other
information concerning the Company may also be inspected at the offices of the
NYSE, 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission a Registration Statement on
Form S-3 (together with all amendments, exhibits, schedules, and supplements
thereto, the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the securities offered hereby.
This Prospectus, which constitutes a part of the Registration Statement, does
not contain all of the information set forth in the Registration Statement, as
permitted by the rules and regulations of the Commission. For further
information with respect to the Company and the securities offered hereby,
reference is hereby made to the Registration Statement, which may be inspected
and copied at the Public Reference Section of the Commission referred to above.
Statements contained in this Prospectus as to the contents of any contract or
other document are not necessarily complete, and in each instance reference is
made to the full text of such contract or document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission, each such
statement being qualified in all respects by such reference.
The Company furnishes stockholders with annual reports containing
audited financial statements. The Company also furnishes its holders of Common
Stock with proxy material for its annual meetings complying with the proxy
requirements of the Exchange Act.
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents which have been filed by the Company with the
Commission are incorporated in this Prospectus by reference:
1. The Company's Annual Report on Form 10-K for the year ended December 31,
1997.
2. The Company's Notice of Annual Meeting of Stockholders and Proxy Statement
dated April 8, 1998.
3. The Company's Current Report on Form 8-K dated March 31, 1998 and filed on
April 7, 1998.
4. The Company's Quarterly Report on Form 10-Q for the Three Months Ended
March 31, 1998, dated May 15, 1998 and filed on May 15, 1998.
5. The Company's Amendment No. 1 to Current Report on Form 8-K/A dated March
31, 1998 and filed on June 11, 1998.
6. The Company's Amendment No. 2 to Current Report on Form 8-K/A dated March
31,1 998 and filed on June 29, 1998.
7. The description of the Common Stock contained in the Company's Registration
Statement on Form 8-A dated February 22, 1991.
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<PAGE>
All reports and other documents filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
after the date of this Prospectus and prior to the termination of the Offering
of the Offered Securities made hereby shall be deemed to be incorporated herein
by reference and to be a part hereof on and from the date of filing such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference in this Prospectus shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or incorporated herein by reference or in any other
subsequently filed document that also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any and all documents incorporated by reference in this Prospectus (not
including exhibits to such information, unless such exhibits are specifically
incorporated by reference in such information). Such requests should be directed
to Terex Corporation, Attention: Secretary, 500 Post Road East, Westport,
Connecticut 06880 (telephone (203) 222-7170).
THE COMPANY
Terex is a global manufacturer of a broad range of construction and
mining related capital equipment. The Company strives to manufacture high
quality machines which are low cost, simple to use and easy to maintain. The
Company's principal products include telescopic mobile cranes, aerial work
platforms, utility aerial devices, telescopic material handlers, truck mounted
mobile cranes, rigid and articulated off-highway trucks and high capacity
surface mining trucks, large hydraulic mining shovels and related components and
replacement parts. The Company's products are manufactured at 16 plants in the
United States and Europe and are sold primarily through a worldwide network of
dealers in over 750 locations to the global construction, infrastructure and
surface mining markets.
The Company's operations began in 1983 with the purchase of Northwest
Engineering Company, the Company's original business and name. Since 1983,
management has expanded and changed the Company's business through a series of
acquisitions and dispositions. In 1988, Northwest Engineering Company merged
into a subsidiary acquired in 1986 named Terex Corporation, with Terex
Corporation as the surviving entity. As a result of the completion of the PPM
Acquisition (as defined below) in May 1995, the Company's operations were
divided into three principal segments: Material Handling, Heavy Equipment and
Mobile Cranes. On November 27, 1996, the Company completed the sale of its
worldwide material handling segment, which was originally acquired in July 1992,
and currently the Company operates in two business segments: Terex Lifting
(formerly known as Terex Cranes) and Terex Earthmoving (formerly known as Terex
Trucks). The principal executive offices of the Company are located at 500 Post
Road East, Westport, Connecticut 06880 and its telephone number is (203)
222-7170.
Terex Lifting (formerly known as Terex Cranes) manufactures and sells
telescopic mobile cranes (including rough terrain, truck and all terrain mobile
cranes), aerial work platforms (including scissor, articulated boom and straight
telescoping boom aerial work platforms), utility aerial devices (including
digger derricks and articulated aerial devices), telescopic material handlers
(including container stackers, scrap handlers and telescopic rough terrain boom
forklifts), truck mounted cranes (boom trucks) and related components and
replacement parts. These products are primarily used by construction and
industrial customers and utility companies. Terex Lifting is comprised of a
number of divisions and subsidiaries.
Terex Lifting was established as a separate business segment as a
result of the acquisition (the "PPM Acquisition") in May 1995 of substantially
all of the shares of P.P.M. S.A. and certain of its subsidiaries, including
P.P.M. SpA, Brimont Agraire S.A., a specialized trailer manufacturer in France,
PPM Krane GmbH, a sales organization in Germany, and Baulift Baumaschinen Und
Krane Handels GmbH, a parts distributor in Germany (collectively, "PPM Europe"),
from Potain S.A., and all of the capital stock of Legris Industries, Inc., which
owned 92.4% of the capital stock of PPM Cranes, Inc. ("Terex Lifting -- Conway
Operations"; PPM Europe and Terex Lifting -- Conway Operations are collectively
referred to herein as "PPM") from Legris Industries, S.A. Concurrently with the
completion of the PPM Acquisition, the Company contributed the assets (subject
to liabilities) of its Koehring Cranes and Excavators and Mark Industries
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division to Terex Cranes, Inc., a wholly-owned subsidiary of the Company. The
former division now operates as Koehring Cranes, Inc., a wholly owned subsidiary
of Terex Cranes, Inc.
During 1997, the Company completed two acquisitions to augment its
Terex Lifting segment. On April 7, 1997, the Company completed the acquisition
of substantially all of the capital stock of certain of the former subsidiaries
of Simon Engineering plc (the "Simon Access Companies") for $90 million (subject
to adjustment under certain circumstances). The Simon Access Companies consist
principally of business units in the United States and Europe engaged in the
manufacture, sale and worldwide distribution of access equipment designed to
position people and materials to work at heights. The Simon Access Companies'
products include utility aerial devices, aerial work platforms and truck mounted
cranes (boom trucks) which are sold to customers in the industrial and
construction markets, as well as utility companies. Specifically, the Company
acquired 100% of the outstanding common stock of (i) Simon Telelect, Inc. (now
named Terex Telelect, Inc.), a Delaware corporation, (ii) Simon Aerials, Inc.
(now named Terex Aerials, Inc.), a Wisconsin corporation and parent company of
Terex-RO Corporation ("Terex RO"), (iii) Sim-Tech Management Limited, a private
limited company incorporated under the laws of Hong Kong, (iv) Simon Cella,
S.r.1., a company incorporated under the laws of Italy, and (v) Simon Aerials
Limited (now named Terex Aerials Limited), a company incorporated under the laws
of Ireland; and 60% of the outstanding common stock of Simon-Tomen Engineering
Company Limited, a limited liability stock company organized under the laws of
Japan. On April 14, 1997, the Company completed the acquisition of all of the
capital stock of Baraga Products, Inc. and M&M Enterprises of Baraga, Inc.
(together, the "Square Shooter Business"), which manufacture the Square Shooter,
a rough terrain telescopic lift truck designed to lift materials to heights
where they are used in construction.
Terex Earthmoving (formerly known as Terex Trucks) manufactures and
sells articulated and rigid off-highway trucks, high capacity surface mining
trucks, large hydraulic mining shovels, and related components and replacement
parts. These products are used primarily by construction, mining and government
customers. On January 5, 1998, the Company also acquired Payhauler Corp.
("Payhauler"), which manufactures and markets 30 and 50 ton all wheel drive
rigid frame trucks designed to move material in more severe operating conditions
than a standard rear wheel drive rigid frame truck. On March 31, 1998, the
Company purchased all of the outstanding shares of O&K Mining GmbH ("O&K
Mining") from O&K Orenstein & Koppel AG for net aggregate consideration of
approximately $168 million, subject to certain post-closing adjustments. O&K
Mining is engaged in the manufacture, sale and worldwide distribution of large
hydraulic mining shovels primarily used to load coal, copper ore, iron ore,
other mineral-bearing materials or rocks into trucks. These products are used by
mining equipment contractors, mining and quarrying companies and large
construction companies involved in infrastructure projects worldwide. Terex
Earthmoving is comprised of Terex Equipment Limited ("TEL"), located in
Motherwell, Scotland, Unit Rig ("Unit Rig"), located in Tulsa, Oklahoma,
Payhauler, located in Batavia, Illinois, and O&K Mining, located in Dortmund,
Germany.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the unaudited historical ratios of
earnings to fixed charges for the Company for the periods indicated below:
Three Months
Ended
Year Ended December 31, March 31,
------------------------------ ------------
1993 1994 1995 1996 1997 1997 1998
---- ---- ---- ---- ---- ---- ----
Ratio of earnings to fixed charges --- 1.1x --- --- 1.6x 1.4x 2.5x
In calculating the ratio of earnings to fixed charges, earnings consist of
income (loss) from continuing operations before income taxes and extraordinary
items plus fixed charges. Fixed charges consist of interest expense, preferred
stock accretion, amortization of indebtedness issuance costs, and rental expense
representative of the interest factor. Earnings were insufficient to cover fixed
charges by $40 million, $32.1 million and $42.2 million during the years ended
December 31, 1993, 1995, and 1996, respectively.
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<PAGE>
USE OF PROCEEDS
Unless otherwise described in the applicable Prospectus Supplement, the
Company intends to use any net proceeds received by it from the sale of the
Offered Securities for general corporate purposes, which may include
acquisitions and other business combinations as suitable opportunities arise,
the repayment of indebtedness outstanding at such time, the satisfaction of the
Company's obligations under its outstanding Stock Appreciation Rights and
working capital.
DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and
provisions of the Debt Securities to which any Prospectus Supplement may relate.
The particular terms of the Debt Securities being offered and the extent to
which such general provisions may apply will be described in a Prospectus
Supplement relating to such Debt Securities.
The Senior Securities are to be issued under an Indenture, as amended
or supplemented from time to time (the "Senior Securities Indenture"), between
the Company and a trustee to be selected by the Company (the "Senior Securities
Trustee") and the Subordinated Securities are to be issued under an Indenture,
as amended or supplemented from time to time (the "Subordinated Securities
Indenture"), between the Company and a trustee to be selected by the Company
(the "Subordinated Securities Trustee"). The Senior Securities Indenture and the
Subordinated Securities Indenture are referred to herein individually as the
"Indenture" and collectively as the "Indentures," and the Senior Securities
Trustee and the Subordinated Securities Trustee are referred to herein
individually as the "Trustee" and collectively as the "Trustees." A form of the
Senior Securities Indenture and a form of the Subordinated Securities Indenture
will be filed as exhibits to the Registration Statement of which this Prospectus
is a part and will be available for inspection at the corporate trust offices of
the respective Trustees or as described above under "Available Information." The
Indentures will be subject to and governed by the Trust Indenture Act of 1939,
as amended (the "TIA"). The description of the Indentures set forth below
assumes that the Company has entered into the Indentures. The Company will
execute the applicable Indenture when and if the Company issues Debt Securities.
The statements made hereunder relating to the Indentures and the Debt Securities
to be issued thereunder are summaries of certain provisions thereof and do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all provisions of the Indentures and such Debt Securities.
Unless otherwise specified, all capitalized terms used but not defined
herein shall have the meanings set forth in the Indentures.
General
The Debt Securities will be direct, unsecured obligations of the
Company. Senior Securities will rank pari passu with certain other senior debt
of the Company that may be outstanding from time to time, and will rank senior
to all Subordinated Securities that may be outstanding from time to time.
Subordinated Securities will be subordinated in right of payment to the prior
payment in full of the Senior Debt of the Company, as described under
"Subordination."
Each Indenture provides that the Debt Securities may be issued without
limit as to aggregate principal amount, in one or more series, in each case as
established from time to time in or pursuant to authority granted by a
resolution of the Board of Directors of the Company or as established in one or
more indentures supplemental to the Indenture. All Debt Securities of one series
need not be issued at the same time and, unless otherwise provided, a series may
be reopened, without the consent of the holders of the Debt Securities of such
series, for issuances of additional Debt Securities of such series.
