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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

                              Washington, DC 20549

                                    FORM 10-K

(Mark One)
                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
|X|                  OF THE SECURITIES EXCHANGE ACT OF 1934
                   For the Fiscal Year Ended December 31, 1997

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
|_| OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______.

Commission File Number 1-10702

TEREX CORPORATION
(Exact Name of Registrant as Specified in Charter)

           Delaware                                      34-1531521
   (State of incorporation)                          (I.R.S. Employer
                                                    Identification No.)

500 Post Road East, Suite 320, Westport, Connecticut          06880
    (Address of principal executive offices)                (Zip Code)

Registrant's Telephone Number, including area code:  (203) 222-7170

Securities registered pursuant to Section 12(b)of the Act:

Common Stock, $.01 par value
(Title of Class)

New York Stock Exchange
(Name of Exchange on which Registered)

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days.
YES X NO____

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. |_|

The aggregate market value of the voting and non-voting common equity stock held by non-affiliates of the Registrant was approximately $462.8 million based on the last sale price on March 23, 1998.

The number of shares of the Registrant's Common Stock outstanding was 20,642,649 as of March 23, 1998.

DOCUMENTS INCORPORATED BY REFERENCE:

Portions of the 1998 Terex Corporation Proxy Statement to be filed with the Securities and Exchange Commission within 120 days after the year covered by this Form 10-K with respect to the 1998 Annual Meeting of Stockholders are incorporated by reference into Part III


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TEREX CORPORATION AND SUBSIDIARIES
Index to Annual Report on Form 10-K
For the Year Ended December 31, 1997

                                                                            Page
                                     PART I

Item 1   Business..............................................................3
Item 2   Properties...........................................................13
Item 3   Legal Proceedings....................................................14
Item 4   Submission of Matters to a Vote of Security Holders..................14

                                     PART II

Item 5   Market for Registrant's Common Stock and Related Stockholder Matters.14
Item 6   Selected Financial Data..............................................16
Item 7   Management's Discussion and Analysis of Financial Condition and Results
           of Operations......................................................17
Item 8   Financial Statements and Supplementary Data..........................26
Item 9   Changes in and Disagreements With Accountants on Accounting and
           Financial Disclosures..............................................26

                                    PART III

Item 10  Directors and Executive Officers of the Registrant....................*
Item 11  Executive Compensation................................................*
Item 12  Security Ownership of Certain Beneficial Owners and Management........*
Item 13  Certain Relationships and Related Transactions........................*

                                     PART IV
Item 14  Exhibits, Financial Statement Schedule and Reports on Form 8-K.......27



*  Incorporated by reference from Terex Corporation Proxy Statement.


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As used in this Annual Report on Form 10-K, unless otherwise indicated, Terex Corporation, together with its consolidated subsidiaries, is hereinafter referred to as "Terex", the "Registrant", or the "Company".

PART I

ITEM 1. BUSINESS

General

Terex is a global manufacturer of a broad range of construction and mining related capital equipment. The Company strives to manufacture high quality machines which are low cost, simple to use and easy to maintain. The Company's principal products include telescopic mobile cranes, aerial work platforms, utility aerial devices, telescopic material handlers, truck mounted mobile cranes, rigid and articulated off-highway trucks and high capacity surface mining trucks, and related components and replacement parts. The Company's products are manufactured at 15 plants in the United States and Europe and are sold primarily through a worldwide network of dealers in over 750 locations to the global construction, infrastructure and surface mining markets.

The Company's operations began in 1983 with the purchase of Northwest Engineering Company, the Company's original business and name. Since 1983, management has expanded and changed the Company's business through a series of acquisitions and dispositions. In 1988, Northwest Engineering Company merged into a subsidiary acquired in 1986 named Terex Corporation, with Terex Corporation as the surviving entity. As a result of the completion of the PPM Acquisition (as defined below) in May 1995, the Company's operations were divided into three principal segments: Material Handling, Heavy Equipment and Mobile Cranes. On November 27, 1996, the Company completed the sale of its worldwide material handling segment, which was originally acquired in July 1992, and currently the Company operates in two business segments: Terex Lifting (formerly known as Terex Cranes) and Terex Earthmoving (formerly known as Terex Trucks).

Terex Lifting manufactures and sells telescopic mobile cranes (including rough terrain, truck and all terrain mobile cranes), aerial work platforms (including scissor, articulated boom and straight telescoping boom aerial work platforms), utility aerial devices (including digger derricks and articulated aerial devices), telescopic material handlers (including container stackers and rough terrain lift trucks), truck mounted cranes (boom trucks) and related components and replacement parts. These products are used by construction and industrial customers, as well as utility companies.

Terex Earthmoving manufactures and sells articulated and rigid off-highway trucks and high capacity surface mining trucks, and related components and replacement parts. These products are used primarily by construction, mining and government customers. As discussed more fully below under the heading "Recent Developments," the Company has agreed to purchase all of the outstanding shares of O & K Mining GmbH ("O & K Mining"), whose principal executive offices and primary manufacturing facility are located in Dortmund, Germany. O & K Mining's product line includes a full range of large hydraulic excavators and related parts and components to be sold primarily by O&K Mining's and Terex's combined sales organization.

Over the past several years, Terex has implemented a series of interrelated strategic initiatives designed to improve manufacturing efficiency and offer its products at a lower cost than competitors, thereby increasing sales, earnings and market share. These include: (i) focusing the Company's business on its core lifting and earthmoving businesses; (ii) focusing product lines on products which it can manufacture for low cost relative to its competitors by rationalizing product lines and simplifying its product designs; (iii) growth in the size and scope of operations through both acquisitions and new product development; and (iv) increasing profitability through cost reductions and improved manufacturing efficiency. The Company has also implemented a strategy to improve significantly its financial flexibility, strengthen its capital structure and enhance its liquidity to execute its growth initiatives. In addition, the Company has, and continues to, seek out acquisitions in the capital goods industry where aggressive management can achieve substantial improvements in profitability and cash flow.

For financial information about the Company's industry and geographic segments, see Note O --- "Business Segment Information" in the Notes to the Consolidated Financial Statements and "Management's Discussion and Analysis of Financial Condition and Results of Operations."


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Terex Lifting

Terex Lifting was established as a separate business segment as a result of an acquisition (the "PPM Acquisition") in May 1995 of substantially all of the shares of PPM S.A. and certain of its subsidiaries, including PPM SpA, Brimont Agraire S.A., a specialized trailer manufacturer in France, PPM Krane GmbH, a sales organization in Germany, and Baulift Baumaschinen Und Krane Handels GmbH, a parts distributor in Germany (collectively, "PPM Europe") from Potain S.A., and all of the capital stock of Legris Industries, Inc., which owned 92.4% of the capital of PPM Cranes, Inc., ("PPM North America" and PPM Europe and PPM North America are collectively referred to herein as "PPM") from Legris Industries, S.A. Concurrently with the completion of the PPM Acquisition, the Company contributed the assets (subject to liabilities) of its Koehring Cranes and Excavators and Mark Industries division to Terex Cranes, Inc. The former division now operates as Koehring Cranes, Inc. ("Koehring"), a wholly owned subsidiary of Terex Cranes, Inc. Koehring and PPM are part of the Terex Lifting segment.

During 1997, the Company completed two acquisitions to augment its Terex Lifting segment. On April 7, 1997, the Company completed the acquisition of substantially all of the capital stock of certain of the former subsidiaries of Simon Engineering plc (collectively referred to herein as the "Simon Access Companies") for approximately $90 million. The Simon Access Companies consist principally of business units in the United States and Europe engaged in the manufacture, sale and worldwide distribution of access equipment designed to position people and materials to work at heights. The Simon Access Companies' products include utility aerial devices, aerial work platforms and truck-mounted cranes (boom trucks) which are sold to customers in the industrial and construction markets, as well as utility companies. Specifically, the Company acquired 100% of the outstanding common stock of (i) Simon Telelect, Inc. (now named Terex Telelect Inc.), a Delaware corporation, (ii) Simon Aerials, Inc. (now named Terex Aerials, Inc.), a Wisconsin corporation and parent company of Terex RO, (iii) Sim-Tech Management Limited, a private limited company incorporated under the laws of Hong Kong, (iv) Simon Cella, S.r.l., a company incorporated under the laws of Italy, and (v) Simon Aerials Limited (now named Terex Aerials Limited), a company incorporated under the laws of Ireland; and 60% of the outstanding common stock of Simon-Tomen Engineering Company Limited, a limited liability stock company organized under the laws of Japan. On April 14, 1997, the Company completed the acquisition of all of the capital stock of Baraga Products, Inc. and M&M Enterprises of Baraga, Inc. Baraga Products, Inc. (now named Terex Baraga Products, Inc.) manufactures the Square Shooter, a rough terrain telescopic lift truck designed to lift materials to heights where they are used in construction.

Terex Lifting has eight significant manufacturing operations: (i) PPM S.A. located in Montceau-les-Mines, France, at which mobile cranes and container stackers under the brand names TEREX and PPM are manufactured; (ii) PPM SpA, located in Crespellano, Italy, at which mobile cranes are manufactured under the TEREX, BENDINI and PPM brand names; (iii) Terex Lifting, located in Conway, South Carolina, at which mobile cranes are manufactured under the P&H (a licensed trademark of Harnischfeger Corporation) and TEREX brand names; (iv) Terex Lifting - Waverly Operations, located in Waverly, Iowa, at which rough terrain hydraulic telescoping mobile cranes, truck cranes and material handlers are manufactured under the brand names TEREX, KOEHRING and LORAIN, and aerial lift equipment is manufactured under the brand names TEREX AERIALS, TEREX AND MARK; (v) Terex Telelect, Inc., located in Watertown, South Dakota, at which utility aerial devices and digger derricks are manufactured under the TELELECT and HI-RANGER brand names, (vi) Terex Aerials, Inc., located in Milwaukee, Wisconsin, at which aerial platforms are manufactured under the TEREX, SIMON, MARK and TEREX AERIALS brand names; (vii) Terex RO, Inc., located in Olathe, Kansas, at which truck mounted cranes are manufactured under the RO-STINGER brand name; and (viii) Terex Baraga Products, Inc., located in Baraga, Michigan, at which rough terrain telescopic lift trucks are manufactured under the SQUARE SHOOTER brand name.

Throughout the world market, mobile cranes are principally sold to rental companies and dealers with rental fleets. Terex Lifting's mobile crane market share varies dramatically by geographical area; however, the Company believes it is the leading manufacturer of mobile cranes in France and Italy and is the second largest manufacturer in North America. Terex Lifting's principal worldwide mobile crane competitors are Grove Worldwide and Link Belt (Sumitomo); Terex Lifting competes with several smaller specialty companies in North America and with Grove Cranes Ltd., Liebherr Werk Ehingen and DeMag in Europe. Terex Lifting's major competitors in the container stacker market are Kalmar, Valmet Belloti and Taylor. The Company believes that it is the fifth largest manufacturer of aerial work platforms in North America. Currently, the leading competitors in the aerial lift industry are JLG Industries, Genie, Grove Manlift (including the recently acquired Krupp Mobil Krane), Skyjack, and Snorkel. Currently, the leading competitors in the telescopic rough terrain lift truck industry are OmniQuip and Gradall. The Company believes that it is the second largest manufacturer in the United States of utility aerial devices behind Altec.


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Terex Earthmoving

Terex Earthmoving currently manufactures and sells articulated and rigid off-highway trucks and high capacity surface mining trucks, and related components and replacement parts. These products are used primarily by construction, mining and government customers. Terex Earthmoving currently has three manufacturing operations: (i) Terex Equipment Limited ("TEL"), located at Motherwell, Scotland, which manufactures off-highway rigid haulers and articulated haulers and scrapers, each sold under the TEREX brand name and to other truck manufacturers on a private label basis; (ii) the Unit Rig Division, located in Tulsa, Oklahoma, which manufactures electric rear and bottom dump haulers principally sold to the copper, gold and coal mining industry customers in North and South America, Asia, Africa and Australia; and (iii) Payhauler Corp. ("Payhauler"), located in Batavia, Illinois, which was acquired by Terex on January 5, 1998 and manufactures all-wheel drive rigid off highway trucks. In addition, Terex Earthmoving has an interest in North Hauler Limited Liability Company, a corporation incorporated under the laws of China. In 1987, TEL entered into a joint venture agreement with Second Inner Mongolia Machinery Company for the production of haulers in China. The joint venture company, North Hauler Limited Liability Company, manufactures heavy trucks, principally used in mining, at a facility in Baotou, Inner Mongolia, People's Republic of China. As discussed more fully below under the heading "Recent Developments," the Company has agreed to purchase all of the outstanding shares of O & K Mining GmbH ("O & K Mining"), whose principal executive offices and primary manufacturing facility are located in Dortmund, Germany. O & K Mining's product line includes a full range of large hydraulic excavators and related parts and components to be sold primarily by O&K Mining's and Terex's combined sales organization.

A "hauler" is an off-road dump truck with a capacity in excess of 25 tons. Haulers produced by TEL and Payhauler have capacities ranging from 25 to 100 tons. The "scrapers" manufactured by TEL are off-road vehicles, commonly referred to as "earthmovers," that load, move and unload large quantities of soil for site preparations, including roadbeds. The Unit Rig hauler is powered by a diesel engine driving an electric generator that provides power to individual electric motors in each of the rear wheels. Unit Rig's current LECTRA HAUL product line consists of a series of rear dump hauler trucks with payload capacities ranging from 100 to 260 tons, and bottom dump haulers with capacities ranging from 180 to 270 tons. Unit Rig's products are sold under the Company's TEREX, UNIT RIG, and LECTRA HAUL trademarks. TEL's North, Central and South American sales and distribution are managed by Terex Americas, a division of the Company, located in Tulsa, Oklahoma. Payhauler manufactures 30- and 50-ton all-wheel drive rigid rear dump haulers under the PAYHAULER trade name.

Terex Earthmoving believes that it is a significant competitor in the market for large capacity off highway haulers and scrapers. However, the Company is not a dominant manufacturer in the heavy equipment industry, which is dominated in most segments by large, diversified firms, such as Caterpillar, Volvo Group and Komatsu with respect to the TEL products and Caterpillar, Komatsu, Liebherr Werk Ehingen and Euclid with respect to Unit Rig products.

Recent Developments

Acquisition of O & K Mining GmbH

The Company has agreed to purchase all of the outstanding shares of O&K Mining from O&K Orenstein & Koppel AG ("Orenstein & Koppel") for net aggregate consideration of DM 309 million (approximately $172 million), subject to certain post-closing adjustments. The transaction is scheduled to close on March 31, 1998 and will be financed through the issuance by the Company of its New Senior Subordinated Notes (defined below) and borrowings under the New Bank Credit Facility (as defined below). O&K Mining, which will be part of the Terex Earthmoving segment, is headquartered in Dortmund, Germany, and has operations in the United States, United Kingdom, Australia, Canada, South Africa and Singapore. O&K Mining markets a complete range of large hydraulic excavators serving the global surface mining industry and the global construction and infrastructure development markets. The Company believes that O&K Mining has the leading market share for large hydraulic excavator models having machine weights in excess of 200 tons. The use of O&K Mining's excavators in around the clock intensive, harsh condition mining operations requires significant higher margin after-market parts and service, which in the case of the larger hydraulic excavators can generate revenues of up to 200% of the original sale price over the expected life of the machines. In 1997, O&K Mining introduced the RH 400, the world's largest hydraulic excavator with an 800 ton machine weight and 80 ton bucket capacity.

The Company has identified and plans to initiate several programs to increase sales and reduce costs in connection with the integration of O&K Mining into the Terex Earthmoving segment. Since 1993, O&K Mining has successfully marketed the Company's off-highway trucks under private label, primarily in Europe. The Company believes that additional opportunities exist to offer packages of off-highway trucks with complementary small hydraulic excavators to the construction industry outside Europe and of high capacity trucks with complementary large hydraulic excavators to the global surface mining industry. The new machine product combinations and the related integrated parts and field


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service business will allow the Company to expand on its and O&K Mining's established customer relationships and position itself as an integrated provider of surface mining and construction products.

Repurchase of 13-1/4% Senior Secured Notes and New Bank Credit Facility

On March 6, 1998, the Company completed the purchase or defeasance of all of the $166.7 million in principal amount of its then outstanding 13-1/4% Senior Secured Notes due 2002 (the "Senior Secured Notes"). Concurrently therewith, the Company also amended or eliminated certain of the principal restrictive covenants contained in the Indenture governing the Senior Secured Notes and refinanced substantially all of its then existing domestic and foreign revolving credit debt. The proceeds for the offer to purchase and the repayment of its then existing revolving credit facility were obtained from borrowings under the Company's new $500 million global bank credit facility (the "New Bank Credit Facility").

The New Bank Credit Facility consists of a new secured global revolving credit facility aggregating up to $125 million (the "New Revolving Credit Facility") and two term loan facilities (collectively, the "Term Loan Facilities") providing for loans in an aggregate principal amount of up to approximately $375 million. The New Revolving Credit Facility, which is currently undrawn, will be used for working capital and general corporate purposes, including acquisitions.

Pursuant to the Term Loan Facilities, the Company has borrowed, or may borrow in the future, (i) up to $175 million in aggregate principal amount pursuant to a Term Loan A due March 2004 (the "Term A Loan") and (ii) up to $200 million in aggregate principal amount pursuant to a Term Loan B due March 2005 (the "Term B Loan"). The outstanding principal amount of the Term A Loan initially bears interest, at Company's option, at an all-in drawn cost of 2% per annum in excess of the adjusted eurocurrency rate or, with respect to U.S. dollar denominated alternate base rate loans, at an all-in drawn cost of 1% per annum in excess of the prime rate. The outstanding principal amount of the Term B Loan initially bears interest, at the Company's option, at a rate of 2.5% per annum in excess of the adjusted eurodollar rate or, with respect to U.S. dollar denominated alternate base rate loans, 1.5% in excess of the prime rate. The Term A Loan amortizes on a quarterly basis, in the annual percentages of 0%, 16%, 16%, 21%, 21% and 26%, respectively, during the six year term of the loan. The Term B Loan amortizes in an annual percentage of 1% during each of the first six years of the term of the loan and 94% in the seventh year of the term of the loan. The Term A Loan and Term B Loan are subject to mandatory prepayment under certain circumstances and is voluntarily prepayable without payment of a premium (subject to reimbursement of the lenders' costs in case of prepayment of eurodollar loans other than on the last day of an interest period). The outstanding principal amount of loans under the New Revolving Credit Facility initially bears interest, at the Company's option, at an all-in drawn cost of 2% per annum in excess of the adjusted eurocurrency rate or, with respect to U.S. dollar denominated alternate base rate loans, at an all-in drawn cost of 1% per annum in excess of the prime rate. The New Revolving Credit Facility terminates on March 5, 2004. The Company has entered into certain interest rate protection agreements with respect to a portion of the principal amount of the New Bank Credit Facility.

With limited exceptions, the obligations of the Company under the New Bank Credit Facility are secured by (i) a pledge of all of the capital stock of domestic subsidiaries of the Company, (ii) a pledge of 65% of the stock of certain of the foreign subsidiaries of the Company and (iii) a first priority security interest in, and mortgages on, substantially all of the assets of Terex and its domestic subsidiaries. The New Bank Credit Facility contains covenants limiting the Company's activities, including, without limitation, limitations on dividends and other payments, liens, investments, incurrence of indebtedness, mergers and asset sales, related party transactions and capital expenditures. The New Bank Credit Facility also contains certain financial and operating covenants, including a maximum leverage ratio, a minimum interest coverage ratio and a minimum fixed charge coverage ratio. If for any reason the Company is unable to comply with the terms of the New Bank Credit Facility, including the covenants included therein, such noncompliance would result in an event of default under the New Bank Credit Facility and could result in acceleration of the payment of the indebtedness outstanding under the New Bank Credit Facility.

New Senior Subordinated Notes

On March 24, 1998, the Company entered into a Purchase Agreement to issue and sell $150 million aggregate principal amount of 8.875% Senior Subordinated Notes Due 2008 (the "New Senior Subordinated Notes"). The New Senior Subordinated Notes are being issued and sold pursuant to an exemption from registration under the Securities Act of 1933, as amended, and the closing is expected to occur on March 31, 1998. The New Senior Subordinated Notes are unsecured and repayment is guaranteed on an unsecured basis by certain of the Company's domestic subsidiaries. The proceeds of the issuance and sale of the New Senior Subordianted Notes will be used to fund a portion of the aggregate consideration for the acquisition of O&K Mining and for general corporate purposes.