Each Indenture provides that there may be more than one Trustee
thereunder, each with respect to one or more series of Debt Securities. Any
Trustee under either Indenture may resign or be removed with respect to one or
more series of Debt Securities, and a successor Trustee shall be appointed by
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<PAGE>
the Company, by or pursuant to a resolution adopted by the Board of Directors of
the Company, to act with respect to such series. In the event that two or more
persons are acting as Trustee with respect to different series of Debt
Securities, each such Trustee shall be a Trustee of a trust under the applicable
Indenture separate and apart from the trust administered by any other Trustee
thereunder, and, except as otherwise indicated herein or therein, any action
described herein or therein to be taken by the Trustee may be taken by each such
Trustee with respect to, and only with respect to, the one or more series of
Debt Securities for which it is Trustee under the applicable Indenture.
Reference is made to the Prospectus Supplement relating to the series
of Debt Securities being offered for the specific terms thereof, including:
(1) the title of such Debt Securities;
(2) the classification of such Debt Securities as Senior Securities
or Subordinated Securities;
(3) the aggregate principal amount of such Debt Securities and any
limit on such aggregate principal amount;
(4) the percentage of the principal amount at which such Debt
Securities will be issued and, if other than the principal amount
thereof, the portion of the principal amount thereof payable upon
declaration of acceleration of the maturity thereof, or (if
applicable) the portion of the principal amount of such Debt
Securities which is convertible into Common Stock or Preferred
Stock, or the method by which any such portion shall be
determined;
(5) the date or dates, or the method for determining such date or
dates, on which the principal of such Debt Securities will be
payable;
(6) the rate or rates (which may be fixed or variable), or the method
by which such rate or rates shall be determined, at which such
Debt Securities will bear interest, if any;
(7) the date or dates, or the method for determining such date or
dates, from which any such interest will accrue, the Interest
Payment Dates on which any such interest will be payable, the
Regular Record Dates for such Interest Payment Dates, or the
method by which such dates shall be determined, the person to
whom such interest shall be payable, and the basis upon which
interest shall be calculated if other than that of a 360-day year
of twelve 30-day months;
(8) the place or places where the principal of (and premium, if any)
and interest and other amounts, if any, on such Debt Securities
will be payable, such Debt Securities may be surrendered for
conversion or registration of transfer or exchange and notices or
demands to or upon the Company in respect of such Debt Securities
and the applicable Indenture may be served;
(9) the period or periods within which, the price or prices
(including premium, if any) at which and the terms and conditions
upon which such Debt Securities may be redeemed, in whole or in
part, at the option of the Company, if the Company is to have
such an option;
(10) the obligation, if any, of the Company to redeem, repay or
purchase such Debt Securities pursuant to any sinking fund or
analogous provision or at the option of a Holder thereof, and the
period or periods within which, the price or prices at which and
the terms and conditions upon which such Debt Securities will be
redeemed, repaid or purchased, in whole or in part, pursuant to
such obligation;
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<PAGE>
(11) if other than U.S. dollars, the currency or currencies in which
such Debt Securities are denominated and payable, which may be a
foreign currency or units of two or more foreign currencies or a
composite currency or currencies, and the terms and conditions
relating thereto;
(12) whether the amount of payments of principal of (and premium, if
any) or interest, if any, on such Debt Securities may be
determined with reference to an index, formula or other method
(which index, formula or other method may, but need not, be based
on a currency, currencies, currency unit or units or composite
currency or currencies) and the manner in which such amounts
shall be determined;
(13) whether such Debt Securities will be issued in the form of one or
more global securities and whether such global securities are to
be issuable in a temporary global form or permanent global form;
(14) any additions to, modifications of or deletions from the terms of
such Debt Securities with respect to the Events of Default or
covenants set forth in the applicable Indenture;
(15) whether the principal of (and premium, if any) or interest or
other amounts, if any, on such Debt Securities are to be payable,
at the election of the Company or a Holder, in one or more
currencies other than that in which such Debt Securities are
denominated or stated to be payable, the period or periods within
which, and the terms and conditions upon which, such election may
be made, and the time and manner of, and identity of the exchange
rate agent with responsibility for, determining the exchange rate
between the currency or currencies in which such Debt Securities
are denominated or stated to be payable and the currency or
currencies in which such Debt Securities are to be so payable;
(16) whether such Debt Securities will be issued in certificated or
book-entry form;
(17) whether such Debt Securities will be in registered or bearer form
and, if in registered form, the denominations thereof if other
than $1,000 and any integral multiple thereof and, if in bearer
form, the denominations thereof and the terms and conditions
relating thereto;
(18) the applicability, if any, of the defeasance and covenant
defeasance provisions of the applicable Indenture;
(19) if such Debt Securities are to be issued upon the exercise of
Warrants, the time, manner and place for such Debt Securities to
be authenticated and delivered;
(20) the terms, if any, upon which such Debt Securities may be
convertible into Common Stock or Preferred Stock and the terms
and conditions upon which such conversion will be effected,
including, without limitation, the initial conversion price or
rate and the conversion period;
(21) whether and under what circumstances the Company will pay any
other amounts as contemplated in the applicable Indenture on such
Debt Securities in respect of any tax, assessment or governmental
charge and, if so, whether the Company will have the option to
redeem such Debt Securities in lieu of making such payment;
(22) the name of the applicable Trustee and the address of its
corporate trust office; and
(23) any other terms of such Debt Securities not inconsistent with the
provisions of the applicable Indenture.
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The Debt Securities may provide for less than the entire principal
amount thereof to be payable upon declaration of acceleration of the maturity
thereof ("Original Issue Discount Securities") or that the principal amount
thereof payable at their stated maturity may be more or less than the principal
face amount thereof at original issuance ("Indexed Securities"). Special U.S.
federal income tax, accounting and other considerations applicable to Original
Issue Discount Securities and Index Securities will be described in the
applicable Prospectus Supplement.
Except as set forth below under "Certain Covenants--Senior Securities
Indenture Limitations on Incurrence of Indebtedness," neither Indenture contains
any other provisions that would limit the ability of the Company to incur
indebtedness or that would afford holders of Debt Securities protection in the
event of a highly leveraged or similar transaction involving the Company or in
the event of a change of control. See "Description of Preferred Stock" and
"Description of Common Stock."
Reference is made to the applicable Prospectus Supplement for
information with respect to any deletions from, modifications of or additions to
the Events of Default or covenants of the Company that are described below,
including any addition of a covenant or other provision providing event risk or
similar protection.
Denominations, Interest, Registration and Transfer
Unless otherwise described in the applicable Prospectus Supplement, the
Debt Securities of any series will be issuable in denominations of $1,000 and
integral multiples thereof. Unless otherwise described in the applicable
Prospectus Supplement, the Debt Securities of any series issued in bearer form
will be issuable in denominations of $5,000.
Unless otherwise specified in the applicable Prospectus Supplement, the
principal of (and premium, if any) and interest on any series of Debt Securities
will be payable at an office or agency established by the Company in accordance
with the Indenture, provided that, at the option of the Company, payment of
interest may be made by check mailed to the address of the person entitled
thereto as it appears in the Security Register or by wire transfer of funds to
such person at an account maintained within the United States.
Any interest not punctually paid or duly provided for on any Interest
Payment Date with respect to a Debt Security ("Defaulted Interest") will
forthwith cease to be payable to the Holder on the applicable Regular Record
Date and may either be paid to the person in whose name such Debt Security is
registered at the close of business on a special record date (the "Special
Record Date") for the payment of such Defaulted Interest to be fixed by the
applicable Trustee, notice whereof shall be given to the Holder of such Debt
Security not less than 10 days prior to such Special Record Date, or may be paid
at any time in any other lawful manner, all as more completely described in the
applicable Indenture.
Subject to certain limitations imposed upon Debt Securities issued in
book-entry form, the Debt Securities of any series will be exchangeable for
other Debt Securities of the same series and of a like aggregate principal
amount and tenor of different authorized denominations upon surrender of such
Debt Securities at the corporate trust office of the applicable Trustee or at an
office or agency established by the Company in accordance with the Indenture. In
addition, subject to certain limitations imposed upon Debt Securities issued in
book-entry form, the Debt Securities of any series may be surrendered for
exchange or registration of transfer thereof at the corporate trust office of
the applicable Trustee or at an office or agency established by the Company in
accordance with the Indenture. Every Debt Security surrendered for registration
of transfer or exchange shall be duly endorsed or accompanied by a written
instrument of transfer. No service charge will be made for any registration of
transfer or exchange of any Debt Securities, but the Company may require payment
of a sum sufficient to cover any tax or other governmental charge payable in
connection therewith. If the applicable Prospectus Supplement refers to any
transfer agent (in addition to the Trustee) initially designated by the Company
with respect to any series of Debt Securities, the Company may at any time
rescind the designation of any such transfer agent or approve a change in the
location through which any such transfer agent acts, except that the Company
will be required to maintain a transfer agent in each place of payment for such
series. The Company may at any time designate additional transfer agents with
respect to any series of Debt Securities.
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Neither the Company nor any Trustee shall be required to (i) issue,
register the transfer of or exchange Debt Securities of any series during a
period beginning at the opening of business 15 days before any selection of Debt
Securities of that series to be redeemed and ending at the close of business on
the day of mailing of the relevant notice of redemption; (ii) register the
transfer of or exchange any Debt Security, or portion thereof, called for
redemption, except the unredeemed portion of any Debt Security being redeemed in
part; or (iii) issue, register the transfer of or exchange any Debt Security
which has been surrendered for repayment at the option of the Holder, except the
portion, if any, of such Debt Security not to be so repaid.
Certain Covenants
Certain Definitions.
As used herein,
"Acquired Indebtedness" means Indebtedness of a person or any of
its Subsidiaries (the "Acquired person") (i) existing at the time such
person becomes a Restricted Subsidiary of the Company or at the time it
merges or consolidates with the Company or any of its Restricted
Subsidiaries or (ii) assumed in connection with the acquisition of
assets from such person.
"Asset Disposition" means any sale, lease, transfer, conveyance or
other disposition (or series of related sales, leases, transfers or
dispositions) by the Company or any Restricted Subsidiary, including
any disposition by means of a merger or consolidation (each referred to
for the purposes of this definition as a "disposition"), of (i) any
shares of capital stock of a Restricted Subsidiary (other than
directors' qualifying shares or shares required by applicable law to be
held by a person other than the Company or a Restricted Subsidiary),
(ii) all or substantially all the assets of any division or line of
business of the Company or any Restricted Subsidiary or (iii) any other
assets of the Company or any Restricted Subsidiary outside of the
ordinary course of business of the Company or such Restricted
Subsidiary (other than, in the case of (i), (ii) and (iii) above, a
disposition by a Restricted Subsidiary to the Company or by the Company
or a Restricted Subsidiary to a Wholly Owned Subsidiary; provided,
however, that each of (a) the consummation of any sale or series of
related sales of assets or properties of the Company and the Restricted
Subsidiaries by the Company and any Restricted Subsidiaries having an
aggregate fair market value of less than $1 million in any fiscal year
and (b) the discounting of accounts receivable or the sale of
inventory, in each case in the ordinary course of business, shall not
be deemed an Asset Disposition.
"Bank Indebtedness" means (i) the Indebtedness outstanding or
arising under any credit facility, (ii) all obligations and other
amounts owing to the holders of such Indebtedness or any agent or
representative thereof outstanding or arising under any credit facility
(including, but not limited to, interest (including interest accruing
on or after the filing of any petition in bankruptcy, reorganization or
similar proceeding relating to the Company or any Restricted
Subsidiary, whether or not a claim for such interest is allowed in such
proceeding), fees, charges, indemnities, expense reimbursement
obligations and other claims under any credit facility), and (iii) all
Hedging Obligations arising in connection therewith with any party to
any credit facility.
"Capital Lease Obligations" of a person means any obligation which
is required to be classified and accounted for as a capital lease on
the face of a balance sheet of such person prepared in accordance with
GAAP; the amount of such obligation shall be the capitalized amount
thereof, determined in accordance with GAAP; and the Stated Maturity
thereof shall be the date of the last payment of rent or any other
amount due under such capital lease prior to the first date upon which
such lease may be terminated by the lessee without payment of a
penalty.