Products

Telescopic Mobile Cranes

Telescopic mobile cranes are used primarily in new industrial, commercial construction and public works construction industries and in maintenance applications, to lift equipment or material to heights in excess of 50 feet. The Company's Terex Lifting segment manufactures the following types of telescopic mobile cranes:


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Rough Terrain Cranes--are designed
to lift materials and equipment on rough or
uneven terrain and are most often located on
a single construction or work site such as a
building site, a highway or a utility
project for long periods of time. Rough
terrain cranes cannot be driven on highways
and accordingly must be transported by truck
to the work site. Rough terrain cranes
manufactured by Terex Lifting have maximum
lifting capacities of up to 90 tons and
maximum tip heights of up to 205 feet. Terex
Lifting manufactures its rough terrain
cranes at its facilities located at Waverly,
Iowa, Conway, South Carolina,
Montceau-les-Mines, France, and Crespellano,
Italy under the brand names TEREX, LORAIN,
P&H, PPM and BENDINI.

Truck Cranes--have two cabs and can
travel rapidly from job site to job site at
highway speeds. In contrast to rough terrain
cranes which are often located for extended
periods at a single work site, truck cranes
are often used for multiple local jobs,
primarily in urban or suburban areas. Truck
cranes manufactured by Terex Lifting have
maximum lifting capacities of up to 75 tons
and maximum tip heights of up to 193 feet.
Terex Lifting manufactures truck cranes at
its Waverly, Iowa and Conway, South Carolina
facilities under the brand names P&H and
LORAIN.

All Terrain Cranes--were developed
in Europe as a cross between rough terrain
and truck cranes in that they are designed
to travel across both rough terrain and
highways. All terrain cranes have two cabs
and are versatile and highly maneuverable.
All terrain cranes manufactured by Terex
Lifting have lifting capacities of up to 130
tons and maximum tip heights of up to 223
feet. Terex Lifting manufactures its all
terrain cranes at its Montceau-les-Mines,
France facility under the brand names TEREX
and PPM.

Truck Mounted Cranes (Boom Trucks)

Terex Lifting manufactures telescopic boom cranes for mounting on commercial truck chassis. Terex also distributes truck mounted articulated cranes under the EFFER brand name which are manufactured by Effer SpA. Truck mounted cranes are used primarily in the construction industry to lift equipment or materials to various heights. Boom trucks are generally lighter and have a lower lifting capacity than truck cranes, and are used for many of the same applications when lower lifting capabilities are required. An advantage of a boom truck is that the equipment or material to be lifted by the crane can be transported by the truck which can travel at highway speeds. Applications include the installation of air conditioners and other roof equipment. The Company's Terex Lifting segment manufactures the following types of cranes for installation on truck chassis:

Telescopic Boom Truck Mounted Cranes--enable an operator to reach heights of up to 167 feet and have a maximum lifting capacity of up to 37.5 tons. Terex Lifting manufactures its telescopic boom truck mounted cranes at its Olathe, Kansas facility under the brand name RO-STINGER.

Articulated Boom Truck Mounted Cranes--are for users who prefer greater capacities over the greater vertical reach provided by a telescopic boom truck mounted crane. At its Olathe, Kansas facility, Terex Lifting acts as the master distributor for the EFFER brand line of articulated boom truck mounted cranes which have maximum capacities up to 87,305 pounds and horizontal reach to 66 feet.

Aerial Work Platforms

Aerial work platforms are self propelled devices which position workers and materials easily and quickly to elevated work areas. These products have developed over the past 20 years as alternatives to scaffolding and ladders. The work platform is mounted on either a telescoping and/or articulating boom or on a vertical lifting scissor mechanism.


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Scissor Lifts--are used in open
areas in indoor or outdoor applications in a
variety of construction, industrial and
commercial settings. Scissor lifts
manufactured by Terex Lifting have maximum
working heights of up to 52 feet and maximum
load capacities of up to 2,000 pounds. Terex
Lifting manufactures scissor aerial work
platforms at its Waverly, Iowa and
Milwaukee, Wisconsin facilities under the
brand names TEREX, SIMON and MARK.

Straight Telescopic Boom Lifts--are
used primarily outdoors in residential,
commercial and industrial new construction
and maintenance projects. Straight
telescopic boom lifts manufactured by Terex
Lifting have maximum working heights of up
to 126 feet and maximum load capacities of
up to 650 pounds. Terex Lifting manufactures
its straight telescopic aerial work
platforms at its Waverly, Iowa and
Milwaukee, Wisconsin facilities under the
brand names TEREX, SIMON and MARK.

Articulating Telescopic Boom
Lifts--are generally used in industrial
environments where the articulation allows
the user to access elevated areas over
machines or structural obstacles which
prevent access with a scissor lift or
straight boom. Articulating lifts available
from Terex Lifting have maximum working
heights of up to 70 feet and maximum load
capacities of up to 500 pounds. Terex
Lifting manufactures its articulating
telescopic boom lifts at its Waverly, Iowa
and Milwaukee, Wisconsin facilities under
the brand name TEREX AERIALS.

Utility Aerial Devices

Utility aerial devices are used to set utility poles and move workers and materials to work areas at the top of utility poles and towers. Utility aerial devices are mounted on commercial truck chassis which include separately installed steel cabinets for tool and material storage. Most utility aerial devices are insulated to permit live wire work.

Articulated Aerial Devices--are used to elevate workers to work areas at the top of utility poles or in trees and include one or two man baskets. Articulated aerial devices available from Terex Lifting include telescopic, non-overcenter and overcenter models and range in working heights from 32 to 203 feet. Articulated aerial devices are manufactured by Terex Lifting at its Watertown, South Dakota facility under the brand names TELELECT and HI-RANGER.

Digger Derricks--are used to set telephone poles. The digger derricks include a telescopic boom with an auger mounted at the tip which digs a hole, and a device to grasp, manipulate and set the pole. Digger derricks available from Terex Lifting have sheave heights exceeding 70 feet and lifting capacities up to 48,000 pounds. Digger derricks are manufactured by Terex Lifting at its Watertown, South Dakota facility under the brand name TELELECT.

Telescopic Material Handlers

Telescopic material handlers are used to lift containers or other material from one location to another at the same job site.

Telescopic Container Stackers--are used to pick up and stack containers at dock and terminal facilities. At the end of a telescopic container stacker's boom is a spreader which enables it to attach to containers of varying lengths and weights and to rotate the container up to 360 degrees. Telescopic container stackers are particularly effective in storage areas where containers are continually added and removed, and where the efficient manipulation of, and access to, specific containers is required. Telescopic container stackers manufactured by Terex Lifting have lifting capacities up to 49.5 tons, can stack up to six full or nine empty containers and are able to maneuver through very narrow areas. Terex Lifting manufactures its telescopic container stackers under the brand names PPM and P&H SUPERSTACKERS at its Conway, South Carolina and Montceau-les-Mines, France facilities.


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Rough Terrain Telescopic Boom
Forklifts--serve a similar function as
smaller size rough terrain telescopic mobile
cranes and are used exclusively to move and
place materials on new residential and
commercial job sites. Terex Lifting
manufactures rough terrain telescopic boom
forklifts with load capacities of up to
10,000 pounds and with a maximum extended
reach of up to 31 feet and lift capabilities
of up to 48 feet. Terex Lifting manufactures
rough terrain telescopic boom forklifts at
its facility in Baraga, Michigan under the
brand name SQUARE SHOOTER.

Rigid and Articulated Off-Highway Trucks

Terex Earthmoving manufactures two distinct types of off-highway trucks with hauling capacities from 25 to 100 tons: articulated and rigid frame. Terex Earthmoving manufactures rigid and articulated trucks at its TEL facility in Motherwell, Scotland. TEL manufactures and markets articulated trucks and rigid frame trucks under the TEREX brand name and sells to O&K Mining on a private label basis. Upon consummation of the O&K Acquisition, the Company will continue to manufacture articulated trucks and rigid frame trucks under the O&K name.

Articulated Off-Highway Trucks--are three axle, six wheel drive machines with a capacity range of 25 to 40 tons. Their differentiating feature is an oscillating connection between the cab and body which allows the cab and body to move independently, thereby enabling all six tires to maintain ground contact for improved traction on rough terrain. This allows the truck to move effectively through extremely rough or muddy off-road conditions. Articulated off-highway trucks are typically used together with an excavator or wheel loader to move dirt in connection with road, tunnel or other infrastructure construction and commercial, industrial or major residential construction projects. Terex's articulated trucks are manufactured in Motherwell, Scotland, under the brand name TEREX.

Rigid Off-Highway Trucks--are two axle machines which generally have larger capacities than articulated trucks but can operate only on improved or graded surfaces.

The capacities of rigid off-highway trucks
range from 35 to 100 tons, and off-highway
trucks have applications in large
construction or infrastructure projects,
aggregates and smaller surface mines. Terex
Earthmoving's rigid trucks are manufactured
in Motherwell, Scotland, under the TEREX
brand name and in Batavia, Illinois, under
the PAYHAULER brand name.

High Capacity Surface Mining
Trucks--are off road dump trucks with
capacities in excess of 120 tons primarily
for surface mining. Terex Earthmoving's
haulers are powered by a diesel engine
driving an electric generator that provides
power to individual electric motors in each
of the rear wheels. Unit Rig's current
LECTRA HAUL product line consists of a
series of rear dump trucks with payload
capacities ranging from 120 to 260 tons, and
bottom dump trucks with capacities ranging
from 180 to 270 tons. Terex Earthmoving's
high capacity surface mining trucks are
manufactured at Unit Rig, located in Tulsa,
Oklahoma, under the UNIT RIG and LECTRA HAUL
brand names.

Backlog

The Company's backlog as of December 31, 1997 and 1996 was as follows:

                                           December 31,
                                    ---------------------------
                                        1997          1996
                                    ------------- -------------

Terex Lifting...................... $    186.5    $     67.2
Terex Earthmoving..................       30.3          53.4
                                    ============= =============
     Total......................... $    216.8    $    120.6
                                    ============= =============

Substantially all of the Company's backlog orders are expected to be filled


10

within one year, although there can be no assurance that all such backlog orders will be filled within that time period. The Company's backlog orders represent primarily new equipment orders. Parts orders are generally filled on an as-ordered basis.

Terex Lifting backlog at December 31, 1997 increased $119.3 million to $186.5 million as compared to $67.2 at December 31, 1996. The increase in backlog was due to the effect of the Simon Access and Square Shooter businesses acquired in April 1997 (approximately $51 million in backlog) as well as increases in the businesses other than the 1997 acquisitions. The backlog at Terex Earthmoving decreased to $30.3 million at December 31, 1997 from $53.4 million at December 31, 1996, principally because of the decline in sales and backlog of Unit Rig machines during 1997.

Distribution

Terex Lifting distributes its products primarily through a global network of dealers in over 750 different locations. With respect to telescopic mobile cranes in North America, Terex Lifting maintains extensive dealer networks. The geographic strength of Terex Lifting's telescopic mobile cranes marketed under the LORAIN brand name centers in the midwest and mid-Atlantic regions of the United States and the geographic strength of telescopic mobile cranes marketed under the P&H brand name centers in the southern and western regions of the United States. Terex Lifting's European distribution is carried out primarily under three brand names, TEREX, PPM and BENDINI, through a single distribution network comprised of both distributors and a direct sales force. Terex Lifting sells its utility aerial devices under the SIMON, TEREX and TELELECT brand names principally through a network of North American distributors. Terex Lifting sells its aerial work platform products through a distribution network that includes many of the Aerials Limited and Aerials dealers throughout the world, but principally in North America and Europe. Terex Lifting's aerial work platform products are sold under the brand name TEREX AERIALS.

TEL markets machines and replacement parts primarily through worldwide dealership networks. TEL's truck dealers are independent businesses which generally serve the construction, mining, timber and/or scrap industries. Although these dealers carry products of a variety of manufacturers, and may or may not carry more than one of the Company's products, each dealer generally carries only one manufacturer's "brand" of each particular type of product. The Company employs sales representatives who service these dealers from offices located throughout the world. Payhauler distributes its products primarily through a dealership network. Unit Rig distributes its products and services directly to customers primarily through its own distribution system.

Research and Development

The Company maintains engineering staffs at several of its locations which design new products and improvements in existing product lines. Such costs incurred in the development of new products or significant improvements to existing products of continuing operations amounted to $6.2, $6.1 and $5.0 million in 1997, 1996 and 1995, respectively.

Materials

Principal materials used by the Company in its various manufacturing processes include steel, castings, engines, tires, hydraulic cylinders, electric controls and motors, and a variety of other fabricated or manufactured items. In the absence of labor strikes or other unusual circumstances, substantially all materials are normally available from multiple suppliers. Current and potential suppliers are evaluated on a regular basis on their ability to meet the Company's requirements and standards. Electric wheel motors and controls used in the Unit Rig product line are currently supplied exclusively by General Electric Company. The Company is endeavoring to develop alternative sources and has entered into a contract with General Atomics, a former defense contractor, to develop electric wheel motors for Unit Rig trucks. If the Company is unable to develop alternative sources, or if there is disruption or termination of its relationship with General Electric Company (which is not governed by a written contract), it could have a material adverse effect on Unit Rig's operations.

Working Capital Items

The Company, in the normal course of business, does not provide right of return on merchandise sold, nor does it provide extended payment terms to customers.

Competition

Telescopic Mobile Cranes--The domestic telescopic mobile crane industry is comprised primarily of three manufacturers. The Company believes that Terex Lifting is the second largest domestic manufacturer, with approximately a 36% market share. The Company believes that the number one domestic manufacturer is Grove Worldwide, and the number three domestic manufacturer is Link-Belt, a


11

subsidiary of Sumitomo Corp. The Company's principal markets in Europe are in France and Italy, where the Company believes it has the largest market shares, with an estimated 50% market share in each of these countries. In Europe, Terex Lifting's primary competitors are Grove Cranes Ltd., Liebherr Werk Ehingen and DeMag. Outside the United States and Europe, the most active new mobile crane markets are the Middle East and South America. Terex Lifting sells approximately 10% of its newly manufactured telescopic mobile cranes to those markets.

The United States boom truck industry is dominated by four manufacturers, of which the Company believes Terex RO, with a 25% market share, is the second largest behind Grove National.

Aerial Work Platforms--The aerial work platform industry in North America is fragmented, with seven major competitors. The Company believes that its approximate 7% market share makes it the fifth largest manufacturer of aerial work platforms in North America, behind JLG, Grove Manlift, Skyjack and Snorkel. The Company believes that approximately 42,000 aerial platforms were sold in the United States during 1997, of which approximately 70% were scissor lifts, 19% were articulated boom lifts, and 11% were straight boom lifts. The Company believes that its market share in boom lifts is greater than its market share in scissor lifts.

Utility Aerial Devices--The utility aerial device industry is comprised primarily of three manufacturers. The Company believes that it has a 20% market share of that industry and that it is the second largest manufacturer in the United States of utility aerial devices behind Altec. Outside the United States, the Company is focusing primarily on the Mexican and Caribbean markets.

Telescopic Container Stackers--The Company believes that three manufacturers account for approximately 66% of the global market for telescopic container stackers. The Company believes that it has a global market share of 25% and that it is the second largest manufacturer behind Kalmar. Other manufacturers include Valmet Belloti and Taylor.

Telescopic Rough Terrain Lift Trucks--OmniQuip and Gradall are the largest manufacturers of telescopic rough terrain lift trucks. The Company believes that the Square Shooter Business has approximately a 4% market share.

Off-Highway Trucks--North America and Europe account for greater than 60% of the global market. Four manufacturers dominate the global market. The Company believes that it is the third largest of these manufacturers (behind Volvo and Caterpillar), with approximately a 10% global market share.

High Capacity Surface Mining Trucks--The high capacity surface mining truck industry includes three principal manufacturers: Caterpillar, Komatsu-Dresser and the Company. The Company believes that it is the third largest manufacturer with a global market share of approximately 13%.

Employees

As of December 31, 1997, the Company had approximately 2,950 employees. The Company considers its relations with its personnel to be good. Approximately 35% of the Company's employees are represented by labor unions which have entered into or are in the process of entering into various separate collective bargaining agreements with the Company. The Company experienced a labor strike at its parts distribution center in Southaven, Mississippi during the second quarter of 1995 which was settled in February 1997. The strike at Southaven had no appreciable effect on the conduct of business or financial results of that operation as a whole, although individual product line sales growth may have been hindered.

Patents, Licenses and Trademarks

Several of the trademarks and trade names of the Company, in particular the TEREX, LORAIN, UNIT RIG, MARK, P&H, PPM, SIMON, TELELECT, SQUARE SHOOTER and PAYHAULER trademarks, are important to the business of the Company. The Company owns and maintains trademark registrations and patents in countries where it conducts business, and monitors the status of its trademark registrations and patents to maintain them in force and renews them as required. The Company also protects its trademark, trade name and patent rights when circumstances warrant such action, including the initiation of legal proceedings, if necessary. P&H is a registered trademark of Harnischfeger Corporation which the Company has the right to use for certain products pursuant to a license agreement until 2011. Pursuant to the terms of the acquisition agreements for the Simon Access Companies, the Company has the right to use the SIMON name (which is a registered trademark of Simon Engineering plc) for certain products until April 7, 2000. CELLA is a trademark of Sergio Cella. EFFER is a trademark of Effer SpA. All other trademarks and tradenames referred to in this Annual Report are registered trademarks of Terex Corporation or its subsidiaries.


12

Environmental Considerations

The Company generates hazardous and non-hazardous wastes in the normal course of its operations. As a result, the Company is subject to a wide range of federal, state, local and foreign environmental laws and regulations, including the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), that (i) govern activities or operations that may have adverse environmental effects, such as discharges to air and water, as well as handling and disposal practices for hazardous and non-hazardous wastes, and (ii) impose liability for the costs of cleaning up, and certain damages resulting from, sites of past spills, disposals or other releases of hazardous substances. Compliance with such laws and regulations has, and will, require expenditures by the Company on a continuing basis.

Seasonal Factors

The Company markets a large portion of its products in North America and Europe, and its sales of heavy equipment and cranes during the fourth quarter of each year to the construction industry are usually lower than sales of such equipment during each of the first three quarters of the year because of the normal winter slowdown of construction activity. However, sales of heavy equipment to the mining industry are generally less affected by such seasonal factors.


13

ITEM 2. PROPERTIES

The following table outlines the principal manufacturing, warehouse and office facilities owned or leased by the Company and its subsidiaries:

Entity                   Facility Location           Type and Size of Facility

Terex
(Corporate Offices)......Westport, Connecticut(1)    Office;  14,898 sq.ft.

Terex
(Distribution Center)....Southaven, Mississippi(1)   Warehouse and light
                                                       manufacturing;
                                                       505,000 sq.ft.(2)

                                  Terex Lifting

Terex Lifting -
Waverly Operations.......Waverly, Iowa(3)            Office, manufacturing and
                                                       warehouse; 383,000 sq.ft.
Terex Lifting -
Conway Operations........Conway, South Carolina(1)   Office, manufacturing and
                                                       warehouse; 168,716 sq.ft.

PPM S.A..................Montceau-les-Mines,         Office, manufacturing and
                           France                      warehouse; 419,764 sq.ft.
P.P.M SpA................Crespellano, Italy          Office, manufacturing and
                                                       warehouse; 79,900 sq.ft.

PPM Europe Subsidiary....Dortmund, Germany (1)       Office and warehouse;
                                                       129,180 sq.ft.
PPM Europe Subsidiary....Rethel, France              Office, manufacturing and
                                                       warehouse; 215,300 sq.ft.

Telelect.................Huron, South Dakota         Manufacturing; 88,000 sq.ft

Telelect.................Watertown, South Dakota     Office, manufacturing and
                                                       warehouse; 222,450 sq.ft.

Cella....................Brescia, Italy (1)          Office and manufacturing;
                                                       64,000 sq.ft.

Aerials Limited..........Cork, Ireland (1)           Manufacturing; 80,000 sq.ft

PPM Europe Subsidiary....Hong Kong (1)               Office; 830 sq.ft.

Aerials  (Terex RO)......Olathe, Kansas              Office and manufacturing;
                                                       80,400 sq.ft.

Aerials  ................Milwaukee, Wisconsin        Office, manufacturing and
                                                       warehouse; 103,000 sq.ft.

Square Shooter...........Baraga, Michigan            Office, manufacturing and
                                                       warehouse; 41,152 sq.ft.

                                Terex Earthmoving

Unit Rig................ Tulsa, Oklahoma             Office, manufacturing and
                                                       warehouse; 375,587 sq.ft.
TEL......................Motherwell, Scotland        Office, manufacturing and
                                                       warehouse; 473,000 sq.ft.
Payhauler................Batavia, Illinois           Office, manufacturing and
                                                       warehouse; 112,000 sq.ft.
------------------------------

(1) These facilities are either leased or subleased by the indicated entity.
(2) Includes 239,400 sq. ft. of warehouse space currently leased to others.
(3) The Company also owns a 66,000 sq. ft. facility in Waterloo, Iowa which is currently leased to others.

Unit Rig also has 10 owned or leased locations for parts distribution and rebuilding of components, of which two are in the United States, two are in Canada and six are abroad.

Management believes that the properties listed above are suitable and adequate for the Company's use. The Company has determined that certain of its properties exceed its requirements. Such properties may be sold, leased or utilized in another manner and have been excluded from the above list.


14

Discontinued Operations

On November 27, 1996, the Company sold substantially all the assets and liabilities of its worldwide material handling business ("CMHC") for an aggregate cash purchase price, subject to adjustments, of $139.5 million (the "Clark Sale"). Prior to the disposition on November 27, 1996, CMHC consisted of Clark Material Handling Company and certain affiliated companies which were acquired by the Company in July 1992 from Clark Equipment Company. CMHC designed, manufactured and marketed a complete line of internal combustion and electric lift trucks, electric walkies and related components and replacement parts under the CLARK trademark.

Financial Information about Industry and Geographic Segments, Export Sales and Major Customers

Information regarding foreign and domestic operations, export sales, segment information and major customers is included in Note O -- "Business Segment Information" in the Notes to the Consolidated Financial Statements.

ITEM 3. LEGAL PROCEEDINGS

As described in Note M -- "Litigation and Contingencies" in the Notes to the Consolidated Financial Statements, the Company is involved in various legal proceedings, including product liability and workers' compensation liability matters, which have arisen in the normal course of its operations and to which the Company is self-insured for up to $2.0 million per incident. Management believes that the final outcome of such matters will not have a material adverse effect on the Company's consolidated financial position.

For information concerning other contingencies and uncertainties, see "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Contingencies and Uncertainties."

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

(a) The Company's Common Stock is listed on the NYSE under the symbol "TEX."

Quarterly Market Prices

The high and low stock prices for the Company's Common Stock on the NYSE Composite Tape (for the last two completed years) are as follows:

                        1997                                   1996
         ---------------------------------     ---------------------------------
         Fourth    Third    Second   First     Fourth    Third   Second    First
         ------    -----    ------   -----     ------    -----   ------    -----
High... $ 25.19  $ 23.75  $ 19.50  $ 13.50    $ 10.13   $ 9.38   $ 9.25   $ 7.13

Low....   18.94    18.75    13.13     9.50       6.63     6.50     6.38     4.13

No dividends were declared or paid in 1996 or in 1997. Certain of the Company's debt agreements contain restrictions as to the payment of cash dividends. In order for the Company to pay dividends, the New Bank Credit Facility requires that the ratio of the Company's total debt to pro forma earnings before interest, taxes, depreciation and amortization for the immediately preceding four fiscal quarters be less than 3.85 to 1.0, and that the amount of dividends paid by the Company during the entire term of New Bank Credit Facility not exceed an aggregate of $25 million. The Company intends generally to retain earnings, if any, to fund the development and growth of its business. The Company does not plan on paying dividends on the Common Stock in the foreseeable future. Any future payments of cash dividends will depend upon the financial condition, capital requirements and earnings of the Company, as well as other factors that the Board of Directors may deem relevant.


15

As of March 23, 1998, there were 661 stockholders of record of the Company's Common Stock.

(b) On December 30, 1997, the Company issued 87,300 shares of Common Stock to Randolph W. Lenz in connection with the conversion of all of the shares of Series B Preferred Stock held by him. The issuance of the shares of Common Stock by the Company to Mr. Lenz was exempt from registration under the Securities Act of 1933, as amended, pursuant to Section 4(2) thereof. The Company did not receive any cash proceeds from the issuance of the shares of Common Stock to Mr. Lenz.


16

ITEM 6. SELECTED FINANCIAL DATA

(in millions except per share amounts and employees)

                                                                           As of or for the Year Ended December 31,
                                                               ------------------------------------------------------------
                                                                  1997        1996         1995         1994        1993
                                                               ----------  ----------   ----------   ----------  ----------
Summary of Operations
  Net sales..................................................$   842.3   $    678.5  $    501.4    $    314.1  $   274.7
  Operating income (loss) from continuing operations.........     71.1          5.1        12.8          10.4       (8.2)
  Income (loss) from continuing operations before
    extraordinary items......................................     30.3        (54.3)      (32.1)          4.9      (40.7)
  Income (loss) from discontinued operations.................   ---           102.0         4.4          (3.7)     (24.3)
  Income (loss) before extraordinary items...................     30.3         47.7       (27.7)          1.2      (65.0)
  Net income (loss)..........................................     15.5         47.7       (35.2)          0.5      (66.5)
  Income (loss) applicable to common stock...................     10.7         24.8       (42.5)         (5.5)     (66.7)
  Per Common and Common Equivalent Share:
    Basic
      Income (loss) from continuing operations...............$    1.57   $     (6.54)$     (3.79)  $    (0.10) $    (4.11)
      Income (loss) from discontinued operations.............   ---             8.64        0.42        (0.36)      (2.44)
      Income (loss) before extraordinary items...............     1.57          2.10       (3.37)       (0.46)      (6.55)
      Net income (loss)......................................     0.66          2.10       (4.09)       (0.53)      (6.70)
    Diluted
      Income (loss) from continuing operations...............$    1.44   $     (5.81)$     (3.79)  $    (0.10) $    (4.11)
      Income (loss) from discontinued operations.............   ---             7.67        0.42        (0.36)      (2.44)
      Income (loss) before extraordinary items...............     1.44          1.86       (3.37)       (0.46)      (6.55)
      Net income (loss)......................................     0.60          1.86       (4.09)       (0.53)      (6.70)
Working Capital
  Current assets.............................................$   426.5   $    390.2  $    312.0    $    278.1  $   257.3
  Current liabilities........................................    236.1        195.0       196.3         221.6      187.8
  Working capital............................................    190.4        195.2       115.7          56.5       69.5
Property, Plant and Equipment
  Net property, plant and equipment..........................$    47.8   $     31.7  $     40.1    $     86.2  $    97.5
  Capital expenditures.......................................      9.9          8.1         5.2          12.7       11.5
  Depreciation...............................................      8.2          7.0         7.4          13.7       12.1
Total Assets.................................................$   588.5   $    471.2  $    478.9    $    401.6  $   390.7
Capitalization
  Long-term debt and notes payable, including current
    maturities...............................................$   300.1   $    281.3  $    329.9    $    190.9  $   218.0
  Minority interest, including redeemable preferred stock
     of a subsidiary.........................................      0.6         10.0         9.4         ---        ---
  Redeemable convertible preferred stock.....................   ---            46.2        24.6          17.3       10.5
  Stockholders' equity (deficit).............................     59.6        (71.7)      (96.9)        (55.7)     (62.3)
  Dividends per share of Common Stock........................$   ---     $    ---    $    ---      $    ---    $   ---
  Shares of Common Stock outstanding at year end.............     20.5         13.2        10.6          10.3       10.3
Employees
  Continuing operations......................................    2,950        2,270       2,614         1,549       1,520
  Discontinued operations (Material Handling)................    ---          ---           986         1,302       1,410
    Total....................................................    2,950        2,270       3,600         2,851       2,930

The Selected Financial Data include the results of operations of the Simon Access Companies, Square Shooter and PPM from April 7, 1997, April 14, 1997 and May 9, 1995, respectively, the dates of their acquisitions. See Note C -- "Acquisitions" in the Notes to the Consolidated Financial Statements for further information. The Selected Financial Data for the years ended December 31, 1995 and 1996 include the results of operations of CMHC as discontinued operations. See Note B -- "Discontinued Operations" in the Notes to the Consolidated Financial statements for further information.


17

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

The Company currently operates in two industry segments: Terex Lifting and Terex Earthmoving. The Company previously operated a third industry segment, the Material Handling segment, the results of which are now accounted for as Income from Discontinued Operations. The Terex Lifting segment results for periods prior to April 1997 consist of Terex Lifting - Waverly Operations, Terex Lifting
- Conway Operations and PPM Europe. Subsequent to that date, Terex Lifting' results also include the results of the Simon Access and Square Shooter businesses acquired in April of 1997. Terex Earthmoving consists of TEL and Unit Rig.

1997 Compared with 1996

The table below is a comparison of net sales, gross profit, engineering, selling and administrative expenses, income (loss) from operations, and income (loss) from discontinued operations, by segment, for 1997 and 1996. The 1996 amounts include $30.0 million in special charges comprised of $18.3 million at Terex Lifting ($16.8 gross profit; $1.6 million engineering, selling and administrative expenses), $10.4 million at Terex Earthmoving (gross profit), and $1.2 million General/Corporate (engineering, selling and administrative expenses).

                                                  Year Ended December 31,    Increase
                                                  -----------------------
                                                     1997         1996      (Decrease)
                                                  -----------  ----------  ------------
                                                        (in millions of dollars)
NET SALES
  Terex Lifting.................................. $    548.0   $   363.9   $   184.1
  Terex Earthmoving..............................      288.4       314.9       (26.5)
  General/Corporate/Eliminations.................        5.9        (0.3)        6.2
                                                  ===========  ==========  ============
     Total....................................... $    842.3   $   678.5   $   163.8
                                                  ===========  ==========  ============

GROSS PROFIT
  Terex Lifting.................................. $     87.2  $     38.1   $    49.1
  Terex Earthmoving..............................       50.7        31.3        19.4
  General/Corporate/Eliminations.................        1.7        (0.2)        1.9
                                                  =========== ===========  ============
     Total....................................... $    139.6  $     69.2   $    70.4
                                                  =========== ===========  ============

ENGINEERING, SELLING AND ADMINISTRATIVE EXPENSES
  Terex Lifting.................................. $     40.0  $     33.3   $     6.7
  Terex Earthmoving..............................       26.0        25.7         0.3
  General/Corporate..............................        2.5         5.1        (2.6)
                                                  =========== ===========  ============
     Total....................................... $     68.5  $     64.1   $     4.4
                                                  =========== ===========  ============

INCOME (LOSS) FROM OPERATIONS
  Terex Lifting.................................. $     47.2  $      4.8   $    42.4
  Terex Earthmoving..............................       24.7         5.6        19.1
  General/Corporate..............................       (0.8)       (5.3)        4.5
                                                  ----------- -----------  ------------
     Total....................................... $     71.1  $      5.1   $    66.0
                                                  =========== ============ ============

INCOME FROM DISCONTINUED OPERATIONS
                                                  $    ---    $    102.0   $  (102.0)
                                                  =========== ============ ============


18

Net Sales

Sales increased $163.8 million, or approximately 24.1%, to $842.3 million in 1997 from $678.5 million in 1996, primarily reflecting the Simon Access and Square Shooter Acquisitions in the second quarter of 1997.

Terex Lifting's sales were $548.0 million for 1997, an increase of $184.1 million, or 50.6%, from $363.9 million in 1996 which did not include the results of Simon Access and Square Shooter. Machine sales increased $168.7 million to $460.5 million in 1997. This increase in sales was due primarily to the inclusion of Simon Access and Square Shooter since their acquisition in April 1997. The increase in Terex Lifting's sales in 1997 as compared to 1996 was also attributable to an increase of $22.7 million in sales at Terex--Waverly Operations as compared to 1996. Parts sales increased $8.6 million to $72.9 million in 1997. Terex Lifting's bookings were $613.3 million for 1997, compared to $356.1 million for 1996, an increase of $257.2 million.

Terex Earthmoving's sales decreased $26.5 million in 1997 to $288.4 million. This decline in sales resulted from a decrease in sales of Unit Rig machines which was partially offset by sales increases in the other Terex Earthmoving businesses. Machine sales at Terex Earthmoving in 1997 decreased $22.2 million to $189.0 million from $211.2 million in 1996 of which approximately $33 million was attributable to a decrease in Unit Rig's machine sales partially offset by increased sales in Terex products primarily in North America. Sales of parts at Terex Earthmoving in 1997 increased $2.2 million to $96.2 million as compared to $94.0 million in 1996. The sales mix was approximately 33% parts in 1997 compared to approximately 29% parts in 1996. Terex Earthmoving's bookings for 1997 were $268.0 million, a decrease of $9.9 million, or 3.6%, from 1996. Backlog decreased to $30.3 million at December 31, 1997 from $53.4 million in 1996 primarily as a result of the decrease in machine sales at Unit Rig.

Gross Profit

Gross profit for 1997 increased $70.4 million to $139.6 million. The increase in the gross profit was due to the addition of the Simon Access and Square Shooter businesses, general improvements at most operations and the effect of $27.1 million of non-recurring charges in 1996. The 1996 charges included a $16.8 million write down of goodwill and other long lived assets at Terex Lifting and $10.4 million of non-recurring charges recorded at Terex Earthmoving, primarily Unit Rig, in the fourth quarter of 1996. Gross profit as a percentage of net sales for 1997 increased to 16.6% as compared to 10.2% for 1996 as a result of the effect of the non-recurring charges in 1996. Excluding these $27.1 million charges in 1996, gross profit as a percentage of sales in 1997 increased to 16.6% from 14.2% in 1996.

Terex Lifting's gross profit increased $49.1 million to $87.2 million for 1997, compared to $38.1 million for 1996, reflecting the Simon Access and Square Shooter acquisitions. The gross profit percentage increased to 15.9% in 1997 as compared to 10.5% in 1996. Excluding the effect of the Simon Access and Square Shooter acquisitions and the 1996 impairment charge, Terex Lifting's gross profit in 1997 increased $3.6 million as compared to 1996.

Terex Earthmoving's gross profit increased $19.4 million to $50.7 million in 1997 compared to $31.3 million for 1996. Excluding the $10.4 million non-recurring charges in 1996 noted above, Terex Earthmoving's gross profit increased $9.0 million in 1997 as compared to 1996. Excluding the 1996 non-recurring charges, the gross profit percentage in 1997 increased to 17.6% from 13.2% in 1996 due to an increase in the proportion of higher margin parts sales as compared to machine sales, an increase in the gross margin for the Terex product line, primarily due to cost reduction initiatives, and a decrease in the percentage of Terex Earthmoving's sales in 1997 comprised of the lower margin Unit Rig machines.

Engineering, Selling and Administrative Expenses

Engineering, selling and administrative expenses (which include the Company's research and development expenses) increased to $68.5 million in 1997 from $64.1 million for 1996, reflecting the effects of the acquisition of the Simon Access Companies and Square Shooter. However, engineering, selling and administrative expenses as a percentage of net sales decreased to 8.1% for 1997 from 9.4% for 1996. Terex Earthmoving's engineering, selling and administrative expenses increased $0.3 million to $26.0 million for 1997 due to increased selling efforts. Terex Lifting's engineering, selling and administrative expenses increased to $40.0 million for 1997 from $33.3 million for 1996, reflecting the acquisition of the Simon Access Companies and Square Shooter. Excluding the effect of the acquired companies, Terex Lifting engineering, selling and administrative expenses fell by almost 22% year over year. Unallocated corporate engineering, selling and administrative expenses decreased to $2.5 million in 1997 as compared to $5.1 million in 1996. See "Business--Research and Development" for a discussion of the Company's engineering expenses.


19

Income (Loss) from Operations

Terex Lifting's income from operations of $47.2 million for 1997 increased by $42.4 million over 1996, primarily due to the inclusion of the Simon Access and Square Shooter businesses ($14.3 million), the 1996 impairment charges, improved results at the European operations and continued strong performance by Terex Lifting--Waverly Operations.

Terex Earthmoving's income from operations increased by $19.1 million to $24.7 million for 1997 from $5.6 million in 1996, primarily due to improved profits at Unit Rig, higher gross margin percentages and the 1996 non-recurring charges mentioned above under "Gross Profit."

On a consolidated basis, the Company had operating income of $71.1 million for 1997, compared to operating income of $5.1 million for 1996, for the reasons mentioned above.

Interest Expense

Net interest expense decreased to $38.5 million for 1997 from $43.6 million in 1996 as a result of lower average debt levels and interest rates in 1997. A portion of the decrease was due to the $139.5 million of cash provided from the sale of the Company's Materials Handling Segment in November 1996, which allowed the Company to eliminate borrowings under its revolving credit facility prior to the acquisition of the Simon Access Companies on April 7, 1997. Furthermore, the proceeds from the issuance of the Common Stock in July 1997 were used to reduce the average balance borrowed under the then existing revolving credit facility, and then on September 4, 1997, the Company redeemed $83.3 million of the Senior Secured Notes.

Other Income (Expense)

The Company realized gains in 1996 of $3.3 million from the sale of excess property principally in Scotland and Italy. During 1996, the Company recorded a provision for income taxes of $12.1 million; in 1997, the Company recorded $0.7 million provision for income taxes. The 1996 provision for income taxes primarily relates to $11.3 million of tax expense recognized at PPM Europe in connection with its recapitalization which required the Company to utilize a net operating loss carryforward. The additional $0.8 million provision relates to taxes due on the sale of property in Europe.

Income (Loss) from Discontinued Operations

Income from discontinued operations in the Company's Material Handling Segment ("Clark") was $102.0 million for 1996. The income was primarily due to the gain realized on the Clark Sale of $84.5 million. Gross profit for 1996 (through the date of the Clark Sale) was $46.0 million.

Extraordinary Items

The Company recorded a charge of $2.6 million in 1997 to recognize a loss on the early extinguishment of debt in connection with its debt refinancing in April 1997. Additionally, the Company recorded a charge of $12.2 million to recognize a loss on the early extinguishment of debt in connection with the September 1997 redemption of $83.3 million of the Senior Secured Notes.

1996 Compared with 1995

The table below is a comparison of net sales, gross profit, engineering, selling and administrative expenses, income (loss) from operations, and income (loss) from discontinued operations, by segment, for 1996 and 1995. The 1996 amounts include $30.0 million in special charges comprised of $18.3 million at Terex Lifting ($16.8 gross profit; $1.6 million engineering, selling and administrative expenses), $10.4 million at Terex Earthmoving (gross profit), and $1.2 million General/Corporate (engineering, selling and administrative expenses).


20

                                                   Year Ended December 31,    Increase
                                                  ------------ ------------
                                                      1996        1995       (Decrease)
                                                  ------------ ------------ ------------
                                                          (in millions of dollars)
NET SALES
  Terex Lifting.................................. $    363.9   $   252.3    $   111.6
  Terex Earthmoving..............................      314.9       250.3         64.6
  Eliminations...................................       (0.3)       (1.2)         0.9
                                                  ============ ============ ============
     Total....................................... $    678.5   $   501.4    $   177.1
                                                  ============ ============ ============

GROSS PROFIT
  Terex Lifting.................................. $     38.1   $    35.2    $     2.9
  Terex Earthmoving..............................       31.3        35.9         (4.6)
  Eliminations...................................       (0.2)       (0.7)         0.5
                                                  ============ ============ ============
     Total....................................... $     69.2   $    70.4    $    (1.2)
                                                  ============ ============ ============

ENGINEERING, SELLING AND ADMINISTRATIVE EXPENSES
  Terex Lifting.................................. $     33.3   $    28.0    $     5.3
  Terex Earthmoving..............................       25.7        22.9          2.8
  General/Corporate..............................        5.1         6.7         (1.6)
                                                  ============ ============ ============
     Total....................................... $     64.1   $    57.6    $     6.5
                                                  ============ ============ ============

INCOME (LOSS) FROM OPERATIONS
  Terex Lifting.................................. $      4.8   $     7.2    $    (2.4)
  Terex Earthmoving..............................        5.6        13.0         (7.4)
  General/Corporate..............................       (5.3)       (7.4)         2.1
                                                  ------------ ------------ ------------
     Total....................................... $      5.1   $    12.8    $    (7.7)
                                                  ============ ============ ============

INCOME FROM DISCONTINUED OPERATIONS
                                                  $    102.0   $     4.4    $    97.6
                                                  ============ ============ ============

Net Sales

Sales increased $177.1 million, or approximately 35.3%, to $678.5 million in 1996 from $501.4 million in 1995, reflecting the PPM Acquisition in the second quarter of 1995.

Terex Lifting's sales were $363.9 million for 1996, an increase of $111.6 million, or 44.2%, from $252.3 million in 1995 which did not include PPM prior to the PPM Acquisition. Machine sales increased $94.9 million to $291.8 million in 1996. This increase in sales was due primarily to the inclusion of PPM Europe and Terex Lifting--Conway Operations for all of 1996, as compared to 1995 when the results of these operations were not included prior to May 9, 1995. The increase in Terex Lifting's sales in 1996 as compared to 1995 was also attributable to an increase of $34.3 million in sales at Terex--Waverly Operations as compared to 1995 and, to a lesser extent, to growth in sales at PPM Europe and Terex Lifting--Conway Operations during such period. Parts sales increased $11.4 million to $64.3 million in 1996. Terex Lifting's bookings were $356.1 million for 1996, compared to $236.7 million for 1995, an increase of $119.4 million.