"Cash Flow" for any period means the Consolidated Net Income for
such period, plus the following (but without duplication) to the extent
deducted in calculating such Consolidated Net Income for such period:
(i) income tax expense, (ii) Consolidated Interest Expense, (iii)
depreciation expense and amortization expense, provided that
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consolidated depreciation and amortization expense of a Subsidiary that
is not a Wholly Owned Subsidiary shall only be added to the extent of
the equity interest of the Company in such Subsidiary and (iv) all
other non-cash charges (other than any recurring non-cash charges to
the extent such charges represent an accrual of or reserve for cash
expenditures in any future period). Notwithstanding clause (iv) above,
there shall be deducted from Cash Flow in any period any cash expended
in such period that funds a non-recurring, non-cash charge accrued or
reserved in a prior period which was added back to Cash Flow pursuant
to clause (iv) in such prior period.
"Consolidated Cash Flow Coverage Ratio" as of any date of
determination means the ratio of (i) the aggregate amount of Cash Flow
for the period of the most recent four consecutive fiscal quarters for
which financial statements are available to (ii) Consolidated Interest
Expense for such four fiscal quarters; provided, however, that (1) if
the Company or any Restricted Subsidiary has issued any Indebtedness
since the beginning of such period that remains outstanding or if the
transaction giving rise to the need to calculate the Consolidated Cash
Flow Coverage Ratio is an issuance of Indebtedness, or both, Cash Flow
and Consolidated Interest Expense for such period shall be calculated
after giving effect on a pro forma basis to such Indebtedness as if
such Indebtedness had been issued on the first day of such period and
the discharge of any other Indebtedness repaid, repurchased, defeased
or otherwise discharged with the proceeds of such new Indebtedness as
if such discharge had occurred on the first day of such period, (2) if
since the beginning of such period the Company or any Restricted
Subsidiary shall have made any Asset Disposition, the Cash Flow for
such period shall be reduced by an amount equal to the Cash Flow (if
positive) directly attributable to the assets which are the subject of
such Asset Disposition for such period, or increased by an amount equal
to the Cash Flow (if negative), directly attributable thereto for such
period, and Consolidated Interest Expense for such period shall be
reduced by an amount equal to the Consolidated Interest Expense
directly attributable to any Indebtedness of the Company or any
Restricted Subsidiary repaid, repurchased, defeased or otherwise
discharged with respect to the Company and its continuing Restricted
Subsidiaries in connection with such Asset Dispositions for such period
(or, if the capital stock of any Restricted Subsidiary is sold, the
Consolidated Interest Expense for such period directly attributable to
the Indebtedness of such Restricted Subsidiary to the extent the
Company and its continuing Restricted Subsidiaries are no longer liable
for such Indebtedness after such sale), (3) if since the beginning of
such period the Company or any Restricted Subsidiary (by merger or
otherwise) shall have made an Investment in any Restricted Subsidiary
(or any person which becomes a Restricted Subsidiary) or an acquisition
of assets (including capital stock of a Subsidiary), including any
acquisition of assets occurring in connection with a transaction
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.
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"Consolidated Interest Expense" means, for any period, the total
interest expense of the Company and its consolidated Restricted
Subsidiaries, plus, to the extent not included in such interest expense
but Incurred by the Company or its Restricted Subsidiaries, (i)
interest expense attributable to capital leases, (ii) amortization of
debt discount, (iii) capitalized interest, (iv) original issue discount
and non-cash interest payments or accruals, (v) commissions, discounts
and other fees and charges owed with respect to letters of credit and
bankers' acceptance financing, (vi) net costs under Hedging Obligations
(including amortization of fees), (vii) dividends in respect of all
Disqualified Stock held by persons other than the Company, a Subsidiary
Guarantor or a Wholly Owned Subsidiary, (viii) interest Incurred in
connection with investments in discontinued operations, (ix) the
interest portion of any deferred payment obligations constituting
Indebtedness, and (x) the cash contributions to any employee stock
ownership plan or similar trust to the extent such contributions are
used by such plan or trust to pay interest or fees to any person (other
than the Company) in connection with Indebtedness Incurred by such plan
or trust. For purposes of this definition, interest expense
attributable to any Indebtedness represented by the guarantee (other
than (a) Guarantees permitted by the terms of clauses (b)(x) and (xi),
respectively, of the covenants described under "-- Certain Covenants --
Limitation on Indebtedness" and "-- Limitation on Indebtedness and
Preferred Stock of Restricted Subsidiaries" and (b) Guarantees by the
Company of Indebtedness of a consolidated Restricted Subsidiary or by a
consolidated Restricted Subsidiary of the Company or another
consolidated Restricted Subsidiary) by such person or a Subsidiary of
such person of an obligation of another person shall be deemed to be
the interest expense attributable to the Indebtedness guaranteed.
"Currency Agreement Obligations" means the obligations of any
person under a foreign exchange contract, currency swap agreement or
other similar agreement or arrangement to protect such person against
fluctuations in currency values.
"Disqualified Stock" means, with respect to any person, any capital
stock which by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable) or upon the happening
of any event (i) matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise prior to the 91st day after the
stated maturity of the Debt Securities, (ii) is convertible or
exchangeable for Indebtedness or Disqualified Stock prior to the 91st
day after the stated maturity of the Debt Securities or (iii) is
redeemable at the option of the holder thereof, in whole or in part on
or prior to the 91st day after the stated maturity of the Debt
Securities.
"Floor Plan Guarantees" means guarantees (including but not limited
to repurchase or remarketing obligations) by the Company or a
Restricted Subsidiary Incurred in the ordinary course of business
consistent with past practice of Indebtedness Incurred by a franchise
dealer, or other purchaser or lessor, for the purchase of inventory
manufactured or sold by the Company or a Restricted Subsidiary, the
proceeds of which Indebtedness is used solely to pay the purchase price
of such inventory to such franchise dealer and any related reasonable
fees and expenses (including financing fees), provided, however, that
(1) to the extent commercially practicable, the Indebtedness so
guaranteed is secured by a perfected first priority lien on such
inventory in favor of the holder of such Indebtedness and (2) if the
Company or such Restricted Subsidiary is required to make payment with
respect to such guarantee, the Company or such Restricted Subsidiary
will have the right to receive either (q) title to such inventory, (r)
a valid assignment of a perfected first priority lien in such inventory
or (s) the net proceeds of any resale of such inventory.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the date of the Indenture,
including those set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified
Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other
entity as approved by a significant segment of the accounting
profession.
"Guarantee" means any obligation, contingent or otherwise, of any
person directly or indirectly guaranteeing in any manner any
Indebtedness or other obligation of any person and any obligation,
direct or indirect, contingent or otherwise, of such person (i) to
purchase or pay (or advance or supply funds for the purchase or payment
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of) such Indebtedness or other obligation of such person (whether
arising by virtue of partnership arrangements, or by agreement to
keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or
otherwise) or (ii) entered into for purposes of assuring in any other
manner the obligee of such Indebtedness or other obligation of the
payment thereof or to protect such obligee against loss in respect
thereof (in whole or in part); provided, however, that the term
"Guarantee" shall not include endorsements of negotiable instruments
for collection or deposit in the ordinary course of business. The term
"Guarantee" used as a verb has a corresponding meaning.
"Hedging Obligations" of any person means the obligations of such
person pursuant to any interest rate swap agreement, foreign currency
exchange agreement, interest rate collar agreement, option or futures
contract or other similar agreement or arrangement designed to protect
such person against changes in interest rates or foreign exchange
rates.
"Indebtedness" of any person means, without duplication, and
whether or not contingent,
(i) the principal of and premium (if any) in respect of (A)
indebtedness of such person for money borrowed and (B) indebtedness
evidenced by notes, debentures, bonds or other similar instruments for
the payment of which such person is responsible or liable;
(ii) all Capital Lease Obligations of such person;
(iii) all obligations of such person issued or assumed as the
deferred purchase price of property, all conditional sale obligations
of such person and all obligations of such person under any title
retention agreement (but excluding trade accounts payable arising in
the ordinary course of business);
(iv) all obligations of such person for the reimbursement of any
obligor on any letter of credit, banker's acceptance or similar credit
transaction;
(v) the amount of all obligations of such person with respect to
the redemption, repayment or other repurchase of any Disqualified Stock
(measured at the greater of its voluntary or involuntary maximum fixed
repurchase price plus accrued and unpaid dividends);
(vi) to the extent not otherwise included in this definition, all
Hedging Obligations;
(vii) all obligations of the type referred to in clauses (i)
through (vi) of other persons and all dividends of other persons for
the payment of which, in either case, such person is responsible or
liable, directly or indirectly, as obligor, guarantor or otherwise,
including by means of any Guarantee (other than in each case by reason
of activities described in the proviso to the definition of
"Guarantee"); and
(viii) all obligations of the type referred to in clauses (i)
through (vii) of other persons secured by any lien on any property or
asset of such person (whether or not such obligation is assumed by such
person), the amount of such obligation being deemed to be the lesser of
the value of such property or assets or the amount of the obligation so
secured.
For purposes hereof, the "maximum fixed repurchase price" of any
Disqualified Stock which does not have a fixed repurchase price shall
be calculated in accordance with the terms of such Disqualified Stock
as if such Disqualified Stock were purchased on any date on which
Indebtedness shall be required to be determined pursuant to the
Indenture, and if such price is based upon, or measured by, the fair
market value of such Disqualified Stock, such fair market value to be
determined in good faith by the Board of Directors. For purposes
hereof, the amount of any Indebtedness issued with original issue
discount shall be the original purchase price plus accrued interest,
provided, however, that such accretion shall not be deemed an
incurrence of Indebtedness.
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"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 "--
Certain Covenants -- Limitation on Restricted Payments," (i)
"Investment" shall include the portion (proportionate to the Company's
equity interest in such Subsidiary) of the fair market value of the net
assets of any Subsidiary of the Company at the time that such
Subsidiary is designated an Unrestricted Subsidiary; provided, however,
that upon a redesignation of such Subsidiary as a Restricted
Subsidiary, the Company shall be deemed to continue to have a permanent
investment in an Unrestricted Subsidiary in an amount (if positive)
equal to (x) the Company's "Investment" in such Subsidiary at the time
of such redesignation less (y) the portion (proportionate to the
Company's equity interest in such Subsidiary) of the fair market value
of the net assets of such Subsidiary at the time of such redesignation,
and (ii) any property transferred to or from an Unrestricted Subsidiary
shall be valued at its fair market value at the time of such transfer,
in each case as determined in good faith by the Board of Directors.
Notwithstanding the foregoing, in no event shall any issuance of
capital stock (other than Preferred Stock or Disqualified Stock, or
capital stock exchangeable, exercisable or convertible for any of the
foregoing) of the Company in exchange for capital stock , property or
assets of another person constitute an Investment by the Company in
such person.
"Restricted Subsidiary" means any Subsidiary of the Company that is
not an Unrestricted Subsidiary.
"Senior Debt" means with respect to the Company or any Subsidiary
Guarantor (x) Bank Indebtedness and (y) any other Indebtedness that, by
the terms of the instrument creating or evidencing such Indebtedness,
is expressly made senior in right of payment to the Notes or the
applicable Guarantee, other than (1) any obligation of such person to
any subsidiary of such person or to any officer, director or employee
of such person or any such subsidiary, (2) any liability of such person
for federal, state, local or other taxes owed or owing by such person,
(3) any accounts payable or other liability of such person to trade
creditors arising in the ordinary course of business (including
Guarantees thereof or instruments evidencing such liabilities), (4) any
Indebtedness, Guarantee or obligation of such person which is,
expressly by its terms, subordinate or junior in any respect to any
other Indebtedness, Guarantee or obligation of such person, (5) that
portion of any Indebtedness of such person which at the time of
issuance is issued in violation of the Indenture, (6) Indebtedness of
such person represented by Disqualified Stock or (7) Capital Lease
Obligations.
"Significant Subsidiary" means any Restricted Subsidiary that would
be a "Significant Subsidiary" of the Company within the meanings of
Rule 1-02 under Regulation S-X promulgated by the Commission.
"Subsidiary" means (a) any corporation, association, partnership,
limited liability company or other business entity of which more than
50% of the total voting power of shares of capital stock or other
interests (including partnership interests) entitled (without regard to
the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by (i) the Company, (ii) the
Company and one or more Subsidiaries or (iii) one or more Subsidiaries
or (b) any limited partnership of which the Company or any Subsidiary
is a general partner, or (c) any other person (other than a corporation
or limited partnership) in which the Company, or one or more other
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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 Guarantor" means any Subsidiary of the Company that
Guarantees the Company's obligations with respect to the Debt
Securities.