Terex Earthmoving's sales increased $64.6 million in 1996 to $314.9 million. Machines sales increased 36.2% primarily due to increased presence in the Asian market and the United States rental market, and parts sales increased 8.5% in 1996. The sales mix was approximately 29% parts in 1996 compared to 34.6% parts in 1995. Terex Earthmoving's bookings for 1996 were $277.9 million, a decrease of $3.0 million, or 1.1%, from 1995. Backlog decreased to $53.4 million at December 31, 1996 from $88.8 million in 1995 as a result of a large order which was placed late in 1995. However, the average backlog increased slightly to $68.1 million for 1996 as compared to $57.0 million for 1995.


21

Gross Profit

Gross profit for 1996 decreased $1.2 million to $69.2 million. The decline in the gross profit was primarily due to the $16.8 million write down of goodwill and other long lived assets at Terex Lifting and $10.4 million of non-recurring charges recorded at Terex Earthmoving in the fourth quarter of 1996. These charges substantially offset the increased gross profit from increased net sales during 1996 as compared to 1995. Gross profit as a percentage of net sales for 1996 decreased to 10.2% as compared to 14.0% for 1995 as a result of the non-recurring charges. However, excluding these $27.1 million charges in 1996, gross profit as a percentage of sales increased to 14.2% and increased from $70.4 million to $96.3 million.

Terex Lifting's gross profit increased $2.9 million to $38.1 million for 1996, compared to $35.2 million for 1995, reflecting the PPM Acquisition, the effect of cost reduction actions put in place at PPM Europe and Terex Lifting--Conway Operations, and improved performance at Terex Lifting--Waverly Operations. These improvements were substantially offset by an impairment charge which resulted from a detailed analysis of future cash flows from operations primarily at Terex Lifting--Conway Operations facility. Excluding the impairment charge, Terex Lifting's gross profit in 1996 increased $19.7 million as compared to 1995 and the gross profit percentage increased to 15.1% as compared to 14.0% in 1995.

Terex Earthmoving's gross profit decreased $4.6 million to $31.3 million in 1996 compared to $35.9 million for 1995. Excluding the $10.4 million non-recurring charges noted above, Terex Earthmoving's gross profit increased $5.8 million in 1996 as compared to 1995. The $10.4 million non-recurring charges are comprised mainly of $8.6 million at Unit Rig for the reduction in value of the Unit Rig Tulsa facility due to changes in production methods, and $1.9 million of goodwill associated with TEL's acquisition of its UK distributor, Terex (UK) Limited, which was written off and recorded as an impairment charge in 1996. Exclusive of these non-recurring charges, the gross profit percentage in 1996 decreased to 13.2% from 14.3% in 1995 due to an increase in the proportion of machine sales as compared to parts sales. Parts sales have higher margins than machine sales.

Engineering, Selling and Administrative Expenses

Engineering, selling and administrative expenses (which include the Company's research and development expenses) increased to $64.1 million in 1996 from $57.6 million for 1995, reflecting the effects of the PPM Acquisition. However, engineering, selling and administrative expenses as a percentage of net sales decreased to 9.4% for 1996 from 11.5% for 1995. Terex Earthmoving's engineering, selling and administrative expenses increased to $25.7 million for 1996 from $22.9 million for 1995 primarily due to costs associated with a new parts sales office and a new U.K. dealership. Terex Lifting's engineering, selling and administrative expenses increased to $33.3 million for 1996 from $28.0 million for 1995, reflecting the PPM Acquisition and non-recurring charges of $1.6 million. See "Business--Research and Development" for a discussion of the Company's engineering expenses.

Income (Loss) from Operations

Terex Lifting's income from operations of $4.8 million for 1996 decreased by $2.4 million over 1995, primarily due to the impairment charges at the Terex Lifting--Conway Operations facility, which were offset somewhat by the increased net sales and the effect of cost control initiatives implemented at all PPM operations since they were acquired by the Company, and continued strong performance by Terex Lifting--Waverly Operations.

Terex Earthmoving's income from operations decreased by $7.4 million to $5.6 million for 1996 from $13.0 million in 1995, primarily due to the non-recurring charges mentioned above under "Gross Profit." Excluding these charges, income from operations increased to $16.0 million.

On a consolidated basis, the Company had operating income of $5.1 million for 1996, compared to operating income of $12.8 million for 1995, for the reasons mentioned above.

Interest Expense

Net interest expense increased to $43.6 million for 1996 from $38.0 million in 1995 as a result of incremental borrowings associated with the PPM Acquisition.

Other Income (Expense)

The Company realized gains in 1996 of $3.3 million from the sale of excess property principally in Scotland and Italy. During 1996, the Company recorded a provision for income taxes of $12.1 million; in 1995, the Company recorded no


22

provision for income taxes. The 1996 provision for income taxes primarily relates to $11.3 million of tax expense recognized at PPM Europe in connection with its recapitalization which required the Company to utilize a net operating loss carryforward. The additional $0.8 million provision relates to taxes due on the sale of property in Europe.

In 1995, the Company had a gain of $1.0 million from the sale of stock of a former subsidiary and recorded a charge of $0.5 million to recognize the impairment in value of certain properties held for sale.

Income (Loss) from Discontinued Operations

Income from discontinued operations in the Company's Material Handling Segment increased $97.6 million to $102.0 million for 1996 as compared to $4.4 million in 1995. The increased income was primarily due to the gain realized on the Clark Sale of $84.5 million. Gross profit for 1996 (through the date of the Clark Sale) increased $1.2 million to $46.0 million as compared to 1995 even though net sales decreased $124.2 million or 23%. Additionally, in 1995 the Clark Material Handling Segment recorded charges of $6.0 million related to severance costs, exit costs and the impairment in value of certain properties held for sale.

Extraordinary Items

The Company recorded a charge of $7.5 million in 1995 to recognize a loss on the early extinguishment of debt in connection with its debt refinancing in May 1995.

LIQUIDITY AND CAPITAL RESOURCES

The Company's businesses are working capital intensive and require funding for purchases of production and replacement parts inventories, capital expenditures for repair, replacement and upgrading of existing facilities as well as financing of receivables from customers and dealers. The Company has significant debt service requirements.

Debt reduction and an improved capital structure are major focal points for the Company. In this regard, the Company regularly reviews its alternatives to improve its capital structure and to reduce debt through debt refinancings, issuances of equity, asset sales, including the sale of business units, or any combination thereof. As part of its strategy the Company has consummated several transactions over the past 18 months which have strengthened its capital structure and significantly reduced its cost of funds.

On November 27, 1996, the Company completed the Clark Sale for an aggregate cash purchase price of approximately $139.5 million. Upon closing, the Company initially used the proceeds to pay down its then existing domestic credit facility. Then, on December 30, 1996, the Company called all of its issued and outstanding Series A Preferred Stock for redemption on January 29, 1997 (the "Series A Redemption Date"). The Series A Preferred Stock was accreting initially at a rate of 13% per annum, which was to increase to 18% per annum at the end of 1998. All 1,200,000 shares of the Series A Preferred Stock outstanding on the Series A Redemption Date were redeemed at a redemption price of $37.80 per share, or approximately $45.4 million in aggregate.

On July 28, 1997 and August 7, 1997, the Company issued an additional 5,000,000 shares and 700,000 shares, respectively, of its Common Stock in an underwritten public stock offering. The shares were issued at a price to the public of $19.50 per share. The net proceeds received by the Company were $104.6 million. A portion of the proceeds from the stock offering were initially used to reduce borrowings under the Company's then existing domestic revolving credit facility. On September 4, 1997, the Company used a portion of the proceeds from the stock offering to redeem $83.3 million of the Senior Secured Notes. The total funds paid at the redemption were $94.6 million ($83.3 million principal, $7.9 million redemption premium and $3.4 million accrued interest). As a result of the redemption of a portion of the Senior Secured Notes, the annual interest payments on the Senior Secured Notes decreased from $33.1 million to $22.1 million, a savings of $11.0 million per year.

In December 1997, two additional transactions were completed that further improved the Company's capital structure. On December 10, 1997, the Company eliminated all of the issued and outstanding shares of Series A Redeemable Exchangeable Preferred Stock of its subsidiary, Terex Cranes, Inc. (the "Subsidiary Preferred Stock"), by merging Terex Cranes, Inc. with the Company and exchanging the Subsidiary Preferred Stock (originally issued in connection with the PPM Acquisition) into 705,969 shares of Common Stock of the Company. On December 30, 1997, all of the Company's issued and outstanding shares of Series B Cumulative Redeemable Convertible Preferred Stock, which was accreting initially at a rate of 13% per annum, and was to increase to 18% per annum at the end of 1998, were converted by the holder thereof into 87,300 shares of Common Stock of the Company.


23

On March 6, 1998, the Company consummated the New Bank Credit Facility, the refinancing of substantially all of its domestic and foreign revolving credit facilities, and the purchase or defeasance of all of the Company's outstanding Senior Secured Notes. The New Bank Credit Facility consists of the New Revolving Credit Facility aggregating up to $125 million and the Term Loan Facilities providing for loans in an aggregate principal amount of up to approximately $375 million. Borrowings under the Term Loan Facilities were used by the Company to
(i) finance the purchase of the $166.7 million of its then outstanding Senior Secured Notes and pay the premium and accrued interest in connection therewith and (ii) repay in full the outstanding indebtedness and related fees and expenses under certain of the Company's then existing credit facilities. In connection with these actions, the Company will incur an extraordinary loss of $38.4 million in the first quarter of 1998. Borrowings under the Term Loan Facilities will also be used to fund a portion of the aggregate consideration for the acquisition of O&K Mining. The New Revolving Credit Facility, which is currently undrawn, will be used for working capital and general corporate purposes.

On March 24, 1998, the Company entered into a Purchase Agreement to issue and sell $150 million aggregate principal amount of 8.875% Senior Subordinated Notes Due 2008 (the "New Senior Subordinated Notes"). The New Senior Subordinated Notes are being issued and sold pursuant to an exemption from registration under the Securities Act of 1933, as amended, and the closing is expected to occur on March 31, 1998. The New Senior Subordinated Notes are unsecured and repayment is guaranteed on an unsecured basis by certain of the Company's domestic subsidiaries. The proceeds of the issuance and sale of the New Senior Subordinated Notes will be used to fund a portion of the aggregate consideration for the acquisition of O&K Mining and for general corporate purposes.

Net cash of $0.3 million was used by operating activities during 1997. $85.4 million was provided by operating results plus depreciation and amortization, and approximately $9.8 million was invested in working capital during the period to support the increase in business activity at Terex Lifting and TEL. The remaining effect on cash from operations for the period was due to the costs of financing. Net cash used in investing activities was $98.6 million during 1997, primarily related to the purchase of the Simon Access Companies and Baraga Products, Inc. Net cash provided by financing activities was $64.2 million during 1997. Cash was provided by the net proceeds from the public offering of common stock and additional borrowings primarily related to the purchase of the Simon Access Companies. Cash was used for the redemption of the Series A Preferred Stock and the redemption of a portion of the Senior Secured Notes. Cash and cash equivalents totaled $28.7 million at December 31, 1997.

Factors Affecting Future Liquidity

The Company's debt service obligations for 1998 include quarterly interest and principal payments on the Term Loan Facilities and variable periodic payments on the New Revolving Credit Facility and will include semi-annual interest payments due on the Senior Subordinated Notes issued in connection with the O&K Mining acquisition. Management believes that with cash generated from operations, together with borrowings under the New Revolving Credit Facility (which is currently undrawn), the Company has adequate liquidity to meet the Company's operating and debt service requirements for the foreseeable future.

The New Bank Credit Facility places certain limits on the Company's ability, among other things, to incur indebtedness and liens, pay dividends and make other payments, consummate mergers and asset acquisitions and sales, enter into related party transactions and make capital expenditures and investments. The New Bank Credit Facility also contains certain financial and operating covenants, including a maximum leverage ratio, a minimum interest coverage ratio and a minimum fixed charge coverage ratio.

Foreign Currencies and Interest Rate Risk

The Company's products are sold in over 50 countries around the world and, accordingly, revenues of the Company are generated in foreign currencies, while the costs associated with those revenues are only partly incurred in the same currencies. The major foreign currencies, among others, in which the Company does business are the Pound Sterling and the French Franc. Following consummation of the O&K Mining acquisition, the Company will also conduct significant business in Deutsche Marks. The Company may, from time to time, hedge specifically identified committed cash flows in foreign currencies using forward currency sale or purchase contracts. Such foreign currency contracts have not historically been material in amount.

Because certain of the Company's obligations, including indebtedness under the New Bank Credit Facility, will bear interest at floating rates, an increase in interest rates could adversely affect, among other things, the ability of the Company to meet its debt service obligations. The Company has entered into interest protection arrangements with respect to approximately $220 million of the principal amount of its indebtedness under the New Bank Credit Facility fixing interest at various rates between 6.6% and 8.3%.

Contingencies and Uncertainties

The Internal Revenue Service (the "IRS") is currently examining the Company's Federal tax returns for the years 1987 through 1989. In December 1994, the Company received an examination report from the IRS proposing a substantial tax deficiency. The examination report raised a variety of issues, including the Company's substantiation for certain deductions taken during this period, the Company's utilization of certain net operating loss carryovers ("NOLs") and the availability of such NOLs to offset future taxable income. The Company filed an administrative appeal to the examination report in April 1995. In June 1996, the Company was advised that the matter was being referred back to the audit division of the IRS. The IRS is currently reviewing information provided by the Company. The ultimate outcome of this matter is subject to the resolution of significant legal and factual issues. Given the stage of the audit, and the


24

number and complexity of the legal and administrative proceedings involved in reaching a resolution of this matter, it is unlikely that the ultimate outcome, if unfavorable to the Company, will be determined for at least several years. If the IRS were to prevail on all the issues raised, the amount of the tax assessment would be approximately $56 million plus penalties of approximately $12.8 million and interest through December 31, 1997 of approximately $94.5 million. The penalties asserted by the IRS are calculated as 20% of the amount of the tax assessed for fiscal year 1987 and 25% of the tax assessed for each of fiscal years 1988 and 1989. Interest on the amount of tax assessed and penalties is currently accruing at a rate of 11% per annum. The applicable annual rate of interest has historically varied from 7% to 12%.

If the Company were required to pay a significant portion of the assessment with related interest and penalties, such payment might exceed the Company's resources. In such event, the viability of the Company would be placed in jeopardy, and it is uncertain that the Company could, through financing or otherwise, obtain the funds required to pay such assessment, interest, and applicable penalties. Management believes, however, that the Company will be able to provide adequate documentation for a substantial portion of the deductions questioned by the IRS and that there is substantial support for the Company's past and future utilization of the NOLs. Based upon consultation with its tax advisors, management believes that the Company's position will prevail on the most significant issues. Accordingly, management believes that the outcome of the examination will not have a material adverse effect on its financial condition or results of operations, but may result in some reduction in the amount of the NOLs available to the Company. No additional accruals have been made for any amounts which might be due as a result of this matter because the possible loss ranges from zero to $56 million plus interest and penalties, and the ultimate outcome cannot be determined or estimated at this time. No reserves are being expensed to cover the potential liability.

As of December 31, 1997, the Company had federal NOLs of approximately $290.5 million. The Company would be subject to an annual limitation (described below) on its ability to utilize its NOLs to offset future taxable income if the Company undergoes an ownership change (an "Ownership Change") within the meaning of Section 382 of the Internal Revenue Code of 1986, as amended ("Section 382"). Generally, an Ownership Change is deemed to occur if the aggregate cumulative increase in the percentage ownership of the capital stock of the Company (which generally includes for this purpose, but is not limited to, the common stock and certain options and warrants) by persons owning 5% or more of such capital stock and certain public groups (within the meaning of Section 382) is more than 50 percentage points in any three-year testing period. In the event of an Ownership Change, the Company's utilization of its NOLs would be limited to an annual amount (without extending the applicable 15-year carryforward period for NOLs) equal to the product of the fair market value of the Company immediately before such Ownership Change (as determined pursuant to Section 382, which may provide for certain reductions in value) multiplied by the long-term tax-exempt rate, which is an interest-indexed rate that is published monthly by the IRS and which is approximately 5.23% as of the date of this Annual Report. NOLs arising after the date that any Ownership Change occurs will be unaffected by such Ownership Change.

It is impossible for the Company to ensure that an Ownership Change will not occur in the future, in part because the Company has no ability to restrict the acquisition or disposition of the Company's capital stock by persons whose ownership could cause an Ownership Change. In addition, the Company may in the future take certain actions which, alone or coupled with other events, could give rise to an Ownership Change, if in the exercise of the business judgment of the Company such actions (which may include future issuances of equity securities) are necessary or desirable. If an Ownership Change were to occur, the NOL annual limitation under Section 382 could substantially reduce the Company's future after-tax earnings and cash flow.

In March 1994, the Securities and Exchange Commission (the "Commission") initiated a private investigation, which included the Company and certain of its present and former officers and affiliates, to determine whether violations of certain aspects of the Federal securities laws had occurred. To date, the


25

inquiry of the Commission has primarily focused on accounting treatment and reporting matters relating to various transactions which took place in the late 1980s and early 1990s. The Company is cooperating with the Commission in its investigation. The Company has recently been advised by the Staff of the Commission that it has been authorized by the Commission to institute an administrative proceeding against the Company and certain of its present and former officers and affiliates. Based on information currently available to the Company, it is the Company's understanding that if a proceeding were to be brought, the Staff intends to seek an order to cease and desist violations of the Federal securities laws (without monetary penalties) based on claims relating to accounting treatment and reporting matters with respect to the Company's financial statements for the years ended December 31, 1990 and 1991, as well as the Company's Proxy Statement covering the 1992 fiscal year. It is not possible at this time to determine the outcome of the Commission's investigation.

During 1997, in connection with the Commission's investigation, the Company incurred $0.2 million of legal fees and expenses on behalf of the Company, directors and executives of the Company, and KCS. In general, under the Company's by-laws, the Company is obligated to indemnify officers and directors for all liabilities arising in the course of their duties on behalf of the Company. To date, no officer or director has had legal representation separate from the Company's legal representation, and no allocation of the legal fees for such representation has been made.

The Company is subject to a number of contingencies and uncertainties including product liability claims, self-insurance obligations, tax examinations and guarantees. Many of the exposures are unasserted or proceedings are at a preliminary stage, and it is not presently possible to estimate the amount or timing of any cost to the Company. However, management does not believe that these contingencies and uncertainties will, in the aggregate, have a material adverse effect on the Company. When it is probable that a loss has been incurred and possible to make reasonable estimates of the Company's liability with respect to such matters, a provision is recorded for the amount of such estimate or for the minimum amount of a range of estimates when it is not possible to estimate the amount within the range that is most likely to occur.

The Company generates hazardous and non-hazardous wastes in the normal course of its manufacturing operations. As a result, the Company is subject to a wide range of federal, state, local and foreign environmental laws and regulations, including CERCLA, that (i) govern activities or operations that may have adverse environmental effects, such as discharges to air and water, as well as handling and disposal practices for hazardous and non-hazardous wastes, and (ii) impose liability for the costs of cleaning up, and certain damages resulting from, sites of past spills, disposals or other releases of hazardous substances. Compliance with such laws and regulations has, and will, require expenditures by the Company on a continuing basis. The Company does not expect that these expenditures will have a material adverse effect on its financial condition or results of operations.

Forward-Looking Information

Certain information in this Annual Report includes forward looking statements regarding future events or the future financial performance of the Company that involve certain contingencies and uncertainties, including those discussed above in the section entitled Contingencies and Uncertainties. In addition, when included in this Annual Report or in documents incorporated herein by reference, the words "may," "expects," "intends," "anticipates," "plans," "projects," "estimates" and the negatives thereof and analogous or similar expressions are intended to identify forward-looking statements. Such statements are inherently subject to a variety of risks and uncertainties that could cause actual results to differ materially from those reflected in such forward-looking statements. Such risks and uncertainties, many of which are beyond the Company's control, include, among others, the sensitivity of construction and mining activity to interest rates, government spending and general economic conditions; the success of the integration of acquired businesses; the retention of key management; foreign currency fluctuations; pricing, product initiatives and other actions taken by competitors; the effects of changes in laws and regulations; continued use of net operating loss carryovers and other factors. Actual events or the actual future results of the Company may differ materially from any forward looking statement due to these and other risks, uncertainties and significant factors. The forward-looking statements contained herein speak only as of the date of this Annual Report and the forward-looking statements contained in documents incorporated herein by reference speak only as of the date of the respective documents. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained or incorporated by reference in this Annual Report to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable.