"Unrestricted Subsidiary" means any Subsidiary of the Company
(other than a Subsidiary Guarantor) designated as such pursuant to and
in compliance with the covenant described under "Limitation on
Designations of Unrestricted Subsidiaries." Any such designation may be
revoked by a resolution of the Board of Directors of the Company
delivered to the Trustee, subject to the provisions of such covenant.
"Voting Stock" of a person means capital stock of such person of
the class or classes pursuant to which the holders thereof have the
general voting power under ordinary circumstances to elect at least a
majority of the board of directors, managers or trustees of such person
(irrespective of whether or not at the time stock of any other class or
classes shall have or might have voting power by reason of the
happening of any contingency).
"Wholly Owned Subsidiary" means (i) a Restricted Subsidiary all the
capital stock of which (other than directors' qualifying shares and
shares held by other persons to the extent such Shares are required by
applicable law to be held by a person other than the Company or a
Restricted Subsidiary) is owned by the Company or one or more Wholly
Owned Subsidiaries and (ii) each of Terex Cranes, Inc., P.P.M. Cranes,
Inc., P.P.M. S.A., and any future wholly owned subsidiaries of any of
the foregoing, in each case so long as the Company or one or more
Wholly Owned Subsidiaries maintains a percentage ownership interest in
such entity equal to or greater than such ownership interest (on a
fully diluted basis) on the later of (a) the applicable Indenture or
(b) the date such entity is incorporated or acquired by the Company or
one or more Wholly Owned Subsidiaries.
Senior Securities Indenture Limitations on Incurrence of Indebtedness.
The Company will not, and will not permit any Subsidiary to, incur any
Indebtedness if the Consolidated Cash Flow Coverage Ratio at the date on which
such additional Indebtedness is to be incurred shall have been less than 2.0 to
1.0.
Existence. Except as permitted under "Merger, Consolidation or Sale,"
the Company will do or cause to be done all things necessary to preserve and
keep in full force and effect its existence, rights (charter and statutory) and
franchises; provided, however, that the Company will not be required to preserve
any right or franchise if it determines that the preservation thereof is no
longer desirable in the conduct of its business and that the loss thereof is not
disadvantageous in any material respect to the holders of the Debt Securities.
Maintenance of Properties. The Company will cause all of its properties
used or useful in the conduct of its business or the business of any Subsidiary
to be maintained and kept in good condition, repair and working order and
supplied with all necessary equipment and will cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as in
the judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided, however, that the Company and its Subsidiaries shall not be prevented
from selling or otherwise disposing for value its properties in the ordinary
course of business.
Insurance. The Company will, and will cause each of its Subsidiaries
to, keep all of its insurable properties adequately insured against loss or
damage with financially sound and reputable insurance companies.
Payment of Taxes and Other Claims. The Company will pay or discharge or
cause to be paid or discharged, before the same shall become delinquent, (i) all
taxes, assessments and governmental charges levied or imposed upon it or any
Subsidiary or upon the income, profits or property of the Company or any
Subsidiary, and (ii) all lawful claims for labor, materials and supplies which,
if unpaid, might by law become a lien upon the property of the Company or any
Subsidiary, unless such lien would not have a material adverse effect upon such
property; provided, however, that the Company will not be required to pay or
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discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate proceedings or for which the Company has set apart and maintains
an adequate reserve.
Provision of Financial Information. Whether or not the Company is
subject to Section 13 or 15(d) of the Exchange Act, the Company will, to the
extent permitted under the Exchange Act, file with the Commission the annual
reports, quarterly reports and other documents which the Company would have been
required to file with the Commission pursuant to such Section 13 or 15(d) (the
"Financial Statements"), or which the Company would have been so required if the
Company were so subject, such documents to be filed with the Commission on or
prior to the respective dates (the "Required Filing Dates") by which the Company
is or would have been so required to file such documents if the Company is or
were so subject. The Company will also in any event (x) within 15 days of each
Required Filing Date (i) transmit by mail to all holders of Debt Securities, as
their names and addresses appear in the Security Register, without cost to such
holders, copies of the annual reports and quarterly reports which the Company is
required to file with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act, or which the Company would have been so required if the Company
were subject to such Sections and (ii) file with the Trustees copies of annual
reports, quarterly reports and other documents which the Company is required to
file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act, or
which the Company would have been so required if the Company were subject to
such Sections, and (y) if filing such documents by the Company with the
Commission is not permitted under the Exchange Act, promptly upon written
request and payment of the reasonable cost of duplication and delivery, supply
copies of such documents to any prospective holder.
Merger, Consolidation or Sale
The Company may consolidate with, or sell, lease or convey all or
substantially all of its assets to, or merge with or into, any other entity,
provided that (a) either the Company shall be the continuing entity, or the
successor entity (if other than the Company) formed by or resulting from any
such consolidation or merger or which shall have received the transfer of such
assets shall expressly assume payment of the principal of (and premium, if any)
and interest (and any other amounts) on all of the Debt Securities and the due
and punctual performance and observance of all of the covenants and conditions
contained in the Indentures; (b) immediately after giving effect to such
transaction and treating any indebtedness which becomes an obligation of the
Company or any Subsidiary as a result thereof as having been incurred by the
Company or such Subsidiary at the time of such transaction, no Event of Default
under the Indentures, and no event which, after notice or the lapse of time, or
both, would become such an Event of Default, shall have occurred and be
continuing; and (c) an officer's certificate and legal opinion covering such
conditions shall be delivered to the Trustees.
Events of Default, Notice and Waiver
Each Indenture will provide that the following events are "Events of
Default" with respect to any series of Debt Securities issued thereunder: (a)
default for 30 days in the payment of any installment of interest or other
amounts on any Debt Security of such series; (b) default in the payment of the
principal of (or premium, if any, on) any Debt Security of such series when due;
(c) default in making any sinking fund payment as required for any Debt Security
of such series; (d) default in the performance of any other covenant of the
Company contained in the applicable Indenture (other than a covenant added to
such Indenture solely for the benefit of a series of Debt Securities issued
thereunder other than such series) continued for 60 days after written notice as
provided in such Indenture; (e) default in the payment of an aggregate principal
amount exceeding $10,000,000 of any evidence of indebtedness for borrowed money
of the Company or any mortgage, indenture or other instrument under which such
indebtedness is issued or by which such indebtedness is secured, such default
having occurred after the expiration of any applicable grace period and having
resulted in the acceleration of the maturity of such indebtedness, but only if
such indebtedness is not discharged or such acceleration is not rescinded or
annulled; (f) certain events of bankruptcy, insolvency or reorganization, or
court appointment of a receiver, liquidator or trustee of the Company, any
Significant Subsidiary or the property of the Company or any Significant
Subsidiary or all or substantially all of either of its property; and (g) any
other Event of Default provided with respect to a particular series of Debt
Securities. The term "Significant Subsidiary" means each significant subsidiary
(as defined in Regulation S-X promulgated under the Securities Act) of the
Company.
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If an Event of Default under either Indenture with respect to Debt
Securities of any series at the time outstanding occurs and is continuing, then
in every such case the Trustee or the holders of not less than 25% in principal
amount of the outstanding Debt Securities of that series may declare the
principal amount (or, if the Debt Securities of that series are Original Issue
Discount Securities or Indexed Securities, such portion of the principal amount
as may be specified in the terms thereof) of the outstanding Debt Securities of
that series to be due and payable immediately by written notice thereof to the
Company (and to the applicable Trustee if given by the holders). However, at any
time after such a declaration of acceleration with respect to Debt Securities of
such series (or of all Debt Securities then outstanding under the applicable
Indenture, as the case may be) has been made, but before a judgment or decree
for payment of the money due has been obtained by the applicable Trustee, the
holders of not less than a majority in principal amount of Debt Securities then
outstanding of such series (or of all Debt Securities then outstanding under the
applicable Indenture, as the case may be) may rescind and annul such declaration
and its consequences if (a) the Company shall have deposited with the applicable
Trustee all required payments of the principal of (and premium, if any) and
interest, and any other amounts, on the Debt Securities of such series (or of
all Debt Securities then outstanding under the applicable Indenture, as the case
may be), plus certain fees, expenses, disbursements and advances of the Trustee
and (b) all Events of Default, other than the non-payment of accelerated
principal (or specified portion thereof and the premium, if any, or interest),
with respect to Debt Securities of such series (or of all Debt Securities then
outstanding under the applicable Indenture, as the case may be) have been cured
or waived as provided in the applicable Indenture. Each Indenture also provides
that the holders of not less than a majority in principal amount of the
outstanding Debt Securities of any series (or of all Debt Securities then
outstanding under the applicable Indenture, as the case may be) may waive any
past default with respect to such series and its consequences, except a default
(x) in the payment of the principal of (premium, if any) or interest or other
amounts on any Debt Security of such series or (y) in respect of a covenant or
provision contained in the applicable Indenture that cannot be modified or
amended without the consent of the Holder of each outstanding Debt Security
affected thereby.
Each Trustee is required to give notice to the holders of Debt
Securities within 90 days of a default under the applicable Indenture; provided,
however, that the Trustee may withhold notice to the holders of any series of
Debt Securities of any default with respect to such series (except a default in
the payment of the principal of (or premium, if any) or interest payable on or
any other amounts with respect to any Debt Security of such series or in the
payment of any sinking fund installment in respect of any Debt Security of such
series) if the Responsible Officers of the Trustee consider such withholding to
be in the interest of such holders.
Each Indenture provides that no holders of Debt Securities of any
series may institute any proceedings, judicial or otherwise, with respect to the
applicable Indenture or for any remedy thereunder, except in the case of failure
of the Trustee thereunder for 60 days, to act after it has received a written
request to institute proceedings in respect of an Event of Default from the
holders of not less than 25% in principal amount of the outstanding Debt
Securities of such series, as well as an offer of reasonable indemnity. This
provision will not prevent, however, any holder of Debt Securities from
instituting suit for the enforcement of payment of the principal of (and
premium, if any) and interest on, and other amounts payable with respect to,
such Debt Securities at the respective due dates thereof.
Subject to provisions in each Indenture relating to its duties in case
of default, each Trustee is under no obligation to exercise any of its rights or
powers under the applicable Indenture at the request or direction of any holders
of any series of Debt Securities then outstanding under such Indenture, unless
such holders shall have offered to the Trustee reasonable security or indemnity.
The holders of not less than a majority in principal amount of the applicable
outstanding Debt Securities of any series (or of all Debt Securities then
outstanding under the applicable Indenture, as the case may be) shall have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or of exercising any trust or power conferred
upon the Trustee. However, the Trustee may refuse to follow any direction which
is in conflict with any law or the applicable Indenture, which may involve the
Trustee in personal liability or which may be unduly prejudicial to the holders
of Debt Securities of such series not joining therein.
Within 120 days after the close of each fiscal year, the Company must
deliver to each Trustee a certificate, signed by two officers, one of whom must
be the principal financial officer or principal accounting officer, stating
whether or not such officers have knowledge of any default under the applicable
Indenture and, if so, specifying each such default and the nature and status
thereof.
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Modification of the Indentures
Except as described below, modifications and amendments of each
Indenture may be made with the consent of the holders of not less than a
majority in principal amount of all outstanding Debt Securities issued under
such Indenture which are affected by such modification or amendment; provided,
however, that no such modification or amendment may, without the consent of the
Holder of each such Debt Security affected thereby, (a) change the Stated
Maturity of the principal of, or any installment of interest or other amounts
payable on (or premium, if any) any such Debt Security; (b) reduce the principal
amount of, or the rate or amount of interest on, or any premium payable on
redemption of, or change any obligation of the Company to pay any other amounts
set forth in the Indenture relating to, or reduce any other amounts payable with
respect to, any such Debt Security, or reduce the amount of principal of an
Original Issue Discount Security or premium, if any, that would be due and
payable upon declaration of acceleration of the maturity thereof or would be
payable in bankruptcy, or adversely affect any right of repayment of the Holder
of any such Debt Security; (c) change the place of payment, or the coin or
currency, for payment of principal of (and premium, if any), or interest on, or
any other amounts payable with respect to, any such Debt Security; (d) impair
the right to institute suit for the enforcement of any payment on or with
respect to any such Debt Security; (e) reduce the percentage of outstanding Debt
Securities of any series necessary to modify or amend the applicable Indenture,
to waive compliance with certain provisions thereof or certain defaults and
consequences thereunder or to reduce the quorum or voting requirements set forth
in such Indenture; or (f) modify any of the foregoing provisions or any of the
provisions relating to the waiver of certain past defaults or certain covenants,
except to increase the required percentage to effect such action or to provide
that certain other provisions may not be modified or waived without the consent
of the Holder of such Debt Security.
The holders of not less than a majority in principal amount of
outstanding Debt Securities issued under either Indenture have the right to
waive compliance by the Company with certain covenants in the applicable
Indenture.
Modifications and amendments of each Indenture may be made by the
Company and the applicable Trustee without the consent of any Holder of Debt
Securities issued thereunder for any of the following purposes: (i) to evidence
the succession of another person to the Company as obligor under the applicable
Indenture; (ii) to add to the covenants of the Company for the benefit of the
holders of all or any series of Debt Securities or to surrender any right or
power conferred upon the Company in the applicable Indenture; (iii) to add
Events of Default for the benefit of the holders of all or any series of Debt
Securities; (iv) to add or change any provisions of the applicable Indenture to
facilitate the issuance of, or to liberalize certain terms of, Debt Securities
in bearer form, or to permit or facilitate the issuance of Debt Securities in
uncertificated form, provided that such action shall not adversely affect the
interests of the holders of the Debt Securities of any series in any material
respect; (v) to change or eliminate any provision of the applicable Indenture,
provided that any such change or elimination shall become effective only when
there are no Debt Securities outstanding of any series issued thereunder created
prior thereto which are entitled to the benefit of such provision; (vi) to
secure the Debt Securities; (vii) to establish the form or terms of Debt
Securities of any series, including the provisions and procedures, if
applicable, for the conversion of such Debt Securities into Preferred Stock or
Common Stock; (viii) to provide for the acceptance of appointment by a successor
Trustee or facilitate the administration of the trusts under the applicable
Indenture by more than one Trustee; (ix) to cure any ambiguity, defect or
inconsistency in the applicable Indenture, provided that such action will not
adversely affect the interests of holders of Debt Securities of any series in
any material respect; (x) to close the applicable Indenture with respect to the
authentication and delivery of additional series of Debt Securities or to
qualify or maintain qualification of, the applicable Indenture under the TIA; or
(xi) to supplement any of the provisions of the applicable Indenture to the
extent necessary to permit or facilitate defeasance and discharge of any series
of such Debt Securities, provided that such action will not adversely affect the
interests of the holders of the Debt Securities of any series in any material
respect.
Each Indenture provides that, in determining whether the holders of the
requisite principal amount of outstanding Debt Securities of a series have given
any request, demand, authorization, direction, notice, consent or waiver
thereunder or whether a quorum is present at a meeting of holders of Debt
Securities, (i) the principal amount of an Original Issue Discount Security that
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shall be deemed to be outstanding will be the amount of the principal thereof
that would be due and payable as of the date of such determination upon
declaration of acceleration of the maturity thereof, (ii) the principal amount
of a Debt Security denominated in a currency other than U.S. dollars that shall
be deemed outstanding will be the U.S. dollar equivalent, determined on the
issue date for such Debt Security, of the principal amount (or, in the case of
an Original Issue Discount Security, the U.S. dollar equivalent on the issue
date of such Debt Security of the amount determined as provided in (i) above),
(iii) the principal amount of an Indexed Security that will be deemed
outstanding will be the principal face amount of such Indexed Security at
original issuance, unless otherwise provided with respect to such Indexed
Security pursuant to the applicable Indenture, and (iv) Debt Securities owned by
the Company or any other obligor upon the Debt Securities or any Affiliate of
the Company or of such other obligor will be disregarded.
Each Indenture contains provisions for convening meetings of the
holders of Debt Securities of a series. A meeting may be called at any time by
the applicable Trustee, and also, upon request, by the Company, pursuant to a
resolution adopted by the Board of Directors of the Company, or the holders of
at least 10% in principal amount of the outstanding Debt Securities of such
series, in any such case upon notice given as provided in the applicable
Indenture. Except for any consent that must be given by the Holder of each Debt
Security affected by certain modifications and amendments of the applicable
Indenture, any resolution presented at a meeting or adjourned meeting duly
reconvened at which a quorum is present may be adopted by the affirmative vote
of the holders of a majority in principal amount of the outstanding Debt
Securities of that series; provided, however, that, except as referred to above,
any resolution with respect to any request, demand, authorization, direction,
notice, consent, waiver or other action that may be made, given or taken by the
holders of a specified percentage, which is less than a majority, in principal
amount of the outstanding Debt Securities of a series may be adopted at a
meeting or adjourned meeting duly reconvened at which a quorum is present by the
affirmative vote of the holders of such specified percentage in principal amount
of the outstanding Debt Securities of that series. Any resolution passed or
decision taken at any meeting of holders of Debt Securities of any series duly
held in accordance with the applicable Indenture will be binding on all holders
of Debt Securities of that series. The quorum at any meeting called to adopt a
resolution, and at any reconvened meeting, will be persons holding or
representing a majority in principal amount of the outstanding Debt Securities
of a series; provided, however, that, if any action is to be taken at such
meeting with respect to a consent or waiver which may be given by the holders of
not less than a specified percentage in principal amount of the outstanding Debt
Securities of a series, the persons holding or representing such specified
percentage in principal amount of the outstanding Debt Securities of such series
will constitute a quorum.
Notwithstanding the foregoing provisions, if any action is to be taken
at a meeting of holders of Debt Securities of any series with respect to any
request, demand, authorization, direction, notice, consent, waiver or other
action that the applicable Indenture expressly provides may be made, given or
taken by the holders of a specified percentage in principal amount of all
outstanding Debt Securities affected thereby, or of the holders of such series
and one or more additional series: (i) there shall be no minimum quorum
requirement for such meeting and (ii) the principal amount of the outstanding
Debt Securities of such series that vote in favor of such request, demand,
authorization, direction, notice, consent, waiver or other action shall be taken
into account in determining whether such request, demand, authorization,
direction, notice, consent, waiver or other action has been made, given or taken
under the applicable Indenture.
Discharge, Defeasance and Covenant Defeasance
The Company may discharge certain obligations to holders of any series
of Debt Securities that have not already been delivered to the Trustee for
cancellation and that either have become due and payable or will become due and
payable within one year (or scheduled for redemption within one year) by
irrevocably depositing with the applicable Trustee, in trust, funds in such
currency or currencies, currency unit or units or composite currency or
currencies in which such Debt Securities are payable in an amount sufficient to
pay the entire indebtedness on such Debt Securities in respect of principal (and
premium, if any) and interest and other amounts payable to the date of such
deposit (if such Debt Securities have become due and payable) or to the Stated
Maturity or Redemption Date, as the case may be.
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Each Indenture provides that, under certain circumstances, the Company
may elect to (a) defease and be discharged from any and all obligations with
respect to such Debt Securities (except for the obligation to pay other amounts,
if any, upon the occurrence of certain events of tax, assessment or governmental
charge with respect to payments on such Debt Securities and the obligations to
register the transfer or exchange of such Debt Securities, to replace temporary
or mutilated, destroyed, lost or stolen Debt Securities, to maintain an office
or agency in respect of such Debt Securities and to hold moneys for payment in
trust) ("defeasance") and/or (b) be released from its obligations with respect
to such Debt Securities under the applicable Indenture (being the restrictions
described under "Certain Covenants") or, under certain circumstances, its
obligations with respect to any other covenant, and any omission to comply with
such obligations will not constitute a default or an Event of Default with
respect to such Debt Securities ("covenant defeasance"), in either case upon the
irrevocable deposit by the Company with the applicable Trustee, in trust, of an
amount, in such currency or currencies, currency unit or units or composite
currency or currencies in which such Debt Securities are payable at Stated
Maturity, or Government Obligations (as defined below), or both, applicable to
such Debt Securities which through the scheduled payment of principal and
interest in accordance with their terms will provide money in an amount
sufficient to pay the principal of (and premium, if any) and interest on such
Debt Securities, and any mandatory sinking fund or analogous payments thereon,
on the scheduled due dates therefor.
Such a trust may only be established if, among other things, the
Company has delivered to the applicable Trustee an Opinion of Counsel (as
specified in the applicable Indenture) to the effect that the holders of such
Debt Securities will not recognize income, gain or loss for U.S. federal income
tax purposes as a result of such defeasance or covenant defeasance and will be
subject to U.S. federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such defeasance or covenant
defeasance had not occurred, and such Opinion of Counsel, in the case of
defeasance, must refer to and be based upon a ruling of the Internal Revenue
Service (the "IRS") or a change in applicable United States federal income tax
law occurring after the date of the Indenture.
"Government Obligations" means securities which are (i) direct
obligations of the United States of America or the government which issued the
currency (if other than U.S. dollars) in which the Debt Securities of a
particular series are payable, for the payment of which its full faith and
credit is pledged or (ii) obligations of a person controlled or supervised by
and acting as an agency or instrumentality of the United States of America or
such government which issued the currency (if other than U.S. dollars) in which
the Debt Securities of such series are payable, the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America or such other government, which, in either case, are not
callable or redeemable at the option of the issuer thereof, and will also
include a depository receipt issued by a bank or trust company as custodian with
respect to any such Government Obligation or a specific payment of interest on
or principal of any such Government Obligation held by such custodian for the
account of the holder of a depository receipt, provided that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the Government Obligation or the specific payment of
interest on or principal of the Government Obligation evidenced by such
depository receipt.
Unless otherwise provided in the applicable Prospectus Supplement, if,
after the Company has deposited funds and/or Government Obligations to effect
defeasance or covenant defeasance with respect to Debt Securities of any series,
(a) the Holder of a Debt Security of such series is entitled to, and does, elect
pursuant to the applicable Indenture or the terms of such Debt Security to
receive payment in a currency, currency unit or composite currency other than
that in which such deposit has been made in respect of such Debt Security, or
(b) a Conversion Event (as defined below) occurs in respect of the currency,
currency unit or composite currency in which such deposit has been made, the
indebtedness represented by such Debt Security shall be deemed to have been, and
will be, fully discharged and satisfied through the payment of the principal of
(and premium, if any) and interest on such Debt Security as they become due out
of the proceeds yielded by converting the amount so deposited in respect of such
Debt Security into the currency, currency unit or composite currency in which
such Debt Security becomes payable as a result of such election or such
cessation of usage based on the applicable market exchange rate. "Conversion
Event" means the cessation of use of (i) a currency (other than U.S. dollars,
the ECU or other currency unit), both by the government of the country which
issued such currency and for the settlement of transactions by a central bank or
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other public institutions of or within the international banking community, (ii)
the ECU both within the European Monetary System and for the settlement of
transactions by public institutions of or within the European Communities or
(iii) any currency unit or composite currency other than the ECU for the
purposes for which it was established. Unless otherwise provided in the
applicable Prospectus Supplement, all payments of principal of (and premium, if
any) and interest on any Debt Security that is payable in a currency other than
U.S. dollars that ceases to be used by its government of issuance will be made
in U.S. dollars.
In the event the Company effects covenant defeasance with respect to
any Debt Securities and such Debt Securities are declared due and payable
because of the occurrence of any Event of Default other than the Event of
Default described in clause (d) under "Events of Default, Notice and Waiver"
under certain circumstances or described in clause (g) under "Events of Default,
Notice and Waiver" under certain circumstances, the amount in such currency,
currency unit or composite currency in which such Debt Securities are payable,
and Government Obligations on deposit with the applicable Trustee, will be
sufficient to pay amounts due on such Debt Securities at the time of their
Stated Maturity but may not be sufficient to pay amounts due on such Debt
Securities at the time of the acceleration resulting from such Event of Default.
However, the Company would remain liable to make payment of such amounts due at
the time of acceleration.
The applicable Prospectus Supplement may further describe the
provisions, if any, permitting such defeasance or covenant defeasance, including
any modifications to the provisions described above, with respect to the Debt
Securities of or within a particular series.