26

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Unaudited Quarterly Financial Data

Summarized  quarterly  financial  data for 1997  and  1996  are as  follows  (in
millions, except per share amounts):

                                                                 1997                                  1996
                                               ------------------------------------- -------------------------------------
                                                 Fourth    Third    Second   First     Fourth   Third     Second   First
                                               ------------------------------------- -------------------------------------
Net sales.................................... $  219.7  $  214.1  $ 232.2  $ 176.3   $ 156.8  $ 165.7   $ 182.8  $ 173.2
Gross profit.................................     36.8      37.0     38.3     27.5      (4.9)    23.7      27.0     23.4
Income (loss) from continuing operations
  before extraordinary items.................     10.0       8.7      7.7      3.9     (46.5)    (3.4)     (1.7)    (2.7)
Income (loss) from discontinued operations...    ---       ---      ---      ---        87.8      4.8       6.2      3.2
Income (loss) before  extraordinary items....     10.0       8.7      7.7      3.9      41.3      1.4       4.5      0.5
Net income (loss)............................     10.0      (3.5)     5.1      3.9      41.3      1.4       4.5      0.5
Income (loss) applicable to common stock.....      6.4      (3.9)     4.7      3.5      24.4     (0.9)      2.6     (1.4)
Per share:
  Basic
    Income (loss) before extraordinary items. $    0.32 $    0.47  $  0.35 $  0.26   $   1.85 $  (0.07) $   0.19 $  (0.13)
    Net income (loss)........................      0.32     (0.21)    0.33    0.26       1.85    (0.07)     0.19    (0.13)
  Diluted
    Income (loss) before extraordinary items. $    0.30 $    0.43  $  0.48 $  0.24   $   1.71 $  (0.06) $   0.18 $  (0.13)
    Net income (loss)........................      0.30     (0.20)    0.31    0.24       1.71    (0.06)     0.18    (0.13)

The accompanying unaudited quarterly financial data of the Company have been prepared in accordance with generally accepted accounting principles for interim financial information and with Item 302 of Regulation S-K. In the opinion of management, all adjustments considered necessary for a fair presentation have been made and were of a normal recurring nature except for those discussed below.

The results of the Company's Material Handling Segment have been accounted for as discontinued operations for all periods presented. See Item 1. - Business.

In 1997, the Company recognized an extraordinary loss on the early extinguishment of debt -- $2.6 million in connection with the refinancing of its then existing revolving credit in the second quarter and $12.2 million in connection with the redemption of $83.3 million of its Senior Secured Notes in the third quarter.

In 1996, the Company recognized a gain of $2.4 million in the first quarter from the sale of excess property in Scotland. In 1996 Income (loss) from discontinued operations includes the gain, net of income taxes, of $84.5 million on the sale of CMHC in the fourth quarter. In the fourth quarter of 1996 the Company recorded special charges of $45.1 million, including impairment charges of $18.7 million (see Note D -- "Impairment of Long Lived Assets and Other Special Charges"), a reduction in the value of certain assets of $8.6 million, $2.0 million related to pre-purchase tax contingencies at PPM, $3.0 million of other one time accruals, and income tax expense of $12.1 million (see Note I -- "Income Taxes"). Net income (loss) has been reduced by Preferred Stock accretion for purposes of calculating earnings per share amounts. See Note J -- "Preferred Stock" in the Notes to the Company's Consolidated Financial Statements. In the fourth quarter of 1996 preferred stock accretion was $16.9 million, which included $14.5 of additional accretion due to the redemption of the Series A Preferred Stock on January 29, 1997.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.


27

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

ITEM 11. EXECUTIVE COMPENSATION

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by Items 10 through 13 is incorporated by reference to the definitive Terex Corporation Proxy Statement to be filed with the Securities and Exchange Commission not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) (1) and (2) Financial Statements and Financial Statement Schedules.

See "Index to Consolidated Financial Statements and Financial Statement Schedule" on Page F-1.

(3) Exhibits

See "Index to Exhibits" on Page E-1.

(b) Reports on Form 8-K

A report on form 8-K dated December 8, 1997 was filed December 8, 1997 reporting that the Company had entered into an underwriting agreement with Credit Suisse First Boston Corporation (the "Underwriter") and Legris Industries S.A. and Potain S.A. (collectively, the "Selling Shareholders"), providing for the purchase by the Underwriter from the Selling Stockholders of 705,969 shares of the Company's Common Stock.

A report on Form 8-K dated December 15, 1997 was filed December 29, 1997 reporting the Company's announcement of an agreement to acquire the shares of O&K Mining GmbH.


28

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

TEREX CORPORATION

By: /s/ Ronald M. DeFeo                                     March 27, 1998
    ----------------------------------
     Ronald M. DeFeo,
     Chairman, Chief Executive Officer
     and Director

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

         Name                         Title                            Date

/s/  Ronald M. DeFeo       Chairman, Chief Executive Officer,     March 27, 1998
----------------------       and Director
     Ronald M. DeFeo       (Principal Executive Officer)

/s/  David J. Langevin     Executive Vice President               March 27, 1998
----------------------     (Acting Principal Financial Officer)
     David J. Langevin

/s/  Joseph F. Apuzzo      Vice President Finance and Controller  March 27, 1998
----------------------     (Principal Accounting Officer)
     Joseph F. Apuzzo

/s/  G. Chris Andersen     Director                               March 27, 1998
----------------------
     G. Chris Andersen

/s/  William H. Fike       Director                               March 27, 1998
----------------------
     William H. Fike

/s/  Bruce I. Raben        Director                               March 27, 1998
----------------------
     Bruce I. Raben

/s/  Marvin B. Rosenberg   Director                               March 27, 1998
------------------------
     Marvin B. Rosenberg

/s/  David A. Sachs        Director                               March 27, 1998
------------------------
     David A. Sachs

/s/  Adam E. Wolf          Director                               March 27, 1998
------------------------
     Adam E. Wolf


29

THIS PAGE IS INTENTIONALLY BLANK

NEXT PAGE IS NUMBERED "F-1"


F-1

TEREX CORPORATION AND SUBSIDIARIES

Index to Consolidated Financial Statements and Financial Statement Schedules

Page
TEREX CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 1997
AND 1996 AND FOR EACH OF THE THREE YEARS
IN THE PERIOD ENDED DECEMBER 31, 1997

Report of independent accountants.......................................F - 2
Consolidated statement of operations ...................................F - 3
Consolidated balance sheet..............................................F - 4
Consolidated statement of changes in stockholders' equity (deficit).....F - 5
Consolidated statement of cash flows....................................F - 6
Notes to consolidated financial statements..............................F - 7

FINANCIAL STATEMENT SCHEDULES

Schedule II -- Valuation and Qualifying Accounts and Reserves...........F - 28 Schedule IV -- Indebtedness of and to Related Parties -- Not Current....F - 29

All other schedules for which provision is made in the applicable regulations of the Securities and Exchange Commission are not required under the related instructions or are not applicable, and therefore have been omitted.


F-2

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors
and Stockholders of Terex Corporation

In our opinion, the Terex Corporation consolidated financial statements listed in the accompanying index on page F-1 present fairly, in all material respects, the financial position of Terex Corporation and its subsidiaries at December 31, 1997 and 1996, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1997, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.

PRICE WATERHOUSE LLP

Stamford, Connecticut
March 6, 1998


F-3
                       TEREX CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF OPERATIONS
                    (in millions except per share amounts)

                                                                Year Ended December 31,
                                                         ------------------------------------
                                                             1997        1996        1995
                                                         ----------- ----------- ------------
NET SALES............................................... $   842.3   $    678.5  $   501.4

COST OF GOODS SOLD......................................     702.7        609.3      431.0
                                                         ----------- ----------- ------------

   Gross Profit.........................................     139.6         69.2       70.4

ENGINEERING, SELLING AND ADMINISTRATIVE EXPENSES........      68.5         64.1       57.6
                                                         ----------- ----------- ------------

   Income from operations...............................      71.1          5.1       12.8

OTHER INCOME (EXPENSE)
   Interest income......................................       0.9          1.2        0.7
   Interest expense.....................................     (39.4)       (44.8)     (38.7)
   Amortization of debt issuance costs..................      (2.6)        (2.6)      (2.3)
   Other income (expense) - net.........................       1.0         (1.1)      (4.6)
                                                         ----------- ----------- ------------

  INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE
     INCOME TAXES AND EXTRAORDINARY ITEMS...............      31.0        (42.2)     (32.1)

PROVISION FOR INCOME TAXES..............................      (0.7)       (12.1)     ---
                                                         ----------- ----------- ------------

  INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE
   EXTRAORDINARY ITEMS..................................      30.3        (54.3)     (32.1)

INCOME FROM DISCONTINUED OPERATIONS
  (net of tax expense of  $2.6, in 1996.................     ---          102.0        4.4
                                                         ----------- ----------- ------------

  INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS..............      30.3         47.7      (27.7)

EXTRAORDINARY LOSS ON RETIREMENT OF DEBT................     (14.8)       ---         (7.5)
                                                         ----------- ----------- ------------

   NET INCOME (LOSS)....................................      15.5         47.7      (35.2)

LESS PREFERRED STOCK ACCRETION..........................      (4.8)       (22.9)      (7.3)
                                                         ----------- ----------- ------------

   INCOME (LOSS) APPLICABLE TO COMMON STOCK............. $    10.7   $     24.8  $   (42.5)
                                                         =========== =========== ============

PER COMMON AND COMMON EQUIVALENT SHARE:
  Basic
      Income (loss) from continuing operations.......... $   1.57    $   (6.54)  $    (3.79)
      Income from discontinued operations...............   ---            8.64         0.42
                                                         ----------- ----------- ------------
         Income (loss) before extraordinary items.......     1.57         2.10        (3.37)
      Extraordinary loss on retirement of debt..........    (0.91)        ---         (0.72)
                                                         =========== =========== ============

     Net income (loss).................................. $   0.66    $    2.10   $   (4.09)
                                                         =========== =========== ============
  Diluted
      Income (loss) from continuing operations.......... $   1.44    $   (5.81)  $    (3.79)
      Income from discontinued operations...............   ---            7.67         0.42
                                                         ---------- ------------ -----------
          Income (loss) before extraordinary items......     1.44         1.86        (3.37)
      Extraordinary loss on retirement of debt..........    (0.84)        ---         (0.72)
                                                         ----------- ----------- ------------

      Net income (loss)................................. $   0.60    $    1.86   $    (4.09)
                                                         =========== =========== ============

AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT SHARES
     OUTSTANDING IN PER SHARE CALCULATION:
        Basic...........................................      16.2         11.8       10.4
        Diluted.........................................      17.7         13.3       10.4

The accompanying notes are an integral part of these financial statements.


F-4

                       TEREX CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET

                         (in millions, except par value)

                                                                                                   December 31,
                                                                                            ------------------------
                                                                                                1997        1996
                                                                                            ----------- ------------
CURRENT ASSETS
   Cash and cash equivalents............................................................. $     28.7    $     72.0
   Trade receivables (less allowance of $4.5 in 1997 and $7.0 in 1996)...................      139.3         110.3
   Net inventories.......................................................................      232.1         190.6
   Other current assets..................................................................       26.4          17.3
                                                                                          ------------- -----------
                      Total Current Assets...............................................      426.5         390.2

LONG-TERM ASSETS
   Property, plant and equipment - net...................................................       47.8          31.7
   Goodwill - net........................................................................       88.4          32.4
   Other assets - net....................................................................       25.8          16.9
                                                                                          ------------- -----------

TOTAL ASSETS............................................................................. $    588.5    $    471.2
                                                                                          ============= ===========

CURRENT LIABILITIES
   Notes payable and current portion of long-term debt................................... $     26.6    $     19.2
   Trade accounts payable................................................................      138.1         104.4
   Accrued compensation and benefits.....................................................       16.4          15.8
   Accrued warranties and product liability..............................................       25.3          19.4
   Other current liabilities.............................................................       29.7          36.2
                                                                                          ------------- -----------
                     Total Current Liabilities...........................................      236.1         195.0

NON CURRENT LIABILITIES
   Long-term debt, less current portion..................................................      273.5         262.1
   Other.................................................................................       18.7          29.6

MINORITY INTEREST, INCLUDING REDEEMABLE PREFERRED STOCK OF A SUBSIDIARY
   Liquidation preference $0 in 1997 and $21.4 in 1996...................................        0.6          10.0

REDEEMABLE CONVERTIBLE PREFERRED STOCK
   Liquidation preference $0 in 1997 and $46.2 in 1996...................................      ---            46.2

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY (DEFICIT)
   Warrants to purchase common stock.....................................................        0.8           3.2
   Equity rights..........................................................................       3.2        ---
   Common Stock, $0.01 par value --
      authorized 30.0 shares; issued and outstanding 20.5 in 1997 and 13.2 in 1996.......        0.2           0.1
   Additional paid-in capital............................................................      178.7          55.8
   Accumulated deficit...................................................................     (115.4)       (126.1)
   Pension liability adjustment..........................................................       (1.8)         (2.0)
   Cumulative translation adjustment.....................................................       (6.1)         (2.7)
                                                                                          ------------- -----------
                   Total Stockholders' Equity (Deficit)..................................       59.6         (71.7)
                                                                                          ------------- -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)..................................... $    588.5    $    471.2
                                                                                          ============= ===========

The accompanying notes are an integral part of these financial statements.


F-5

                       TEREX CORPORATION AND SUBSIDIARIES
       CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

                                  (in millions)


                                                                                            Unrealized
                                                           Additional  Accumu-    Pension    Holding  Cumulative
                                        Equity   Common     Paid-in      lated    Liability  Gain      Translation
                            Warrants    Rights    Stock     Capital    Deficit  Adjustment   (Loss)   Adjustment   Total
                           ---------- --------- --------- ----------- --------- ----------- --------- ----------- --------
BALANCE AT DECEMBER 31,
   1994....................$    17.6  $   ---    $     0.1  $    40.1 $   (108.4)$    (1.8)$     1.8 $    (5.1) $   (55.7)
  Conversion of Warrants...     (0.4)     ---        ---          0.4      ---       ---       ---       ---        ---
  Net loss.................    ---        ---        ---        ---        (35.2)    ---       ---       ---        (35.2)
  Accretion of carrying
   value of redeemable
   preferred stock to
   redemption value........    ---        ---        ---        ---        (7.3)     ---       ---       ---         (7.3)
  Pension liability
   adjustment..............    ---        ---        ---        ---        ---        (0.9)    ---       ---         (0.9)
  Unrealized holding loss
   on equity securities....    ---        ---        ---        ---        ---       ---        (0.8)    ---         (0.8)
  Translation adjustment...    ---        ---        ---        ---        ---       ---       ---         3.0        3.0
                           ---------- ---------- ---------- --------- ---------- --------- ---------- ---------- ---------

BALANCE AT DECEMBER 31,
   1995....................     17.2      ---          0.1       40.5    (150.9)      (2.7)      1.0      (2.1)     (96.9)
  Conversion of Warrants...    (14.0)     ---        ---         14.0      ---       ---       ---       ---        ---
  Issuance of common stock.    ---        ---        ---          1.3      ---       ---       ---       ---          1.3
  Net income...............    ---        ---        ---        ---        47.7      ---       ---       ---         47.7
  Accretion of carrying
   value of redeemable
   preferred stock to          ---        ---        ---        ---        (22.9)    ---       ---       ---        (22.9)
   redemption value........
  Pension liability            ---        ---        ---        ---        ---         0.7     ---       ---          0.7
   adjustment..............
  Unrealized holding loss
   on equity securities....    ---        ---        ---        ---        ---       ---        (1.0)    ---         (1.0)
  Translation adjustment...    ---        ---        ---        ---        ---       ---       ---        (0.6)      (0.6)
                           ---------- ---------- ---------- ---------- --------- --------- ---------- ---------- ---------

BALANCE AT DECEMBER 31,
   1996....................      3.2      ---          0.1       55.8     (126.1)     (2.0)    ---        (2.7)     (71.7)
  Conversion of Warrants...     (2.4)     ---        ---          2.4      ---       ---       ---       ---        ---
  Issuance of Common Stock.    ---        ---          0.1      106.1      ---       ---       ---       ---        106.2
  Net income...............    ---        ---        ---        ---         15.5     ---       ---       ---         15.5
  Accretion of carrying
   value of redeemable
   preferred stock to
   redemption value........    ---        ---        ---        ---         (4.8)    ---       ---       ---         (4.8)
  Reclassification of
   equity rights from
   non-current liabilities.    ---          3.2      ---        ---        ---       ---       ---       ---          3.2
  Exchange of Preferred
   Stock of a subsidiary
   for common stock........    ---        ---        ---         13.4      ---       ---       ---       ---         13.4
  Conversion of Series B
   preferred stock.........    ---        ---        ---          1.0      ---       ---       ---       ---          1.0
  Pension liability
   adjustment..............    ---        ---        ---        ---        ---         0.2     ---       ---          0.2
  Translation adjustment...    ---        ---        ---        ---        ---       ---       ---         3.4       (3.4)
                           ---------- ---------- ---------- ----------- --------  ---------- --------- ---------- --------
BALANCE AT DECEMBER 31,
   1997....................$     0.8  $     3.2  $     0.2  $   178.7 $  (115.4) $   (1.8) $   ---   $    (6.1)  $    59.6
                           ========== ========== ========== ========== ========= ========= ========= =========== =========

The accompanying notes are an integral part of these financial statements.


F-6

                       TEREX CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                  (in millions)

                                                                              Year Ended December 31,
                                                                    ------------------------------------------
                                                                        1997            1996          1995
                                                                    ------------- ------------- --------------

OPERATING ACTIVITIES
Net Income (Loss)...................................................$   15.5      $     47.7    $    (35.2)
Adjustments to reconcile net income (loss) to cash used
  in operating activities:
   Depreciation ....................................................     8.2             7.0           7.4
   Amortization ....................................................     6.1             6.7           5.5
   Extraordinary loss on retirement of debt.........................    14.8           ---             7.5
   Gain on sale of discontinued operations..........................   ---             (84.5)        ---
   Impairment charges and asset writedowns..........................   ---              33.8         ---
   Deferred taxes...................................................   ---              11.3         ---
   Other............................................................     0.1            (2.9)         (0.9)
   Changes in operating assets and liabilities
     (net of effects of acquisitions):
       Trade receivables............................................    (4.8)          (23.7)          7.0
       Net inventories..............................................   (11.5)          (12.7)         (7.9)
       Net assets of discontinued operations........................   ---              (5.4)          2.0
       Trade accounts payable.......................................     6.5             4.9          (2.3)
       Accrued compensation and benefits............................    (2.6)            3.3           5.6
       Other, net...................................................   (32.6)           (3.1)        (17.3)
                                                                    ------------- ------------- -------------
         Net cash used in operating activities......................    (0.3)          (17.6)        (28.6)
                                                                    ------------- ------------- -------------

INVESTING ACTIVITIES
   Net proceeds from sale of discontinued operations ...............   ---             137.2         ---
   Acquisition of businesses, net of cash acquired..................   (97.2)          ---           (92.4)
   Capital expenditures.............................................    (9.9)           (8.1)         (5.2)
   Proceeds from sale of excess assets..............................     8.5             6.5           3.3
   Other............................................................   ---               0.1           0.2
                                                                    ------------- ------------- -------------
         Net cash provided by (used in) investing activities........   (98.6)          135.7         (94.1)
                                                                    ------------- ------------- -------------

FINANCING ACTIVITIES
   Redemption of preferred stock....................................   (45.4)          ---           ---
   Issuance of common stock.........................................   104.6           ---           ---
   Net borrowings (repayments) under revolving line of credit
     agreements.....................................................    99.7           (55.0)         35.9
   Principal repayments of long-term debt...........................   (83.7)           (1.0)       (153.9)
   Proceeds from issuance of long-term debt, net of issuance costs..   ---             ---           239.8
   Other............................................................   (11.0)            5.6         ---
                                                                    ------------- ------------- -------------
         Net cash provided by (used in) financing activities........    64.2           (50.4)        121.8
                                                                    ------------- ------------- -------------

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS........    (8.6)           (2.7)         (0.3)
                                                                    ------------- ------------- -------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS................   (43.3)           65.0          (1.2)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD....................    72.0             7.0           8.2
                                                                    ============= ============= =============

CASH AND CASH EQUIVALENTS AT END OF PERIOD..........................$   28.7      $     72.0    $      7.0
                                                                    ============= ============= =============

The accompanying notes are an integral part of these financial statements.


F-7

TEREX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1997
(dollar amounts in millions, unless otherwise noted, except per share amounts)

NOTE A -- SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation. As set forth in Note B below, the Company sold its Clark Material Handling business on November 27, 1996. The sale resulted in a gain of $84.5. The Clark Material Handling business is accounted for as a discontinued operation in the consolidated statement of operations for the years ended December 31, 1996 and 1995.

Generally accepted accounting principles permit, but do not require, the allocation of interest expense between continuing and discontinued operations. Because the methods allowed under generally accepted accounting principles for calculating interest expense to be allocated to discontinued operations are not necessarily indicative of the use of proceeds from the sale of the Clark Material Handling business by the Company, and the effect on interest expense of the continuing operations of the Company, the Company has elected not to allocate interest expense to discontinued operations. The results of this election is that loss from continuing operations includes substantially all of the interest expense of the Company, and income from discontinued operations does not include any material interest expense.