Conversion Rights
The terms and conditions, if any, upon which the Debt Securities are
convertible into Preferred Stock or Common Stock will be set forth in the
applicable Prospectus Supplement relating thereto. Such terms will include
whether such Debt Securities are convertible into Preferred Stock or Common
Stock, the conversion price (or manner of calculation thereof), the conversion
period, provisions as to whether conversion will be at the option of the holders
or the Company, the events requiring an adjustment of the conversion price and
provisions affecting conversion in the event of the redemption of such Debt
Securities.
Global Securities
The Debt Securities of a series may be issued in whole or in part in
the form of one or more fully registered global securities (the "Global
Securities") that will be deposited with, or on behalf of, a depositary (the
"Depositary") identified in the applicable Prospectus Supplement relating to
such series. Global Securities are expected to be deposited with The Depository
Trust Company, as Depositary. Global Securities may be issued in either
registered or bearer form and in either temporary or permanent form.
Unless and until it is exchanged in whole or in part for the individual
Debt Securities represented thereby, a Global Security may not be transferred
except as a whole by the Depositary for such Global Security to a nominee of
such Depositary or by a nominee of such Depositary to such Depositary or another
nominee of such Depositary or by the Depositary or any nominee of such
Depositary to a successor Depositary or any nominee of such successor.
The specific terms of the depositary arrangement with respect to a
series of Debt Securities will be described in the applicable Prospectus
Supplement relating to such series. Unless otherwise indicated in the applicable
Prospectus Supplement, the Company anticipates that the following provisions
will apply to depositary arrangements.
Upon the issuance of a Global Security, the Depositary for such Global
Security or its nominee will credit on its book-entry registration and transfer
system the respective principal amounts of the individual Debt Securities
represented by such Global Security to the accounts of persons that have
accounts with such Depositary ("participants"). Such accounts shall be
designated by the underwriters, dealers or agents with respect to such Debt
Securities or by the Company if such Debt Securities are offered and sold
directly by the Company. Ownership of beneficial interests in a Global Security
will be limited to participants or persons that may hold interests through
participants. Ownership of beneficial interests in such Global Security will be
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shown on, and the transfer of that ownership will be effected only through,
records maintained by the applicable Depositary or its nominee (with respect to
beneficial interests of participants) and records of participants (with respect
to beneficial interests of persons who hold through participants). The laws of
some states require that certain purchasers of securities take physical delivery
of such securities in definitive form. Such limits and laws may impair the
ability to own, pledge or transfer beneficial interest in a Global Security.
So long as the Depositary for a Global Security or its nominee is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
applicable Indenture. Except as provided below or in the applicable Prospectus
Supplement, owners of a beneficial interest in a Global Security will not be
entitled to have any of the individual Debt Securities of the series represented
by such Global Security registered in their names, will not receive or be
entitled to receive physical delivery of any such Debt Securities of such series
in definitive form and will not be considered the owners or holders thereof
under the applicable Indenture.
Payments of principal of, any premium on, and any interest on, or any
other amounts payable with respect to, individual Debt Securities represented by
a Global Security registered in the name of a Depositary or its nominee will be
made to the Depositary or its nominee, as the case may be, as the registered
owner of the Global Security representing such Debt Securities. None of the
Company, the Trustees, any Paying Agent or the Security Registrar for such Debt
Securities will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in the Global Security for such Debt Securities or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
The Company expects that the Depositary for a series of Debt Securities
or its nominee, upon receipt of any payment of principal, premium or interest in
respect of a permanent Global Security representing any of such Debt Securities,
will immediately credit participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of such Global Security for such Debt Securities as shown on the records of such
Depositary or its nominee. The Company also expects that payments by
participants to owners of beneficial interests in such Global Security held
through such participants will be governed by standing instructions and
customary practices, as is the case with securities held for the account of
customers in bearer form or registered in "street name." Such payments will be
the responsibility of such participants.
If a Depositary for a series of Debt Securities is at any time
unwilling, unable or ineligible to continue as depositary and a successor
depositary is not appointed by the Company within 90 days, the Company will
issue individual Debt Securities of such series in exchange for the Global
Security representing such series of Debt Securities. In addition, the Company
may, at any time and in its sole discretion, subject to any limitations
described in the applicable Prospectus Supplement relating to such Debt
Securities, determine not to have any Debt Securities of such series represented
by one or more Global Securities and, in such event, will issue individual Debt
Securities of such series in exchange for the Global Security or Securities
representing such series of Debt Securities. Individual Debt Securities of such
series so issued will be issued in denominations, unless otherwise specified by
the Company, of $1,000 and integral multiples thereof.
Subordination
Upon any distribution to creditors of the Company in a liquidation,
dissolution or reorganization, the payment of the principal of and interest on
the Subordinated Securities will be subordinated to the extent provided in the
Subordinated Securities Indenture in right of payment to the prior payment in
full of all Senior Debt, but the obligation of the Company to make payment of
the principal and interest on the Subordinated Securities will not otherwise be
affected. No payment of principal or interest may be made on the Subordinated
Securities at any time if a default on Senior Debt exists that permits the
holders of such Senior Debt to accelerate its maturity and the default is the
subject of judicial proceedings or the Company receives notice of the default.
After all Senior Debt is paid in full and until the Subordinated Securities are
paid in full, holders will be subrogated to the rights of holders of Senior Debt
to receive distributions applicable to Senior Debt to the extent that
distributions otherwise payable to holders have been applied to the payment of
Senior Debt. By reason of such subordination, in the event of a distribution of
assets upon insolvency, certain general creditors of the Company may recover
more, ratably, than holders of the Subordinated Securities.
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There will be no restrictions in the Subordinated Securities Indenture
upon the creation of additional Senior Debt. However, the Senior Securities
Indenture will contain limitations on incurrence of indebtedness by the Company.
If this Prospectus is being delivered in connection with a series of
Subordinated Securities, the accompanying Prospectus Supplement or the
information incorporated herein by reference will set forth the approximate
amount of Senior Debt outstanding as of the end of the Company's most recent
fiscal quarter.
DESCRIPTION OF PREFERRED STOCK
The Company's Restated Certificate of Incorporation, as amended (the
"Certificate of Incorporation"), authorizes the Company to issue up to
50,000,000 shares of preferred stock of the Company. The Board of Directors of
the Company is granted the power to authorize the issuance of one or more series
of preferred stock. As of the date hereof, there are not shares of preferred
stock of the Company issued and outstanding.
The following description of the Preferred Stock which may be offered
pursuant to a Prospectus Supplement sets forth certain general terms and
provisions of the Preferred Stock to which any Prospectus Supplement may relate.
The particular terms of the Preferred Stock being offered and the extent to
which such general provisions may or may not apply will be described in a
Prospectus Supplement relating to such Preferred Stock. The statements below
describing the Preferred Stock are in all respects subject to and qualified in
their entirety by reference to the applicable provisions of the Certificate of
Incorporation and the Company's Bylaws, as in effect.
General
Subject to limitations prescribed by Delaware law and the Certificate
of Incorporation, the Board of Directors of the Company is authorized to fix the
number of shares constituting each series of Preferred Stock and the
designations and powers, preferences and the relative participating, optional or
other special rights and qualifications, limitations or restrictions thereof,
including such provisions as may be desired concerning voting, redemption,
distributions, dissolution or the distribution of assets, conversion or
exchange, and such other subjects or matters as may be fixed by resolution of
the Board of Directors of the Company or a duly authorized committee thereof.
The Preferred Stock will, when issued, be fully paid and nonassessable and will
have no preemptive rights. The Register and Transfer Agent for any Preferred
Stock will be set forth in the applicable Prospectus Supplement.
Reference is made to the Prospectus Supplement relating to the
Preferred Stock offered thereby for specific terms, including:
(1) the title and stated value of such Preferred Stock;
(2) the number of shares of such Preferred Stock being offered, the
liquidation preference per share and the offering price of such
Preferred Stock;
(3) the distribution rate(s), period(s) and/or payment date(s) or
method(s) of calculation thereof applicable to such Preferred
Stock;
(4) the date from which distributions on such Preferred Stock shall
accumulate, if applicable;
(5) the procedures for any auction and remarketing, if any, for such
Preferred Stock;
(6) the provision for a sinking fund, if any, for such Preferred
Stock;
(7) the provisions for redemption, if applicable, of such Preferred
Stock;
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(8) any listing of such Preferred Stock on any securities exchange;
(9) the terms and conditions, if applicable, upon which such
Preferred Stock will be convertible into Common Stock, including
the conversion price (or manner of calculation thereof);
(10) a discussion of federal income tax considerations applicable to
such Preferred Stock;
(11) the relative ranking and preferences of such Preferred Stock as
to distribution rights (including whether any liquidation
preference as to the Preferred Stock will be treated as a
liability for purposes of determining the availability of assets
of the Company for distributions to holders of Stock remaining
junior to the Preferred Stock as to distribution rights) and
rights upon liquidation, dissolution or winding up of the affairs
of the Company;
(12) any limitations on issuance of any series of preferred stock
ranking senior to or on a parity with such series of Preferred
Stock as to distribution rights and rights upon liquidation,
dissolution or winding up of the affairs of the Company; and
(13) any other specific terms, preferences, rights, limitations or
restrictions of such Preferred Stock.
Rank
Unless otherwise specified in the applicable Prospectus Supplement, the
Preferred Stock will, with respect to distribution rights and/or rights upon
liquidation, dissolution or winding up of the Company, rank (i) senior to all
classes or series of Common Stock, and to all equity securities ranking junior
to such Preferred Stock with respect to distribution rights and/or rights upon
liquidation, dissolution or winding up of the Company, as the case may be; (ii)
on a parity with all equity securities issued by the Company the terms of which
specifically provide that such equity securities rank on a parity with the
Preferred Stock with respect to distribution rights and/or rights upon
liquidation, dissolution or winding up of the Company, as the case may be; and
(iii) junior to all equity securities issued by the Company the terms of which
specifically provide that such equity securities rank senior to the Preferred
Stock with respect to distribution rights and/or rights upon liquidation,
dissolution or winding up of the Company, as the case may be. As used in the
Certificate of Incorporation, for these purposes, the term "equity securities"
does not include convertible debt securities.
Distributions
Holders of Preferred Stock shall be entitled to receive, when, as and
if authorized by the Board of Directors of the Company, out of assets of the
Company legally available for payment, cash distributions at such rates (or
method of calculation thereof) and on such dates as will be set forth in the
applicable Prospectus Supplement. Each such distribution shall be payable to
holders of record as they appear on the share transfer books of the Company on
such record dates as shall be fixed by the Board of Directors of the Company.
Distributions on any series of the Preferred Stock may be cumulative or
non-cumulative, as provided in the applicable Prospectus Supplement.
Distributions, if cumulative, will be cumulative from and after the date set
forth in the applicable Prospectus Supplement. If the Board of Directors of the
Company fails to authorize a distribution payable on a distribution payment date
on any series of the Preferred Stock for which distributions are noncumulative,
then the holders of such series of the Preferred Stock will have no right to
receive a distribution in respect of the distribution period ending on such
distribution payment date, and the Company will have no obligation to pay the
distribution accrued for such period, whether or not distributions on such
series are authorized for payment on any future distribution payment date.
If any shares of Preferred Stock of any series are outstanding, no full
distributions shall be authorized or paid or set apart for payment on the
preferred stock of the Company of any other series ranking, as to distributions,
on a parity with or junior to the Preferred Stock of such series for any period
unless (i) if such series of Preferred Stock has a cumulative distribution, full
cumulative distributions have been or contemporaneously are authorized and paid
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or authorized and a sum sufficient for the payment thereof set apart for such
payment on the Preferred Stock of such series for all past distribution periods
and the then current distribution period or (ii) if such series of Preferred
Stock does not have a cumulative distribution, full distributions for the then
current distribution period have been or contemporaneously are authorized and
paid or authorized and a sum sufficient for the payment thereof set apart for
such payment on the Preferred Stock of such series. When distributions are not
paid in full (or a sum sufficient for such full payment is not so set apart)
upon the Preferred Stock of any series and the shares of any other series of
preferred stock ranking on a parity as to distributions with the Preferred Stock
of such series, all distributions authorized upon the Preferred Stock of such
series and any other series of Preferred Stock ranking on a parity as to
distributions with such Preferred Stock shall be authorized pro rata so that the
amount of distributions authorized per share on the Preferred Stock of such
series and such other series of preferred stock shall in all cases bear to each
other the same ratio that accrued and unpaid distributions per share on the
Preferred Stock of such series (which shall not include any accumulation in
respect of unpaid distributions for prior distribution periods if such shares of
Preferred Stock do not have a cumulative distribution) and such other series of
preferred shares bear to each other. No interest, or sum of money in lieu of
interest, shall be payable in respect of any distribution payment or payments on
Preferred Stock of such series which may be in arrears.