Principles of Consolidation. The Consolidated Financial Statements include the accounts of Terex Corporation and its majority owned subsidiaries ("Terex" or the "Company"). All material intercompany balances, transactions and profits have been eliminated. The equity method is used to account for investments in affiliates in which the Company has an ownership interest between 20% and 50%. Investments in entities in which the Company has an ownership interest of less than 20% are accounted for on the cost method or at fair value in accordance with Statement of Financial Accounting Standards ("SFAS") No. 115 "Accounting for Certain Investments in Debt and Equity Securities."

Use of Estimates. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents. Cash equivalents consist of highly liquid investments with original maturities of three months or less. The carrying amount of cash and cash equivalents approximates their fair value.

Inventories. Inventories are stated at the lower of cost or market value. Cost is determined by the first-in, first-out ("FIFO") method.

Debt Issuance Costs. Debt issuance costs incurred in securing the Company's financing arrangements are capitalized and amortized over the term of the associated debt. Capitalized debt issuance costs related to debt that is retired early are charged to expense at the time of retirement. Debt issuance costs before amortization totaled $12.6 and $16.9 at December 31, 1997 and 1996, respectively. During 1997, 1996 and 1995, the Company amortized $2.6, $2.6 and $2.3, respectively, of capitalized debt issuance costs; in addition, $4.1 and $7.5 of such costs were charged to extraordinary loss on retirement of debt in 1997 and 1995, respectively.

Intangible Assets. Intangible assets include purchased patents and trademarks. Costs allocated to patents, trademarks and other specifically identifiable assets arising from business combinations are amortized on a straight-line basis over the respective estimated useful lives not exceeding seven years.

Goodwill. Goodwill, representing the difference between the total purchase price and the fair value of assets (tangible and intangible) and liabilities at the date of acquisition, is being amortized on a straight-line basis over between fifteen and forty years. Accumulated amortization is $8.9 and $5.6 at December 31, 1997 and 1996, respectively.

Property, Plant and Equipment. Property, plant and equipment are stated at cost. Expenditures for major renewals and improvements are capitalized while expenditures for maintenance and repairs not expected to extend the life of an asset beyond its normal useful life are charged to expense when incurred. Plant and equipment are depreciated over the estimated useful lives of the assets


F-8

under the straight-line method of depreciation for financial reporting purposes and both straight-line and other methods for tax purposes.

Impairment of Long Lived Assets. The Company's policy is to assess the realizability of its long lived assets and to evaluate such assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets (or group of assets) may not be recoverable. Impairment is determined to exist if the estimated future undiscounted cash flows is less than its carrying value. The amount of any impairment then recognized would be calculated as the difference between estimated future discounted cash flows and the carrying value of the asset. (See Note D -- "Impairment of Long Lived Assets and Other Special Charges.")

Revenue Recognition. Revenue and costs are generally recorded when products are shipped and invoiced to either independently owned and operated dealers or to customers. Certain new units may be invoiced prior to the time customers take physical possession. Revenue is recognized in such cases only when the customer has a fixed commitment to purchase the units, the units have been completed, tested and made available to the customer for pickup or delivery, and the customer has requested that the Company hold the units for pickup or delivery at a time specified by the customer in the sales documents. In such cases, the units are invoiced under the Company's customary billing terms, title to the units and risks of ownership pass to the customer upon invoicing, the units are segregated from the Company's inventory and identified as belonging to the customer and the Company has no further obligations under the order.

Accrued Warranties and Product Liability. The Company records accruals for potential warranty and product liability claims based on the Company's claim experience. Warranty costs are accrued at the time revenue is recognized. The Company provides self-insurance accruals for estimated product liability experience on known claims and for claims anticipated to have been incurred which have not yet been reported. The Company's product liability accruals are presented on a gross settlement basis.

Non Pension Postretirement Benefits. The Company provides postretirement benefits to certain former salaried and hourly employees and certain hourly employees covered by bargaining unit contracts that provide such benefits and has elected the delayed recognition method of adoption of the new standard related to the benefits. (See Note L -- "Retirement Plans.")

Foreign Currency Translation. Assets and liabilities of the Company's international operations are translated at year-end exchange rates. Income and expenses are translated at average exchange rates prevailing during the year. For operations whose functional currency is the local currency, translation adjustments are accumulated in the Cumulative Translation Adjustment component of Stockholders' Equity (Deficit). Gains or losses resulting from foreign currency transactions are included in Other income (expense) -- net.

Foreign Exchange Contracts. The Company uses foreign exchange contracts to hedge recorded balance sheet amounts related to certain international operations and firm commitments that create currency exposures. The Company does not enter into speculative contracts. Gains and losses on hedges of assets and liabilities are recognized in income as offsets to the gains and losses from the underlying hedged amounts. Gains and losses on hedges of firm commitments are recorded on the basis of the underlying transaction. At December 31, 1997 and 1996 the Company had foreign exchange contracts, which were hedges of firm commitments, totaling $13.8 and $29.4, respectively, fair value of which approximates their carrying value.

Environmental Policies. Environmental expenditures that relate to current operations are either expensed or capitalized depending on the nature of the expenditure. Expenditures relating to conditions caused by past operations that do not contribute to current or future revenue generation are expensed. Liabilities are recorded when environmental assessments and/or remedial actions are probable, and the costs can be reasonably estimated. Such amounts were not material at December 31, 1997 and 1996.

Research and Development Costs. Research and development costs are expensed as incurred. Such costs incurred in the development of new products or significant improvements to existing products are included in Engineering, Selling and Administrative Expenses.

Income Taxes. The Company records deferred tax assets and liabilities based upon the difference between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. The Company records a valuation allowance for deferred tax assets if realization of such assets is dependent on future taxable income. (See Note I -- "Income Taxes.")


F-9

Earnings Per Share. Effective with the fourth quarter of 1997, Terex implemented SFAS No. 128 "Earnings per Share", which establishes new standards for computing and presenting earnings per share and requires the disclosure of basic and diluted amounts. Earnings per share amounts for all prior periods have been restated. Basic earnings per share is computed by dividing net income for the period by the weighted average number of Terex common shares outstanding. Diluted earnings per share, which is consistent with the Company's previously disclosed amounts, is computed by dividing net income for the period by the weighted average number of Terex common shares outstanding and dilutive common stock equivalents.

NOTE B -- DISCONTINUED OPERATIONS

The Company sold its worldwide Clark Material Handling business ("CMHC") on November 27, 1996 for $139.5 in cash. The sale resulted in a $84.5 gain net of $2.6 of income taxes. CMHC comprised the Company's Material Handling Segment. The accompanying Consolidated Statement of Operations for the years ended December 31, 1996 and 1995 include the results of CMHC in "Income from Discontinued Operations." Please refer to Note A - Basis of Presentation for a discussion of allocation of interest expense. Summary operating results of discontinued operations are as follows:

                                                    Year Ended
                                                    December 31,
                                             -------------------------
                                                1996          1995
                                             -----------   -----------
Net sales................................... $  404.6      $   528.8
Income before income taxes..................     17.5            4.4
Provision for income taxes..................    ---            ---

Income from operations of discontinued
  operations................................ $   17.5      $     4.4

Gain on sale of discontinued operations.....     84.5          ---
                                             ===========   ===========
Income from discontinued operations......... $  102.0      $     4.4
                                             ===========   ===========

NOTE C -- ACQUISITIONS

Simon Access and Baraga - On April 7, 1997, the Company completed the purchase of the industrial businesses of Simon Access division ("Simon Access") of Simon Engineering plc for $90 in cash, subject to adjustment. Simon Access consists principally of several business units in the United States and Europe which are engaged in the manufacture and sale of access equipment designed to position people and materials to work at heights. Simon Access products include truck mounted aerial devices, aerial work platforms and truck mounted cranes (boom trucks) which are sold to utility companies as well as to customers in the industrial and construction markets. Specifically, the Company acquired 100% of the outstanding common stock of (i) Simon-Telelect Inc. (now named Terex-Telelect, Inc.), a Delaware corporation, (ii) Simon Aerials, Inc. (now named Terex Aerials, Inc.), a Wisconsin corporation, (iii) Sim-Tech Management Limited, a private limited company incorporated under the laws of Hong Kong,
(iv) Simon-Cella, S.r.l., a company incorporated under the laws of Italy, and
(v) Simon Aerials Limited (now named Terex Aerials Limited), a company incorporated under the laws of Ireland; and 60% of the outstanding common stock of Simon-Tomen Engineering Company Limited, a limited liability stock company organized under the laws of Japan. Not included in the businesses acquired were Simon Access' fire fighting equipment business. The Company obtained the funds necessary to complete the transaction from its cash on hand and borrowings under a new revolving credit facility. (See Note G - "Long-Term Obligations").

On April 14, 1997 the Company completed the purchase of Baraga Products, Inc. and M&M Enterprises of Baraga, Inc. (collectively, "Baraga", or the "Square Shooter Business"). Baraga manufactures rough terrain telescopic boom forklifts.

The Simon Access and Baraga (the "Acquired Businesses") acquisitions are being accounted for using the purchase method, with the purchase price allocated to the assets acquired and the liabilities assumed based upon their respective estimated fair values at the date of acquisition. The excess of purchase price over the net assets acquired (approximately $54.5) is being amortized on a straight-line basis over 40 years.


F-10

The estimated fair values of assets and liabilities acquired in the Simon Access and Baraga businesses are summarized as follows:

Accounts receivable..................................$      23.1
Inventories..........................................       38.8
Other current assets.................................        0.9
Property, plant and equipment........................       21.1
Goodwill.............................................       54.5
Other assets.........................................       11.8
Accounts payable and other current liabilities.......      (42.1)
Long-term debt.......................................       (4.9)
Other non-current liabilities........................       (4.5)
                                                     ---------------
                                                     $      98.7
                                                     ===============

The Company is in the process of completing evaluations and estimates for purposes of determining certain values. The Company has also estimated costs related to plans to integrate the activities of the Acquired Businesses into the Company, including plans to exit certain activities and consolidate and restructure certain functions. The Company may revise the estimates as additional information is obtained.

The operating results of the Acquired Businesses are included in the Company's consolidated results of operations since April 7, 1997 and April 14, 1997, respectively. The following pro forma summary presents the consolidated results of operations as though the Company completed the acquisition of the Acquired Businesses on January 1, 1996, after giving effect to certain adjustments, including amortization of goodwill, interest expense and amortization of debt issuance costs on the New Credit Facility:

                                                     Unaudited Pro Forma
                                                     for the Year Ended
                                                          December 31,
                                                  -------------------------
                                                      1997          1996
                                                  -----------   -----------
Net sales.........................................$  893.3      $   887.1
Income from operations............................    71.4           20.2
Income (loss) before discontinued operations
  and extraordinary items.........................    29.2          (45.3)
Income (loss) before discontinued operations
   and extraordinary items, per share
      Basic.......................................$   1.80      $   (3.84)
      Diluted.....................................    1.65          (3.41)

The pro forma information is not necessarily indicative of what the actual results of operations of the Company would have been for the periods indicated, nor does it purport to represent the results of operations for future periods.

PPM - On May 9, 1995, the Company, through Terex Cranes, Inc., a wholly owned subsidiary of the Company ("Terex Cranes, Inc."), completed the acquisition (the "PPM Acquisition") of substantially all of the shares of P.P.M. S.A. ("PPM Europe"), from Potain S.A., and all of the capital stock of Legris Industries, Inc., which owns 92.4% of the capital stock of PPM Cranes, Inc. ("PPM North America;" and PPM North America together with PPM Europe collectively referred to as "PPM") from Legris Industries S.A. PPM designs, manufactures and markets mobile cranes and container stackers primarily in North America and Western Europe under the brand names of PPM, P&H (trademark of Harnischfeger Corporation) and BENDINI. Concurrently with the completion of the PPM Acquisition, the Company contributed the assets (subject to liabilities) of its Koehring Cranes and Excavators and Marklift division to Terex Cranes. The former division now operates as Koehring Cranes, Inc., a wholly owned subsidiary of Terex Cranes Inc. ("Koehring").

The purchase price of PPM, including acquisition costs, was approximately $104.5. Approximately $92.6 of the purchase price was paid in cash, including the repayment of certain indebtedness of PPM required to be repaid in connection with the acquisition. The remainder of the purchase price consisted of the issuance of redeemable preferred stock of Terex Cranes having an aggregate liquidation preference of approximately $21.4, subject to adjustment. On December 10, 1997, the Company issued 706.0 thousand shares of Terex Common Stock in exchange for the outstanding preferred stock of Terex Cranes. At the time of the exchange Terex recorded an additional $3.2 preferred stock accretion to reflect the difference between the fair market value of the Common Stock issued and the carrying value of the Terex Cranes preferred stock.


F-11

The PPM Acquisition was accounted for as a purchase, with the purchase price allocated to the assets acquired and liabilities assumed based upon their respective estimated fair values at the date of acquisition. The excess of purchase price over the net assets acquired is being amortized on a straight-line basis over 15 years. The estimated fair values of assets and liabilities acquired in the PPM Acquisition were:

Cash...............................................  $      1.0
Accounts receivable................................        33.8
Inventories........................................        69.1
Other current assets...............................        11.9
Property, plant and equipment......................        20.5
Other assets.......................................         0.3
Goodwill...........................................        68.0
Accounts payable and other current liabilities.....       (86.6)
Other liabilities..................................       (13.5)
                                                     ------------
                                                     $    104.5
                                                     ============

The operating results of PPM are included in the Company's consolidated results of operations since May 9, 1995. The following pro forma summary presents the consolidated results of operations as though the Company completed the PPM Acquisition on January 1, 1994, after giving effect to certain adjustments, including amortization of goodwill, interest expense and amortization of debt issuance costs on the debt issued in the Refinancing:

                                                    Unaudited Pro
                                               Forma for the Year Ended
                                                  December 31, 1995
                                               -----------------------

Net sales......................................   $   566.3
Income (loss) from operations..................        (3.7)
Loss before discontinued operations and
    extraordinary items........................       (53.0)
Loss before discountinued operations and
    extraordinary items, per share:
        Basic..................................   $   (5.89)
        Diluted................................       (5.89)

The pro forma information is not necessarily indicative of what the actual results of operations of the Company would have been for the periods indicated, nor does it purport to represent the results of operations for future periods.

NOTE D -- IMPAIRMENT OF LONG LIVED ASSETS AND OTHER SPECIAL CHARGES

As required by generally accepted accounting principles, goodwill was allocated in the PPM Acquisition to various operating units. After eighteen months of continuous rationalization, estimated future undiscounted cash flows for certain operations would not be sufficient to recover the goodwill and fixed assets recorded for these operations. Thus, in the fourth quarter of 1996 the Company recorded an impairment charge of $16.8 ($13.3 related to goodwill and $3.5 related to fixed assets). Similarly, in the fourth quarter of 1996 the Company wrote off $1.9 of goodwill related to its IMACO unit in the United Kingdom. These 1996 impairment charges totaling $18.7 are included in "Cost of Goods Sold."

In addition to the impairment charges described above, the Company recorded special charges of $8.6 to reduce the value of assets at Unit Rig, $2.0 related to 1993 tax matters at PPM Europe, and $3.0 of other one-time charges during the fourth quarter of 1996.


F-12

NOTE E -- INVENTORIES

Inventories consist of the following:

                                                December 31,
                                         -------------------------
                                            1997          1996
                                         -----------   -----------
Finished equipment.....................  $     54.1    $     46.5
Replacement parts......................        82.8          68.0
Work-in-process........................        22.4          19.8
Raw materials and supplies.............        72.8          56.3
                                         -----------   -----------
  Net inventories......................  $    232.1    $    190.6
                                         ===========   ===========

NOTE F -- PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following:

                                                        December 31,
                                                   -----------------------
                                                       1997        1996
                                                   ----------- ------------
Property.........................................  $    13.6   $     0.2
Plant............................................       43.8        14.0
Equipment........................................       25.6        51.2
                                                   ----------- ------------
                                                        83.0        65.4
Less:  Accumulated depreciation..................      (35.2)      (33.7)
                                                   =========== ============
  Net property, plant and equipment..............  $    47.8   $    31.7
                                                   =========== ============

NOTE G -- LONG-TERM OBLIGATIONS

See Note P -- "Subsequent Events" for a discussion regarding the refinancing of substantially all of the Company's debt in the first quarter of 1998. Long-term debt is summarized as follows:

                                                             December 31,
                                                      ------------------------
                                                          1997         1996
                                                      -----------  -----------
13.25% Senior Secured Notes due May 15, 2002
    ("Senior Secured Notes")........................  $    165.1   $    247.3
Credit Facility maturing April 7, 2000..............        94.9       ---
Note payable........................................         4.7          5.0
Capital lease obligations...........................        12.1         14.7
Other...............................................        23.3         14.3
                                                      ------------ -----------
  Total long-term debt..............................       300.1        281.3
  Current portion of long-term debt.................        26.6         19.2
                                                      ------------ -----------
  Long-term debt, less current portion..............  $    273.5   $    262.1
                                                      ============ ===========

The Senior Secured Notes

On May 9, 1995, the Company issued $250 of 13.25% Senior Secured Notes due May 15, 2002. The Senior Secured Notes were issued in conjunction with the PPM Acquisition and a refinancing of 13.0% Senior Secured Notes due August 1, 1996 ("Old Senior Secured Notes"), and 13.5% Secured Senior Subordinated Notes due July 1, 1997 ("Subordinated Notes"). Except in the event of certain asset sales, there are no principal repayment or sinking fund requirements prior to maturity. Interest on the Notes is payable semi-annually on May 15 and November 15 of each year to holders of record on the immediately preceding May 1 and November 1, respectively. The Notes bear interest at 13.25% per annum. Prior to the consummation of an exchange offer on November 5, 1996, the interest rate on the Notes was 13.75% per annum. Interest is computed on the basis of a 360-day year comprised of twelve 30-day months.


F-13

The Senior Secured Notes are senior obligations of the Company, pari passu in right of payment with all existing and future senior indebtedness and senior to all subordinated indebtedness. Repayment of the Senior Secured Notes is guaranteed by certain domestic subsidiaries of the Company (the "Guarantors"). The Senior Secured Notes are secured by a first priority security interest on substantially all of the assets of the Company and the Guarantors, other than cash and cash equivalents, except that as to accounts receivable and inventory and proceeds thereof, and certain related rights, such security shall be subordinated to liens securing obligations outstanding under any working capital or revolving credit facility secured by such accounts receivable and inventory, including the Credit Facility. The Senior Secured Notes are also secured by a lien on certain assets of the Company's foreign subsidiaries. The indenture for the 13.25% Senior Secured Notes (the "Indenture") places certain limits on the Company's ability to incur additional indebtedness; permit the existence of liens; issue, pay dividends on or redeem equity securities; sell assets; consolidate, merge or transfer assets to another entity; and enter into transactions with affiliates.

As required by the Indenture, the Company, following the sale of CMHC, offered to repurchase (the "Offer") $100 principal amount of the Senior Secured Notes. The Offer expired on December 27, 1996, with no Senior Secured Notes being tendered for repurchase. As a result, the $100 of sale proceeds was available for other corporate purposes.

On July 28, 1997 and August 7, 1997, the Company issued an additional five million shares and 700 thousand shares, respectively, of its Common Stock in a public stock offering. The shares were issued at a price to the public of $19.50 per share. The net proceeds received by the Company after deduction of underwriting discounts, commissions and other expenses was $104.6. On September 4, 1997, the Company used a portion of the proceeds to redeem $83.3 in principal of the Secured Senior Notes. In accordance with the terms of the Indenture, the redemption of the Senior Secured Notes was at a 9.46% redemption premium. The redemption premium plus the pro-rata share of unamortized debt origination costs totaled $12.2 and have been reflected as extraordinary items in the third quarter of 1997.

The 1997 Credit Facility

On April 7, 1997, the Company and certain of its domestic subsidiaries (collectively, the "Borrowers") entered a Revolving Credit Agreement with a financial institution, as agent (the "Agent"), pursuant to which the Agent and other financial institutions party thereto have provided the Borrowers with a line of credit of up to $125 secured by accounts receivable and inventory (the "1997 Credit Facility"). The 1997 Credit Facility replaced the Company's $100 revolving credit facility (the "Old Credit Facility").

Loans made under the 1997 Credit Facility (a) bear interest, based on the Company's fixed charge coverage ratio, at a rate between 0.5% and 1.5% per annum in excess of the prime rate or at a rate between 2.0% and 3.0% per annum in excess of the eurodollar rate, at the election of the Company, (b) mature on April 7, 2000, (c) were used by the Borrowers to repay the Old Credit Facility, and (d) are to be used for working capital and other general corporate purposes, including acquisitions.

The Old Credit Facility

The Old Credit Facility was terminated in April 1997 in conjunction with the Simon Access acquisition and entering into the 1997 Credit Facility. The Company paid a fee of $2.0 upon termination of the Old Credit Facility. Additionally, $0.6 of unamortized debt acquisition costs related to the Old Credit Facility were written off at the termination of the Old Credit Facility. These expenses have been reflected as extraordinary items in the second quarter of 1997.

The Company had the option to base the interest rate on prime or the Eurodollar rate. The outstanding principal amount of prime rate loans was at the rate of 1.75% per annum in excess of the prime rate. The outstanding principal amount of Eurodollar rate loans was at the rate of 3.75% per annum in excess of the adjusted Eurodollar rate.

Old Senior Secured Notes and Subordinated Notes

The Old Senior Secured Notes and Subordinated Notes were retired on May 9, 1995 in conjunction with the PPM Acquisition and the issuance of the 13.25% Senior Secured Notes. The Company realized an extraordinary loss of $5.7 and $1.6 on the early extinguishment of the Old Senior Secured Notes and the Subordinated Notes, respectively.


F-14

Old TEL Facility

In 1995, the Company's subsidiary, Terex Equipment Limited ("TEL") located in Motherwell, Scotland, entered into a bank facility (the "TEL Facility") which provides up to (pound)47.0 ($80.5) including up to (pound)10.0 ($17.1) non-recourse discounting of accounts receivable which meet certain credit criteria, plus additional facilities for tender and performance bonds, letters of credit discounting and foreign exchange contracts. Interest rates vary between 1.0% - 1.5% above the financial institution's Published Base Rate or LIBOR. The TEL Facility is collateralized primarily by the related accounts receivable. The TEL Facility requires no performance covenants. Proceeds from the TEL Facility are primarily used for working capital purposes. Amounts discounted under this and the prior facility were $12.7, $6.9 and $11.7 at December 31, 1997, 1996, and 1995, respectively.

Schedule of Debt Maturities

See Note P - "Subsequent Events" for a discussion regarding the refinancing of substantially all of the debt of the Company in the first quarter of 1998.

Prior to the refinancing in the first quarter of 1998, scheduled annual maturities of long-term debt outstanding at December 31, 1997 in the successive five-year period are summarized below. Amounts shown are exclusive of minimum lease payments disclosed in Note H -- "Lease Commitments":

1998................................... $     21.9
1999...................................        1.8
2000...................................       96.3
2001...................................        0.9
2002...................................      165.6
Thereafter.............................        1.5
                                        -----------
     Total............................  $    288.0
                                        ===========

Based on quoted market values, the Company believes that the fair value of the Senior Secured Notes was approximately $190.4 as of December 31, 1997. The Company believes that, based on quoted market values, the carrying value of its other borrowings approximates fair market value, based on discounting future cash flows using rates currently available for debt of similar terms and remaining maturities.

The Company paid $39.8, $45.3 and $43.0 of interest in 1997, 1996 and 1995, respectively.

The weighted average interest rate on short term borrowings outstanding was 8.3% at December 31, 1997 and 10.0% at December 31, 1996.

NOTE H -- LEASE COMMITMENTS

The Company leases certain facilities, machinery and equipment, and vehicles with varying terms. Under most leasing arrangements, the Company pays the property taxes, insurance, maintenance and expenses related to the leased property. Certain of the equipment leases are classified as capital leases and the related assets have been included in Property, Plant and Equipment. Net assets under capital leases were $21.9 and $8.2 at December 31, 1997 and 1996, respectively, net of accumulated amortization of $8.2 and $9.6 at December 31, 1997 and 1996, respectively.


F-15

Future minimum capital and noncancelable operating lease payments and the related present value of capital lease payments at December 31, 1997 are as follows:

                                                   Capital      Operating
                                                    Leases        Leases
                                                 ------------- -------------
1998............................................ $      5.4    $      5.2
1999............................................        2.7           3.9
2000............................................        2.9           3.1
2001............................................        1.3           2.6
2002............................................        0.3           2.2
Thereafter......................................        0.6           3.3
                                                 ------------- -------------
    Total minimum obligations ..................       13.2    $     20.3
                                                               =============
Less amount representing interest...............        1.1
                                                 -------------
    Present value of net minimum obligations....       12.1
Less current portion............................        4.7
                                                 -------------
    Long-term obligations....................... $      7.4
                                                 =============

Most of the Company's operating leases provide the Company with the option to renew the leases for varying periods after the initial lease terms. These renewal options enable the Company to renew the leases based upon the fair rental values at the date of expiration of the initial lease. Total rental expense under operating leases was $6.8, $4.7 and $3.9 in 1997, 1996, and 1995, respectively.

NOTE I -- INCOME TAXES

The components of Income (Loss) From Continuing Operations Before Income Taxes and Extraordinary Items are as follows:

                                                         Year ended December 31,
                                                    --------------------------------
                                                       1997       1996       1995
                                                    ---------- ---------- ----------
United States...................................... $   16.1   $ (40.6)   $  (36.1)
Foreign............................................     14.9      (1.6)        4.0
                                                    ========== ========== ==========
Income (loss) from continuing operations before
    income taxes and extraordinary items........... $   31.0   $ (42.2)   $  (32.1)
                                                    ========== ========== ==========

The major components of the Company's provision for income taxes are summarized below:

                                                      Year ended December 31,
                                                -------------------------------
                                                   1997        1996       1995
                                                ----------  ---------  --------
Current:
  Federal...................................... $  ---      $  ---     $  ---
  State........................................    ---         ---        ---
  Foreign......................................     5.2        12.1        3.8
  Utilization of foreign net operating loss
     ("NOL") carryforward.....................     (4.5)      (11.3)      (3.8)
                                                ----------  ---------  --------
      Current income tax provision.............     0.7         0.8       ---
Deferred:
  Deferred foreign income tax..................    ---         11.3       ---
                                                ----------  ---------  --------
      Total provision for income taxes......... $  0.7         12.1       ---
                                                ==========  =========  ========

As a result of the recapitalization of PPM Europe, certain NOL benefit carryforwards which were fully provided for at the acquisition were utilized resulting in a deferred tax charge of $11.3 in the fourth quarter of 1996.


F-16

Deferred tax assets and liabilities result from differences in the basis of assets and liabilities for tax and financial statement purposes. A valuation allowance has been recognized for the full amount of the deferred tax assets as it is not more likely than not that they will be fully utilized. The tax effects of the basis differences and net operating loss carryforward as of December 31, 1997 and 1996 are summarized below for major balance sheet captions:

                                               1997          1996
                                            -----------  -----------
Intangibles................................ $    (0.4)   $    ---
Accrued liabilities........................      (1.6)        ---
Other......................................      (0.8)        (0.8)
                                            -----------  -----------
     Total deferred tax liabilities........      (2.8)        (0.8)
                                            -----------  -----------
Receivables................................       0.6          0.6
Net inventories............................       4.0          4.6
Fixed assets...............................       0.7          2.4
Warranties and product liability...........       7.8          5.8
All other items............................       7.8          6.2
Benefit of net operating loss carryforward.     140.2         96.2
                                            -----------  -----------
     Total deferred tax assets.............     161.1        115.8
                                            -----------  -----------
Deferred tax assets valuation allowance....    (158.3)      (115.0)
                                            -----------  -----------
     Net deferred tax liabilities.......... $   ---      $     ---
                                            ===========  ===========

The valuation allowance for deferred tax assets as of January 1, 1996 was $149.6. The net change in the total valuation allowance for the years ended December 31, 1996 and 1997 were a decrease of $34.6 and an increase of $43.3, respectively.

The Company's Provision for Income Taxes is different from the amount which would be provided by applying the statutory federal income tax rate to the Company's Income (Loss) From Continuing Operations Before Income Taxes and Extraordinary Items. The reasons for the difference are summarized below:

                                                                         Year ended December 31,
                                                                   --------------------------------
                                                                       1997       1996       1995
                                                                   ----------- --------- ----------
Statutory federal income tax rate................................. $   10.9   $  (14.8)  $  (11.2)
Recognition of fully reserved preacquisition deferred tax asset...    ---         11.3      ---
Change in valuation allowance relating to NOL.....................     (6.6)       7.8       11.4
Foreign tax differential on income/losses of foreign subsidiaries.     (4.5)       1.4       (1.4)
Goodwill..........................................................      0.9        6.3        1.1
Other.............................................................    ---          0.1        0.1
                                                                   ---------- ---------  ----------
     Total provision for income taxes............................. $    0.7   $   12.1   $  ---

                                                                   ========== ========== ==========

The effective tax rate for discontinued operations differs from the statutory rate due primarily to utilization of NOLs and foreign tax differential on the income of foreign subsidiaries.

The Company has not provided for U.S. federal and foreign withholding taxes on $37.8 of foreign subsidiaries' undistributed earnings as of December 31, 1997, because such earnings are intended to be reinvested indefinitely. Any income tax liability that would result had such earnings actually been repatriated would likely be offset by utilization of NOLs. On repatriation, certain foreign countries impose withholding taxes. The amount of withholding tax that would be payable on remittance of the entire amount of undistributed earnings would approximate $6.6.

At December 31, 1997, the Company had domestic federal net operating loss carryforwards of $290.5. Approximately $66.6 of the remaining net operating loss carryforwards are subject to special limitations under the Internal Revenue Code, and the NOLs may be affected by the current Interal Revenue Service (the "IRS") examination discussed below.


F-17

The tax basis net operating loss carryforwards expire as follows:

                                      Tax Basis Net
                                     Operating Loss
                                      Carryforwards
                                     ----------------
1998................................. $     8.1
1999.................................      11.9
2000.................................       0.1
2001.................................       4.8
2002.................................       0.5
2003.................................       0.9
2004.................................      22.4
2005.................................       0.8
2006.................................      14.8
2007.................................      41.1
2008.................................     100.4
2009.................................      34.2
2010.................................      42.3
2012.................................       8.2
                                     ----------
    Total............................ $   290.5
                                     ==========

The Company also has various state net operating loss and tax credit carryforwards expiring at various dates through 2012 available to reduce future state taxable income and income taxes. In addition, the Company's foreign subsidiaries have approximately $78.4 of loss carryforwards, $33.6 in the United Kingdom, $23.1 in France, and $21.7 in other countries, which are available to offset future foreign taxable income. The tax loss carryforwards in the United Kingdom and other countries are available without expiration. Tax loss carryforwards in France of $6.7 expire in 2000 and 2002, with the remaining $16.4 available without expiration.

The IRS is currently examining the Company's Federal tax returns for the years 1987 through 1989. In December 1994, the Company received an examination report from the IRS proposing a substantial tax deficiency. The examination report raised a variety of issues, including the Company's substantiation for certain deductions taken during this period, the Company's utilization of certain NOLs and the availability of such NOLs to offset future taxable income. The Company filed an administrative appeal to the examination report in April 1995. As a result of a meeting with the Manhattan division of the IRS in July 1995, in June 1996 the Company was advised that the matter was being referred back to the Milwaukee audit division of the IRS. The Milwaukee audit division of the IRS is currently reviewing information provided by the Company. The ultimate outcome of this matter is subject to the resolution of significant legal and factual issues. Given the stage of the audit, and the number and complexity of the legal and administrative proceedings involved in reaching a resolution of the matter, it is unlikely that the ultimate outcome, if unfavorable to the Company, will be determined for at least several years. If the IRS were to prevail on all the issues raised, the amount of the tax assessment would be approximately $56 plus penalties of approximately $12.8 and interest through December 31, 1997 of approximately $94.5. The penalties asserted by the IRS are calculated as 20% of the amount of the tax assessed for fiscal year 1987 and 25% of the tax assessed for each of fiscal years 1988 and 1989. Interest on the amount of tax assessed and penalties is currently accruing at a rate of 11% per annum. The applicable annual rate of interest has historically carried from 7% to 12%.

If the Company were required to pay a significant portion of the assessment with related interest and penalties, such payment might exceed the Company's resources. In such event, the viability of the Company would be placed in jeopardy, and it is uncertain that the Company could, through financing or otherwise, obtain the funds required to pay such assessment, interest, and applicable penalties. Management believes, however, that the Company will be able to provide adequate documentation for a substantial portion of the deductions questioned by the IRS and that there is substantial support for the Company's past and future utilization of the NOLs. Based upon consultation with its tax advisors, management believes that the Company's position will prevail on the most significant issues. Accordingly, management believes that the outcome of the examination will not have a material adverse effect on its financial condition or results of operations, but may result in some reduction in the amount of the NOLs available to the Company. No additional accruals have been made for any amounts which might be due as a result of this matter because the possible loss ranges from zero to $56 million plus interest and penalties,


F-18

and the ultimate outcome cannot be determined or estimated at this time. No reserves are being expensed to cover the potential liability.

The Company made income tax payments of $1.8 in 1997. No income tax payments were made in 1996 and 1995.

NOTE J -- PREFERRED STOCK

The Company's certificate of incorporation was amended in October 1993 to authorize 10.0 million shares of preferred stock, $.01 par value per share. As of December 31, 1997, no shares of preferred stock are outstanding as described below.

Series A Cumulative Redeemable Convertible Preferred Stock

As of December 31, 1996, the Company had 1.2 million issued and outstanding shares of Series A Cumulative Redeemable Convertible Preferred Stock (the "Series A Preferred Stock"). The Liquidation Preference totaled $45.4 at December 31, 1996. On December 30, 1996, the Company called all of its Series A Preferred Stock for redemption and subsequently redeemed the stock in January 1997 at an aggregate redemption price of $45.4.

The aggregate net proceeds to the Company for the Series A Preferred Stock and the Series A Warrants issued on December 20, 1993 were $27.2. The Company allocated $10.3 and $16.9 of this amount to the Series A Preferred Stock and the Series A Warrants, respectively, based on management's estimate of the relative fair values of these securities at the time of their issuance, using information provided by the Company's investment bankers. The difference between the initially recorded amount and the redemption amount was accreted to the carrying value of the Series A Preferred Stock using the interest method over the period from issuance to the mandatory redemption date, December 31, 2000. As a result of calling all of the stock for redemption on December 30, 1996, the carrying value of the Series A Preferred Stock was further adjusted for increases in the Liquidation Preference. There was no accretion recorded in 1997. The total accretion recorded in 1996 and 1995 was $22.9 and $7.3, respectively.

Series B Cumulative Redeemable Convertible Preferred Stock

As of December 31, 1996, the Company had 38.8 thousand issued and outstanding shares of Series B Cumulative Redeemable Convertible Preferred Stock (the "Series B Preferred Stock"). These shares constituted the remaining balance outstanding of the Series B Preferred Stock issued to certain individuals on December 9, 1994 in consideration for the early termination of a contract between the Company and KCS Industries, L.P., a Connecticut limited partnership ("KCS"), a related party. On December 30, 1997 all 38.8 thousand outstanding shares of Series B Preferred Stock were converted by the holder thereof into 87.3 thousand shares of common stock.

NOTE K -- STOCKHOLDERS' EQUITY (DEFICIT)

Common Stock. The Company's certificate of incorporation was amended in October 1993 to increase the number of authorized shares of common stock, par value $.01 (the "Common Stock"), to 30.0 million. As of December 31, 1997, there were 20.5 million shares issued and outstanding. Of the 9.5 million unissued shares at that date, $1.7 million shares were reserved for issuance for the exercise of stock options and Series A Warrants.

Equity Rights. On May 9, 1995, the Company sold one million equity rights securities (the "Equity Rights") along with $250 of the Senior Secured Notes. A portion of the proceeds ($3.2) of the sale of the Senior Secured Notes and the Equity Rights was allocated to the Equity Rights. The portion of the proceeds related to the Equity Rights has been reclassified from other non-current liabilities to the stockholders' equity (deficit) section of the balance sheet, because they can be satisfied in Common Stock or cash at the option of the Company. The Equity Rights entitle the holders, upon exercise at any time on or prior to May 15, 2002, to receive cash or, at the election of the Company, Common Stock in an amount equal to the average closing sale price of the Common Stock for the 60 consecutive trading days prior to the date of exercise (the "Current Price"), less $7.288 per share, subject to adjustment in certain circumstances. Changes in the Current Price do not affect the net income or loss reported by the Company; however, changes in the Current Price vary the amount of cash that the Company would have to pay or the number of Shares of Common Stock that would have to be issued in the event holders exercise the Equity Rights. As of December 31, 1997, the Current Price of the Common Stock was $21.891, which would have required the Company to either pay $14.6 or issue


F-19

621.4 thousand shares of Common Stock, at the Company's option, in the event that all of the holders had exercised their Equity Rights.

Series A Warrants. In connection with the private placement of the Series A Preferred Stock (see Note J -- "Series A Preferred Stock"), the Company issued 1.3 million Series A Warrants of which 66.4 thousand warrants were outstanding at December 31, 1997. Each Series A Warrant may be exercised, in whole or in part, at the option of the holder at any time before the expiration date on December 31, 2000 and is redeemable by the Company under certain circumstances. As of December 31, 1997, upon the exercise or redemption of a Warrant, the holder thereof was entitled to receive 2.41 shares of Common Stock. The exercise price for the Warrants is $.01 for each share of Common Stock. The number of shares of Common Stock issuable upon exercise or redemption of the Warrants is subject to adjustment in certain circumstances.

Series B Warrants. In connection with the issuance of the Series B Preferred Stock (see Note J -- "Series B Preferred Stock"), the Company issued 107.0 thousand Series B Warrants. At December 31, 1997, all Series B Warrants had been exercised. The exercise price for the Warrants was $.01 for each share of Common Stock.

Stock Options. The Company maintains a qualified incentive stock option ("ISO") plan covering certain officers and key employees. The exercise price of the ISO is the fair market value of the shares at the date of grant. The ISO allows the holder to purchase shares of Common Stock, commencing one year after grant. ISO expire after ten years. At December 31, 1997, 11.1 thousand stock options were available for grant under the ISO.

Long-Term Incentive Plans. In May 1996, the shareholders approved, the 1996 Terex Corporation Long-Term Incentive Plan (the "1996 Plan"). The 1996 Plan authorizes the granting of (i) options ("Stock Option Awards") to purchase shares of Common Stock, including Restricted Stock, (ii) shares of Common Stock, including Restricted Stock ("Stock Awards"), and (iii) cash bonus awards based upon a participant's job performance ("Performance Awards"). Subject to adjustment as described below under "Adjustments," the aggregate number of shares of Common Stock (including Restricted Stock, if any) optioned or granted under the 1996 Plan was not to exceed 300 thousand shares. In May 1997, the shareholders approved that the aggregate number of shares available under the 1996 Plan be increased to 1.0 million shares. At December 31, 1997, 489.5 thousand shares were available for grant under the 1996 Plan. The 1996 Plan provides that a committee (the "Committee") of the Board of Directors consisting of two or more members thereof who are non-employee directors, shall administer the 1996 Plan and has provided the Committee with the flexibility to respond to changes in the competitive and legal environments, thereby protecting and enhancing the Company's current and future ability to attract and retain directors and officers and other key employees and consultants. The 1996 Plan also provides for automatic grants of Stock Option Awards to non-employee directors.

In 1994, the shareholders approved a Long-Term Incentive Plan (the "Plan") covering certain managerial, administrative and professional employees and outside directors. The Plan provides for awards to employees, from time to time and as determined by a committee of outside directors, of cash bonuses, stock options, stock and/or restricted stock. The total number of shares of the Company's common stock available to be awarded under the Plan is 750 thousand, subject to certain adjustments. At December 31, 1997, 15.6 thousand shares were available for grant under the Plan.


F-20

The following table is a summary of stock options under all three of the Company's plans.

                                                             Weighted
                                                             Exercise
                                             Number of     Average Price
                                              Options        per Share
                                           -------------  --------------

Outstanding at December 31, 1994..........    423,966     $      6.60
                                              448,300            4.85
                                                  ---          ---
                                              (74,166)           6.21
                                           -------------  --------------

Outstanding at December 31, 1995..........    798,100     $      5.65
   Granted................................    108,500            6.57
   Exercised..............................    (18,075)           5.70
   Canceled or expired....................    (45,100)           6.32
                                           -------------  --------------

Outstanding at December 31, 1996..........    843,425     $      5.73
   Granted................................    176,750           13.93
   Exercised..............................   (184,988)           6.04
   Canceled or expired....................   (103,600)           5.69
                                           -------------  --------------

Outstanding at December 31, 1997..........    731,587     $      7.64
                                           =============  ==============

Exercisable at December 31, 1997..........    473,340     $      6.92
                                           =============  ==============

Exercisable at December 31, 1996..........    479,364     $      6.08
                                           =============  ==============

Exercisable at December 31, 1995..........    269,893     $      6.31
                                           =============  ==============

The following table summarizes information about stock options outstanding at December 31, 1997:

                                              Weighted        Exercise
         Range of             Number of     Average Life      Price per
      Exercise Prices          Options       (in years)         Share
-------------------------    -------------  ------------    ------------
$    3.50  -  $    6.00         382,187         7.0         $    4.70
$    6.01  -  $   10.00         147,150         7.6         $    6.68
$   10.01  -  $   15.00         179,500         8.4         $   12.90
$   15.01  -  $   24.13          22,750         9.6         $   21.67
                             -------------
                                731,587         7.5         $    7.64
                             =============

The Company has adopted SFAS No. 123, "Accounting for Stock-Based Compensation." In accordance with the provisions of SFAS 123, the Company applies APB Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations in accounting for its plans and does not recognize compensation expense for its stock-based compensation plans other than for restricted stock. If the Company had elected to recognize compensation expense based upon the fair value at the grant date for awards under these plans consistent with the methodology prescribed by SFAS No. 123, the Company's net income would have been reduced by $1.1 ($0.07 (basic) and $0.06 (diluted) per share), $0.6 ($0.05 (basic) and 0.04 (diluted) per share) and $0.6 ($0.06 (basic and diluted) per share) in 1997, 1996 and 1995, respectively.