Except as provided in the immediately preceding paragraph, unless (i)
if such series of Preferred Stock has a cumulative distribution, full cumulative
distributions on the Preferred Stock of such series have been or
contemporaneously are authorized and paid or authorized and a sum sufficient for
the payment thereof set apart for payment for all past distribution periods and
the then current distribution period and (ii) if such series of Preferred Stock
does not have a cumulative distribution, full distributions on the Preferred
Stock of such series have been or contemporaneously are authorized and paid or
authorized and a sum sufficient for the payment thereof set apart for payment
for the then current distribution period, no distributions (other than in Common
Stock or other shares of capital stock ranking junior to the Preferred Stock of
such series as to distributions and upon liquidation, dissolution or winding up
of the affairs of the Company) shall be authorized or paid or set aside for
payment or other distribution upon the Common Stock or any other shares of
capital stock of the Company ranking junior to or on a parity with the Preferred
Stock of such series as to distributions or upon liquidation, dissolution or
winding up of the affairs of the Company, nor shall any Common Stock or any
other shares of capital stock of the Company ranking junior to or on a parity
with the Preferred Stock of such series as to distributions or upon liquidation,
dissolution or winding up of the affairs of the Company be redeemed, purchased
or otherwise acquired for any consideration (or any moneys be paid to or made
available for a sinking fund for the redemption of any shares of capital stock )
by the Company (except by conversion into or exchange for other shares of
capital stock of the Company ranking junior to the Preferred Stock of such
series as to distributions and upon liquidation, dissolution or winding up of
the affairs of the Company).
Any distribution payment made on a series of Preferred Stock shall
first be credited against the earliest accrued but unpaid distribution due with
respect to shares of such series which remains payable.
Redemption
If so provided in the applicable Prospectus Supplement, the Preferred
Stock of any series will be subject to mandatory redemption or redemption at the
option of the Company, as a whole or in part, in each case upon the terms, at
the times and at the redemption prices set forth in such Prospectus Supplement.
The Prospectus Supplement relating to a series of Preferred Stock that
is subject to mandatory redemption will specify the number of shares of such
Preferred Stock that shall be redeemed by the Company in each year commencing
after a date to be specified, at a redemption price per share to be specified,
together with an amount equal to all accrued and unpaid distributions thereon
(which shall not, if such Preferred Stock does not have a cumulative
distribution, include any accumulation in respect of unpaid distributions for
prior distribution periods) to the date of redemption. The redemption price may
be payable in cash or other property, as specified in the applicable Prospectus
Supplement. If the redemption price for Preferred Stock of any series is payable
only from the net proceeds of the issuance of shares of capital stock of the
Company, the terms of such Preferred Stock may provide that, if no such shares
of capital stock shall have been issued or to the extent the net proceeds from
any issuance are insufficient to pay in full the aggregate redemption price then
due, such Preferred Stock shall automatically and mandatorily be converted into
shares of the applicable shares of capital stock of the Company pursuant to
conversion provisions specified in the applicable Prospectus Supplement.
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Notwithstanding the foregoing, unless (i) if such series of Preferred
Stock has a cumulative distribution, full cumulative distributions on all shares
of such series have been or contemporaneously are authorized and paid or
authorized and a sum sufficient for the payment thereof set apart for payment
for all past distribution periods and the then current distribution period and
(ii) if such series of Preferred Stock does not have a cumulative distribution,
full distributions on all shares of such series have been or contemporaneously
are authorized and paid or authorized and a sum sufficient for the payment
thereof set apart for payment for the then current distribution period, no
shares of such series of Preferred Stock shall be redeemed unless all
outstanding Preferred Stock of such series are simultaneously redeemed;
provided, however, that the foregoing shall not prevent the purchase or
acquisition of Preferred Stock of such series pursuant to a purchase or exchange
offer made on the same terms to holders of all outstanding Preferred Stock of
such series, and, unless (i) if such series of Preferred Stock has a cumulative
distribution, full cumulative distributions on all outstanding shares of such
series have been or contemporaneously are authorized and paid or authorized and
a sum sufficient for the payment thereof set apart for payment for all past
distribution periods and the then current distribution period and (ii) if such
series of Preferred Stock does not have a cumulative distribution, full
distributions on all shares of such series have been or contemporaneously are
authorized and paid or authorized and a sum sufficient for the payment thereof
set apart for payment for the then current distribution period, the Company
shall not purchase or otherwise acquire directly or indirectly any Preferred
Stock of such series (except by conversion into or exchange for shares of
capital stock of the Company ranking junior to the Preferred Stock of such
series as to distributions and upon liquidation).
If fewer than all of the outstanding Preferred Stock of any series are
to be redeemed, the number of shares to be redeemed will be determined by the
Company and such shares may be redeemed pro rata from the holders of record of
such shares in proportion to the number of such shares held by such holders
(with adjustments to avoid redemption of fractional shares) or any other
equitable method determined by the Company.
Notice of redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of record of Preferred Stock
of any series to be redeemed at the address shown on the stock transfer books of
the Company. Each notice shall state: (i) the redemption date; (ii) the number
of shares and series of the Preferred Stock to be redeemed; (iii) the redemption
price; (iv) the place or places where certificates for such Preferred Stock are
to be surrendered for payment of the redemption price; (v) that distributions on
the shares to be redeemed will cease to accrue on such redemption date; and (vi)
the date upon which the holder's conversion rights, if any, as to such shares
shall terminate. If fewer than all the Preferred Stock of any series are to be
redeemed, the notice mailed to each such holder thereof shall also specify the
number of shares of Preferred Stock to be redeemed from each such holder. If
notice of redemption of any Preferred Stock has been properly given and if the
funds necessary for such redemption have been irrevocably set aside by the
Company in trust for the benefit of the holders of any Preferred Stock so called
for redemption, then from and after the redemption date distributions will cease
to accrue on such Preferred Stock, such Preferred Stock shall no longer be
deemed outstanding and all rights of the holders of such shares will terminate,
except the right to receive the redemption price. Any moneys so deposited which
remain unclaimed by the holders of such Preferred Stock at the end of two years
after the redemption date will be returned by the applicable bank or trust
company to the Company.
Liquidation Preference
Upon any voluntary or involuntary liquidation, dissolution or winding
up of the affairs of the Company, then, before any distribution or payment shall
be made to the holders of any Common Stock or any other class or series of
shares of capital stock of the Company ranking junior to any series of Preferred
Stock in the distribution of assets upon any liquidation, dissolution or winding
up of the Company, the holders of such series of Preferred Stock shall be
entitled to receive, after payment or provision for payment of the Company's
indebtedness and other liabilities, out of assets of the Company legally
available for distribution to shareholders, liquidating distributions in the
amount of the liquidation preference per share (set forth in the applicable
Prospectus Supplement), plus an amount equal to all distributions accrued and
unpaid thereon (which shall not include any accumulation in respect of unpaid
distributions for prior distribution periods if such Preferred Stock do not have
a cumulative distribution). After payment of the full amount of the liquidating
distributions to which they are entitled, the holders of such series of
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Preferred Stock will have no right or claim to any of the remaining assets of
the Company. In the event that, upon any such voluntary or involuntary
liquidation, dissolution or winding up, the legally available assets of the
Company are insufficient to pay the amount of the liquidating distributions on
all such outstanding Preferred Stock and the corresponding amounts payable on
all shares of other classes or series of shares of capital stock of the Company
ranking on a parity with such series of Preferred Stock in the distribution of
assets upon liquidation, dissolution or winding up, then the holders of such
series of Preferred Stock and all other such classes or series of shares of
capital stock shall share ratably in any such distribution of assets in
proportion to the full liquidating distributions to which they would otherwise
be respectively entitled.
If the liquidating distributions shall have been made in full to all
holders of a series of Preferred Stock, the remaining assets of the Company
shall be distributed among the holders of any other classes or series of shares
of capital stock ranking junior to such series of Preferred Stock upon
liquidation, dissolution or winding up, according to their respective rights and
preferences and in each case according to their respective number of shares. For
purposes of this section, a distribution of assets in any dissolution, winding
up or liquidation will not include (i) any consolidation or merger of the
Company with or into any other corporation, (ii) any dissolution, liquidation,
winding up, or reorganization of the Company immediately followed by
organization of another entity to which such assets are distributed or (iii) a
sale or other disposition of all or substantially all of the Company's assets to
another entity; provided that, in each case, effective provision is made in the
charter of the resulting and surviving entity or otherwise for the recognition,
preservation and protection of the rights of the holders of Preferred Stock.
Voting Rights
Holders of any series of Preferred Stock will not have any voting
rights, except as set forth below or as otherwise from time to time required by
law or as indicated in the applicable Prospectus Supplement.
Unless provided otherwise for any series of Preferred Stock, so long as
any Preferred Stock remain outstanding, the Company will not, without the
affirmative vote or consent of the holders of a majority of the shares of each
series of Preferred Stock outstanding at the time, given in person or by proxy,
either in writing or at a meeting (such series voting separately as a class),
(i) authorize, create or issue, or increase the authorized or issued amount of,
any class or series of shares of capital stock ranking prior to such series of
Preferred Stock with respect to payment of distributions or the distribution of
assets upon liquidation, dissolution or winding up, or reclassify any authorized
shares of capital stock of the Company into any such shares, or create,
authorize or issue any obligation or security convertible into or evidencing the
right to purchase any such shares; or (ii) amend, alter or repeal the provisions
of the Certificate of Incorporation, including the applicable Certificate of
Designation for such series of Preferred Stock, whether by merger, consolidation
or otherwise, so as to materially and adversely affect any right, preference,
privilege or voting power of such series of Preferred Stock or the holders
thereof; provided, however, that any increase in the amount of the authorized
Preferred Stock or the creation or issuance of any other series of Preferred
Stock, or any increase in the amount of authorized shares of such series or any
other series of Preferred Stock, in each case ranking on a parity with or junior
to the Preferred Stock of such series with respect to payment of distributions
or the distribution of assets upon liquidation, dissolution or winding up, shall
not be deemed to materially and adversely affect such rights, preferences,
privileges or voting powers.
The foregoing voting provisions will not apply if, at or prior to the
time when the act with respect to which such vote would otherwise be required
shall be affected, all outstanding shares of such series of Preferred Stock
shall have been redeemed or called for redemption upon proper notice and
sufficient funds shall have been irrevocably deposited in trust to effect such
redemption.
Whenever distributions on any Preferred Stock shall be in arrears for
six or more consecutive quarterly periods, the holders of such Preferred Stock
(voting together as a class with all other series of Preferred Stock upon which
like voting rights have been conferred and are exercisable) will be entitled to
vote for the election of two additional directors of the Company until, (i) if
such series of Preferred Stock has a cumulative distribution, all distributions
accumulated on such Preferred Stock for the past distribution periods and the
then current distribution period shall have been fully paid or authorized and a
sum sufficient for the payment thereof set aside for payment or (ii) if such
series of Preferred Stock does not have a cumulative distribution, four
consecutive quarterly distributions shall have been fully paid or authorized and
a sum sufficient for the payment thereof set aside for payment. In such case,
the entire Board of Directors of the Company will be increased by two directors.
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Conversion Rights
The terms and conditions, if any, upon which any series of Preferred
Stock are convertible into Common Stock will be set forth in the applicable
Prospectus Supplement relating thereto. Such terms will include the number of
shares of Common Stock into which the Preferred Stock are convertible, the
conversion price (or manner of calculation thereof), the conversion period,
provisions as to whether conversion will be at the option of the holders of the
Preferred Stock or the Company, the events requiring an adjustment of the
conversion price and provisions affecting conversion in the event of the
redemption of such Preferred Stock.
DESCRIPTION OF COMMON STOCK
General
The Company's Certificate of Incorporation authorizes the Company to
issue up to 150,000,000 shares of Common Stock of the Company. As of June 30,
1998, the Company had outstanding 20,768,208 shares of Common Stock. The
following description of the Common Stock sets forth certain general terms and
provisions of the Common Stock to which any Prospectus Supplement may relate,
including a Prospectus Supplement providing that Common Stock will be issuable
upon conversion of Debt Securities or Preferred Stock or upon the exercise of
Warrants or Rights. The statements below describing the Common Stock are in all
respects subject to and qualified in their entirety by reference to the
applicable provisions of the Certificate of Incorporation and the Company's
Bylaws.
Holders of Common Stock will be entitled to receive distributions when,
as and if authorized and declared by the Board of Directors of the Company, out
of funds legally available therefor. Upon any liquidation, dissolution or
winding up of the Company, holders of Common Stock will be entitled to share
equally and ratably in any assets available for distribution to them, after
payment or provision for payment of the indebtedness and other liabilities of
the Company and the preferential amounts owing with respect to any outstanding
Preferred Stock. The Common Stock will possess ordinary voting rights for the
election of directors and in respect of other corporate matters, each share
entitling the holder thereof to one vote. Holders of Common Stock will not have
cumulative voting rights in the election of directors, which means that holders
of more than 50% of all of the outstanding shares of Common Stock voting for the
election of directors can elect all of the directors if they choose to do so and
the holders of the remaining shares cannot elect any directors. Approval of the
following matters requires the affirmative vote of the holders of a majority of
all outstanding shares of Common Stock: certain amendments to the Certificate of
Incorporation, termination of the Company, removal of a director, certain
mergers, reorganizations or consolidations of the Company or the sale,
conveyance, exchange or other disposition of all or substantially all of the
Company's property. Holders of Common Stock will not have preemptive rights,
which means they have no right to acquire any additional shares of Common Stock
that may be issued by the Company at a subsequent date.
The Common Stock will, when issued, be fully paid and nonassessable.
The Registrar and Transfer Agent for the Company's Common Stock is
American Stock Transfer Company.
Delaware Anti-Takeover Statute
The Company is a Delaware corporation and is subject to Section 203 of
the General Corporation Law of Delaware ("Delaware Law"). In general, Section
203 prevents an "interested stockholder" (defined generally as a person owing
15% or more of the Company's outstanding voting stock) from engaging in a
"business combination" (as defined in Section 203) with the Company for three
years following the date that person becomes an interested stockholder unless
(a) before that person became an interested stockholder, the Company's Board of
Directors approved the transaction in which the interested stockholder became an
interested stockholder or approved the business combination, (b) upon completion
of the transaction that resulted in the interested stockholder's becoming an
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interested stockholder, the interested stockholder owns at least 85% of the
Company's voting stock outstanding at the time the transaction commenced
(excluding stock held by directors who are also officers of the Company and by
employee stock plans that do not provide employees with the right to determine
confidentially whether shares held subject to the plan will be tendered in a
tender or exchange offer), or (c) following the transaction in which that person
became an interested stockholder, the business combination is approved by the
Company's Board of Directors and authorized at a meeting of stockholders by the
affirmative vote of the holders of at least two-thirds of the outstanding
Company voting stock not owned by the interested stockholder.
Under Section 203, these restrictions also do not apply to certain
business combinations proposed by an interested stockholder following the
announcement or notification of one of certain extraordinary transactions
involving the Company and a person who was not an interested stockholder during
the previous three years or who became an interested stockholder with the
approval of a majority of the Company's directors, if that extraordinary
transaction is approved or not opposed by a majority of the directors who were
directors before any person became an interested stockholder in the previous
three years or who were recommended for election or elected to succeed such
directors by a majority of such directors then in office.
DESCRIPTION OF WARRANTS
The Company may issue Warrants for the purchase of Debt Securities,
Preferred Stock or Common Stock. Warrants may be issued independently or
together with any Offered Securities and may be attached to or separate from
such securities. Each series of Warrants will be issued under a separate warrant
agreement (each, a "Warrant Agreement") to be entered into between the Company
and a warrant agent ("Warrant Agent"). The Warrant Agent will act solely as an
agent of the Company in connection with the Warrants of such series and will not
assume any obligation or relationship of agency or trust for or with any holders
or beneficial owners of Warrants. The following sets forth certain general terms
and provisions of the Warrants offered hereby. Further terms of the Warrants and
the applicable Warrant Agreement will be set forth in the applicable Prospectus
Supplement.
The applicable Prospectus Supplement will describe the following terms,
where applicable, of the Warrants in respect of which this Prospectus is being
delivered: (1) the title of such Warrants; (2) the aggregate number of such
Warrants; (3) the price or prices at which such Warrants will be issued; (4) the
currencies in which the price of such Warrants may be payable; (5) the
designation, aggregate principal amount and terms of the securities purchasable
upon exercise of such Warrants; (6) the designation and terms of the Offered
Securities with which such Warrants are issued and the number of such Warrants
issued with each such security; (7) the currency or currencies, including
composite currencies, in which the principal of or any premium or interest on
the securities purchasable upon exercise of such Warrants will be payable; (8)
if applicable, the date on and after which such Warrants and the related
securities will be separately transferable; (9) the price at which and currency
or currencies, including composite currencies, in which the securities
purchasable upon exercise of such Warrants may be purchased; (10) the date on
which the right to exercise such Warrants shall commence and the date on which
such right shall expire; (11) the minimum or maximum amount of such Warrants
which may be exercised at any one time; (12) information with respect to
book-entry procedures, if any; (13) a discussion of certain Federal income tax
considerations; and (14) any other terms of such Warrants, including terms,
procedures and limitations relating to the exchange and exercise of such
Warrants.
DESCRIPTION OF RIGHTS
The Company may issue Rights to its stockholders for the purchase of
shares of Preferred Stock or Common Stock. Each series of Rights will be issued
under a separate rights agreement (a "Rights Agreement") to be entered into
between the Company and a bank or trust company, as Rights agent, all as set
forth in the Prospectus Supplement relating to the particular issue of Rights.
The Rights agent will act solely as an agent of the Company in connection with
the certificates relating to the Rights and will not assume any obligation or
relationship of agency or trust for or with any holders of Rights certificates
or beneficial owners of Rights. The Rights Agreement and the Rights certificates
relating to each series of Rights will be filed with the Commission and
incorporated by reference as an exhibit to the Registration Statement of which
this Prospectus is a part at or prior to the time of the issuance of such series
of Rights.
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The applicable Prospectus Supplement will describe the terms of the
Rights to be issued, including the following where applicable: (i) the date for
determining the stockholders entitled to the Rights distribution; (ii) the
aggregate number of shares of Preferred Stock or Common Stock purchasable upon
exercise of such Rights and the exercise price; (iii) the aggregate number of
Rights being issued; (iv) the date, if any, on and after which such Rights may
be transferable separately; (v) the date on which the right to exercise such
Rights shall commence and the date on which such right shall expire; (vi) any
special Federal income tax consequences; and (vii) any other terms of such
Rights, including terms, procedures and limitations relating to the
distribution, exchange and exercise of such Rights.
PLAN OF DISTRIBUTION
The Company may sell the Offered Securities to one or more underwriters
for public offering and sale by them or may sell the Offered Securities to
investors directly or through agents, or may issue Offered Securities to satisfy
obligations of the Company, or upon the exchange, conversion or exercise of
other securities of the Company, or through a combination of any such methods of
sale. Any such underwriter or agent involved in the offer and sale of the
Offered Securities will be named in the applicable Prospectus Supplement.
Underwriters may offer and sell the Offered Securities at a fixed price
or prices, which may be changed, at prices related to the prevailing market
prices at the time of sale or at negotiated prices. The Company also may offer
and sell the Offered Securities in exchange for one or more of its then
outstanding issues of indebtedness or convertible debt securities. The Company
also may, from time to time, authorize underwriters acting as the Company's
agents to offer and sell the Offered Securities upon the terms and conditions as
are set forth in the applicable Prospectus Supplement. In connection with the
sale of Offered Securities, underwriters may be deemed to have received
compensation from the Company in the form of underwriting discounts or
commissions and may also receive commissions from purchasers of Offered
Securities for whom they may act as agent. Underwriters may sell Offered
Securities to or through dealers, and such dealers may receive compensation in
the form of discounts, concessions or commissions from the underwriters and/or
commissions from the purchasers for whom they may act as agent.
Any underwriting compensation paid by the Company to underwriters or
agents in connection with the offering of Offered Securities, and any discounts,
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in the applicable Prospectus Supplement. Underwriters, dealers
and agents participating in the distribution of the Offered Securities may be
deemed to be underwriters, and any discounts and commissions received by them
and any profit realized by them on resale of the Offered Securities may be
deemed to be underwriting discounts and commissions, under the Securities Act.
Underwriters, dealers and agents may be entitled, under agreements entered into
with the Company, to indemnification against and contribution toward certain
civil liabilities, including liabilities under the Securities Act. In the
opinion of the Commission, such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
Unless otherwise specified in the applicable Prospectus Supplement,
each series of Offered Securities will be a new issue with no established
trading market, other than the Common Stock which is listed on the New York
Stock Exchange. Any shares of Common Stock sold pursuant to a Prospectus
Supplement will be listed on the NYSE, subject to official notice of issuance.
The Company may elect to list the Offered Securities on an exchange, but is not
obligated to do so. It is possible that one or more underwriters may make a
market in the Offered Securities, but will not be obligated to do so and may
discontinue any market making at any time without notice. Therefore, no
assurance can be given as to the liquidity of, or the trading market for, the
Offered Securities.
If so indicated in a Prospectus Supplement, the Company will authorize
agents, underwriters or dealers to solicit offers by certain institutional
investors to purchase Offered Securities of the series to which such Prospectus
Supplement relates providing for payment and delivery on a future date specified
in such Prospectus Supplement. There may be limitations on the minimum amount
which may be purchased by any such institutional investor or on the portion of
the aggregate principal amount of the particular Offered Securities which may be
sold pursuant to such arrangements. Institutional investors to which such offers
may be made, when authorized, include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and such other institutions as may be approved by the Company. The
obligations of any such purchasers pursuant to such delayed delivery and payment
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arrangements will not be subject to any conditions except that (i) the purchase
by an institution of the particular Offered Securities shall not at the time of
delivery be prohibited under the laws of any jurisdiction in the United States
to which such institution is subject, and (ii) if the particular Offered
Securities are being sold to underwriters, the Company shall have sold to such
underwriters the total principal amount of such Offered Securities or number of
Warrants less the principal amount or number thereof, as the case may be,
covered by such arrangements. Underwriters will not have any responsibility in
respect of the validity of such arrangements or the performance of the Company
or such institutional investors thereunder.
Certain of the underwriters and their affiliates may be customers of,
engage in transactions with and perform services for the Company and its
subsidiaries in the ordinary course of business.
In order to comply with the securities laws of certain states, if
applicable, the Offered Securities offered hereby will be sold in such
jurisdictions only through registered or licensed brokers or dealers. In
addition, in certain states Offered Securities may not be sold unless they have
been registered or qualified for sale in the applicable state or an exemption
from the registration or qualification requirement is available and is complied
with.
ERISA MATTERS
The Company may be considered a "party in interest" within the meaning
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and a "disqualified person" under corresponding provisions of the Code with
respect to certain employee benefit plans. Certain transactions between an
employee benefit plan and a party in interest or disqualified person may result
in "prohibited transactions" within the meaning of ERISA and the Code, unless
such transactions are effected pursuant to an applicable exemption. Any employee
benefit plan or other entity subject to such provisions of ERISA or the Code
proposing to invest in the Offered Securities should consult with its legal
counsel.
LEGAL OPINIONS
Certain legal matters will be passed upon for the Company by Robinson
Silverman Pearce Aronsohn & Berman LLP, New York, New York.
EXPERTS
The consolidated financial statements of Terex Corporation incorporated
in this Prospectus by reference to the Annual Report on Form 10-K for the year
ended December 31, 1997 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
The consolidated financial statement of O&K Mining GmbH as of December
31, 1997 and 1996 and for the years then ended, incorporated in this Prospectus
by reference to the Company's Amendment No. 2 to Current Report on Form 8-K/A
dated March 31, 1998 have been so incorporated in reliance on the report of C&L
Treuhand-Vereinigung Deutsche Revision, Aktiengesellschaft
Wirtschaftsprufungsgesellschaft, independent accountants, given on the authority
of said firm as experts in auditing and accounting.
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