F-21

The fair value for these options was estimated at the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions for 1997, 1996 and 1995, respectively: dividend yields of 0%, 0% and 0%; expected volatility of 57.50%, 58.72% and 63.76%; risk-free interest rates of 6.34%, 6.42% and 5.57%; and expected life of 8.1 years, 6.6 years and 8.6 years. The weighted average fair value of options granted during 1997, 1996 and 1995 for which the exercise price equals the market price on the grant date was $1.7, $0.4 and $1.6, respectively.

The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company's employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options.

NOTE L -- RETIREMENT PLANS

Pension Plans

US Plans - The Company maintains four defined benefit pension plans covering certain domestic employees. The benefits for the plans covering the salaried employees are based primarily on years of service and employees' qualifying compensation during the final years of employment. Participation in the plan for salaried employees was frozen as of May 7, 1993, and no participants will be credited with service following such date except that participants not fully vested will be credited with service for purposes of determining vesting only. The benefits for the plans covering the hourly employees are based primarily on years of service and a flat dollar amount per year of service. It is the Company's policy generally to fund these plans based on the minimum requirements of the Employee Retirement Income Security Act of 1974 (ERISA). Plan assets consist primarily of common stocks, bonds, and short-term cash equivalent funds.

Pension expense includes the following components for 1997, 1996 and 1995:

                                                       Year ended December 31,
                                                   ----------------------------
                                                      1997      1996     1995
                                                   --------- --------- --------
Service cost for benefits earned during period.... $  0.2    $  0.2    $  0.1
Interest cost on projected benefit obligation.....    2.4       2.3       2.2
Actual (return) loss on plan assets...............   (4.0)     (5.0)     (3.8)
Net amortization and deferral.....................    2.2       3.4       2.0
                                                   --------- --------- --------
     Net pension expense.......................... $  0.8    $  0.9    $  0.5
                                                   ========= ========= ========

The following table sets forth the US plans' funded status and the amounts recognized in the Company's financial statements at December 31:

                                                1997                      1996                          1995
                                     ------------------------- --------------------------- --------------------------
                                      Overfunded  Underfunded   Overfunded    Underfunded   Overfunded   Underfunded
                                        Plans       Plan          Plans          Plans        Plans         Plans
                                     ----------- ------------- ------------  ------------- -----------  -------------
Actuarial present value of:
  Vested benefits....................$   24.9    $     9.3     $    9.8      $   21.8      $   9.4      $    20.9
                                     =========== ============  ============  ============= ===========  =============
  Accumulated benefits...............$   25.4    $     9.3     $   10.2      $   21.8      $   9.9      $    20.9
                                     =========== ============  ============  ============= ===========  =============
  Projected benefits.................$   25.4    $     9.3     $   10.2      $   21.8      $   9.9      $    20.9
Fair value of plan assets............    25.8          6.1         11.5          18.6         10.2           16.5
                                     ----------- ------------  ------------  ------------- -----------  -------------
Projected benefit obligation
  (in excess of) less than                0.5         (3.2)         1.3          (3.2)         0.4           (4.4)
  plan assets........................
Unrecognized net loss from past
  experience different than assumed..     1.7          1.8          1.4           2.0          2.6            2.7
Unrecognized prior service cost......     0.8         ---           0.8         ---            0.9          ---
Adjustment to recognize minimum
  liability..........................   ---           (1.8)      ---             (2.0)       ---             (2.7)
                                     ----------- ------------  ------------  ------------- ----------- -------------
 Pension asset (liability)
  recognized in the balance sheet....$    3.0    $    (3.2)     $    3.5      $   (3.2)     $   3.9      $    (4.4)
                                     =========== ============  ============  ============= =========== =============


F-22

The expected long-term rate of return on plan assets was 9% for the periods presented. The discount rate assumption was 7.0% for 1997, 7.5% for 1996 and 7.5% for 1995.

In accordance with the provisions of the SFAS No. 87, "Employers' Accounting for Pensions," the Company has recorded an adjustment of $1.8 and $2.0 to recognize a minimum pension liability at December 31, 1997 and 1996, respectively. This liability is offset by a direct reduction of stockholders' equity (deficit).

In December 1993, Terex contributed 350.0 thousand shares of Terex Common Stock to the Master Trust for the benefit of two of the Terex plans, which were valued by the Company at $2.3 based upon 96.5% of the market value of Terex Common Stock as quoted on the New York Stock Exchange on the day of contribution. The market value of this investment was $8.2 at December 31, 1997.

International Plans - TEL maintains a government-required defined benefit plan (which includes certain defined contribution elements) covering substantially all of its management employees. This plan is fully funded. Pension expense relating to this plan was approximately $0.5, $0.4 and $0.3 for the years ended December 31, 1997, 1996 and 1995, respectively.

Terex Aerials Limited (Ireland) maintains a voluntary, defined pension plan covering its employees. Pension expense relating to this plan was approximately $0.1 for the year ended December 31, 1997.

Saving Plans

The Company sponsors various tax deferred savings plans into which eligible employees may elect to contribute a portion of their compensation. The Company may, but is not obligated to, contribute to certain of these plans.

Other Postemployment Benefits

The Company provides postemployment health and life insurance benefits to certain former salaried and hourly employees of Terex Cranes - Waverly Operations. The Company adopted SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other than Pensions," on January 1, 1993. This statement requires accrual of postretirement benefits (such as health care benefits) during the years an employee provides service.

Terex adopted the provisions of SFAS No. 106 using the delayed recognition method, whereby the amount of the unrecognized transition obligation at January 1, 1993 is recognized prospectively as a component of future years' net periodic postretirement benefit expense. The unrecognized transition obligation at January 1, 1993 was $4.5. Terex is amortizing this transition obligation over 12 years, the average remaining life expectancy of the participants. The liability of the Company, as of December 31, was as follows:

                                                        1997          1996
                                                    ------------  ------------
Actuarial present value of accumulated
  postretirement benefit obligation of:
   Retirees.......................................  $     2.6     $     2.8
   Active participants............................      ---           ---
                                                    ------------  ------------
   Total accumulated postretirement benefit
     obligation...................................        2.6           2.8
Unamortized transition obligation.................       (2.2)         (3.0)
                                                    ------------  ------------
   Liability (asset) recognized in the
     balance sheet................................  $     0.4     $    (0.2)
                                                    ============  ============

Health care trend rates used in the actuarial assumptions range from 9.0% to 11.5% These rates decrease to 5.5% over a period of 8 to 9 years. The effect of a one percentage-point change in the health care cost trend rates would change the accumulated postretirement benefit obligation approximately 4.8%. The discount rate used in determining the accumulated postretirement benefit obligation was 7.5% for the years ended December 31, 1997 and 1996.


F-23

Net periodic postretirement benefit expense includes the following components for 1997 and 1996:

                                  Year ended December 31,
                                  -----------------------
                                     1997         1996
                                  ----------   ----------
Service cost..................... $   ---      $  ---
Interest cost....................       0.2         0.2
Net amortization.................       0.2         0.2
                                  ==========   ==========
     Total....................... $     0.4    $    0.4
                                  ==========   ==========

The Company's postretirement benefit obligations are not funded. Net periodic postretirement benefit expense for the years ended December 31, 1997, 1996 and 1995 was approximately $0.1, $0.3 and $0.6 greater on the accrual basis than it would have been on the cash basis.

NOTE M -- LITIGATION AND CONTINGENCIES

In the Company's lines of business numerous suits have been filed alleging damages for accidents that have arisen in the normal course of operations involving the Company's products. The Company is self-insured, up to certain limits, for these product liability exposures, as well as for certain exposures related to general, workers' compensation and automobile liability. Insurance coverage is obtained for catastrophic losses as well as those risks required to be insured by law or contract. The Company has recorded and maintains an estimated liability in the amount of management's estimate of the Company's aggregate exposure for such self-insured risks.

The Company is involved in various other legal proceedings which have arisen in the normal course of its operations. The Company has recorded provisions for estimated losses in circumstances where a loss is probable and the amount or range of possible amounts of the loss is estimable.

The Company's outstanding letters of credit totaled $13.8. The letters of credit generally serve as collateral for certain liabilities included in the Consolidated Balance Sheet. Certain of the letters of credit serve as collateral guaranteeing the Company's performance under contracts.

As described in Note I -- "Income Taxes," the Internal Revenue Service is currently examining the Company's federal tax returns for the years 1987 through 1989.

The Company has agreed to indemnify certain outside parties for losses related to a former subsidiary's worker compensation obligations. Some of the claims for which Terex is contingently obligated are also covered by bonds issued by an insurance company. The Company recorded liabilities for these contingent obligations representing management's estimate of the potential losses which the Company might incur.

NOTE N -- RELATED PARTY TRANSACTIONS

On August 28, 1995, the Company announced that its Chairman had retired from his position with the Company and its Board of Directors. In connection with his retirement, the Company (upon the recommendation of a committee comprised of its independent Directors and represented by independent counsel) and the former chairman have executed a retirement agreement providing certain benefits to the former chairman and the Company. The agreement provides, among other things, for a five-year consulting engagement requiring the former chairman to make himself available to the Company to provide consulting services for certain portions of his time. The former chairman, or his designee, received a fee for consulting services which included payments in an amount, and a rate, equal to his 1995 base salary until December 31, 1996. The agreement also provides for the (i) granting of a five-year $1.8 million loan bearing interest at 6.56% per annum which is subject to being forgiven in increments over the five-year term of the agreement upon certain conditions, and (ii) equity grants having a maximum potential of 200.0 thousand shares of Terex Common Stock conditioned upon the Company achieving certain financial performance objectives in the future. During 1997 the former chairman received 150.0 thousand shares of common stock in accordance with this agreement. In contemplation of the execution of this retirement agreement, the Company advanced to the former chairman the principal amount of the forgivable loan. During 1997 and 1996, the Company forgave $0.6


F-24

and $0.4, respectively, of principal on the loan along with the current interest. The former chairman has also agreed not to compete with the Company, to vote his Terex shares in the manner recommended by the Company's Board of Directors and not to acquire any additional shares of the Company's Common Stock.

The Company, certain directors and executives of the Company, and KCS, have been named parties in various legal proceedings. During 1997, 1996 and 1995, the Company incurred $0.2, $0.3 and $0.3, respectively, of legal fees and expenses on behalf of the Company, directors and executives of the Company, and KCS named in the lawsuits.

On December 31, 1997, an officer and director of the Company retired as an officer. In connection with his retirement, the Company and the former officer entered into an agreement providing certain benefits to the former officer and the Company. Pursuant to the agreement, the former officer received an award of 5.0 thousand shares of Common Stock in consideration of his years of service to the Company. The agreement also provides for a two-year consulting engagement requiring the former officer to make himself available to the Company to provide consulting services for a certain portion of his time, for such services he will receive a consulting fee equal to his base salary in 1997 of $0.3 for services provided in 1998 and $0.1 for services provided in 1999.

In 1997, the Company invested $0.1 in a company ("Investee") which was additional reorganizing after declaring bankruptcy. Subsequent to the initial investment, the Company was required to make an additional investment in Investee. As a result, the Company elected not to continue its investment in Investee and not to make the additional required investment. A director of the Company and one of his business associates, acquired the Company's investment in Investee for the amount invested by the Company and assumed the Company's obligations to make additional investments in Investee.

In 1995, the Company retained Jefferies & Company, Inc., of which a director of the Company was then Executive Vice President, in connection with the offering of the Company's $250 Senior Secured Notes and acquisition of PPM which was completed in May 1995. Jefferies & Company, Inc. was paid $9.2 as an underwriting discount and for services rendered.

The Company requires that all transactions with affiliates be on terms no less favorable to the Company than could be obtained in comparable transactions with an unrelated person. The Board is advised in advance of any such proposed transaction or agreement and utilizes such procedures in evaluating their terms and provisions as are appropriate in light of the Board's fiduciary duties under Delaware law. In addition, the Company has an Audit Committee consisting solely of outside directors. One of the responsibilities of the Audit Committee is to review related party transactions.

NOTE O-- BUSINESS SEGMENT INFORMATION

The Company operates in two industry segments: Terex Lifting and Terex Earthmoving. Prior to November 27, 1996 the Company operated in a third industry segment, the Material Handling Segment, which is treated as a discontinued operation.

Terex Lifting designs, manufactures and markets telescopic mobile cranes (including rough terrain trucks and all-terrain mobile cranes), aerial platforms (including-scissor articulated boom and straight telescoping boom aerial work platforms), utility aerial devices (including digger derricks and articulated aerial devices), telescopic materials handlers (including container stackers and rough terrain lift trucks), truck-mounted cranes (boom trucks) and related components and replacement parts. These products are used primarily for construction, repair and maintenance of infrastructure, buildings and manufacturing facilities, for material handling applications in the distribution, transportation and utilities industries as well as in the scrap, refuse and lumber industries. Terex Lifting has eight significant manufacturing operations: (i) P.P.M. S.A. located in Montceau Les Mines, France, at which mobile cranes and container stackers under the brand names TEREX and PPM are manufactured; (ii) PPM SpA, located in Crespellano, Italy, at which mobile cranes are manufactured under the TEREX, BENDINI and PPM brand names; (iii) Terex Lifting, located in Conway, South Carolina, at which mobile cranes are manufactured under the P&H (a licensed trademark of Harnischfeger Corporation) and TEREX brand names; (iv) Terex Lifting - Waverly Operations, located in Waverly, Iowa, at which rough terrain hydraulic telescoping mobile cranes, truck cranes and material handlers are manufactured under the brand names TEREX, KOEHRING and LORAIN, and aerial lift equipment is manufactured under the brand names TEREX AERIALS, TEREX AND MARK; (v) Terex Telelect, Inc., located in Watertown, South Dakota, at which utility aerial devices and digger derricks are manufactured under the TELELECT and HI-RANGER brand names, (vi) Terex Aerials, Inc., located in Milwaukee, Wisconsin, at which aerial platforms are manufactured under the TEREX, SIMON, MARK and TEREX AERIALS brand names; (vii) Terex RO, Inc., located in Olathe, Kansas, at which truck mounted cranes are manufactured under the RO-STINGER brand name; and (viii) Terex Baraga Products,


F-25

Inc., located in Baraga, Michigan, at which rough terrain telescopic lift trucks are manufactured under the SQUARE SHOOTER brand name.

Terex Earthmoving designs, manufactures and markets heavy-duty, off-highway earthmoving and construction equipment and related components and replacement parts. These products are used primarily by construction, mining, logging, industrial and government customers in building roads, dams and commercial and residential buildings; supplying coal, minerals, sand and gravel. Terex Earthmoving has two manufacturing operations: (i) Terex Equipment Limited ("TEL"), located in Motherwell, Scotland, which manufactures off-highway rigid haulers and articulated haulers and scrapers, each sold under the TEREX brand name and to other truck manufacturers on a private label basis; and (ii) the Unit Rig Division of Terex Earthmoving, located in Tulsa, Oklahoma, which manufactures electric rear and bottom dump haulers principally sold to the copper, gold and coal mining industry customers in North and South America, Asia, Africa and Australia. Unit Rig's products are sold under the Company's TEREX, UNIT RIG, and LECTRA HAUL trademarks. TEL's North, Central and South American sales and distribution are managed by Terex Americas, a division of the Company, located in Tulsa, Oklahoma.

Industry segment information is presented below:

                                         1997           1996          1995
                                     ------------- ------------- --------------
Sales
  Terex Earthmoving................. $    288.4    $    314.9    $     250.3
  Terex Lifting.....................      548.0         363.9          252.3
  General/Corporate/Eliminations....        5.9          (0.3)          (1.2)
                                     ------------- ------------- --------------
    Total........................... $    842.3    $    678.5    $     501.4
                                     ============= ============= ==============
Income (Loss) from Operations
  Terex Earthmoving................. $     24.7    $      5.6    $      13.0
  Terex Lifting.....................       47.2           4.8            7.2
  General/Corporate/Eliminations....       (0.8)         (5.3)          (7.4)
                                     ------------- ------------- --------------
    Total........................... $     71.1    $      5.1    $      12.8
                                     ============= ============= ==============
Depreciation and Amortization
  Terex Earthmoving................. $      2.3    $      1.8    $       2.3
  Terex Lifting.....................        8.8           8.6            7.6
  General/Corporate.................        3.2           3.3            3.0
  Discontinued Operations...........      ---           ---             14.8
                                     ------------- ------------- --------------
    Total........................... $     14.3    $     13.7    $      27.7
                                     ============= ============= ==============
Capital Expenditures
  Terex Earthmoving................. $      4.5    $      5.1    $       2.7
  Terex Lifting.....................        4.3           2.9            2.4
  General/Corporate.................        1.1           0.1            0.1
  Discontinued Operations...........      ---           ---              5.3
                                     ------------- ------------- --------------
    Total........................... $      9.9      $    8.1    $      10.5
                                     ============= ============= ==============
Identifiable Assets
  Terex Earthmoving................. $    174.6    $    189.2    $     169.4
  Terex Lifting.....................      402.1         210.5          239.9
  General/Corporate.................       11.8          71.5           27.8
  Discontinued Operations...........      ---           ---             41.8
                                     ------------- ------------- --------------
    Total........................... $    588.5    $    471.2    $     478.9

                                     ============= ============= ==============


F-26

Geographic segment information is presented below:

                                      1997           1996          1995
                                  ------------- ------------- --------------
Sales
  North America.................. $    499.8    $    379.2    $     292.3
  Europe.........................      362.3         348.6          223.0
  All other......................       91.0          27.2           12.9
  Eliminations...................     (110.8)        (76.5)         (26.8)
                                  ------------- ------------- --------------
    Total........................ $    842.3    $    678.5    $     501.4
                                  ============= ============= ==============

Income (Loss) from Operations
  North America.................. $     53.4    $      1.7    $       8.6
  Europe.........................       18.6           8.3           12.0
  All other......................        1.0          (1.7)          (4.2)
  Eliminations...................       (1.9)         (3.2)          (3.6)
                                  ------------- ------------- --------------
    Total........................ $     71.1    $      5.1    $      12.8
                                  ============= ============= ==============

Identifiable Assets
  North America.................. $    466.1    $    237.0    $     170.2
  Europe.........................      295.0         271.1          247.7
  All other......................        7.4           7.2           23.1
  Eliminations...................     (180.0)        (44.1)          37.9
                                  ------------- ------------- --------------
    Total........................ $    588.5    $    471.2    $     478.9
                                  ============= ============= ==============

Sales between segments and geographic areas are generally priced to recover costs plus a reasonable markup for profit. Operating income equals net sales less direct and allocated operating expenses, excluding interest and other nonoperating items. Corporate assets are principally cash, marketable securities and administration facilities.

The Company is not dependent upon any single customer.

Export sales from U.S. continuing operations were as follows:

                                                Year ended December 31,
                                    ------------------------------------------
                                        1997           1996           1995
                                    ------------- ------------- ---------------
North and South America............ $     56.4    $     31.6    $      20.1
Europe, Africa and Middle East.....       41.1          49.7           21.5
Asia and Australia.................       32.6          37.5           33.5
                                    ============= ============= ===============
                                    $    130.1    $    118.8    $      75.1
                                    ============= ============= ===============

NOTE P -- SUBSEQUENT EVENTS (UNAUDITED)

The Company has agreed to purchase all of the outstanding shares of O&K Mining GmbH ("O&K Mining") from O&K Orenstein & Koppel AG ("Orenstein & Koppel") for net aggregate consideration of DM 309 (approximately $172), subject to certain post-closing adjustments. The transaction is scheduled to close on March 31, 1998 and will be financed through the issuance of debt securities and borrowings under the Company's new $500 global bank credit facility, the New Bank Credit Facility (as defined below). O&K Mining, which will be part of the Terex Earthmoving segment, is headquartered in Dortmund, Germany, and has operations in the United States, United Kingdom, Australia, Canada, South Africa and Singapore. O&K Mining markets a complete range of large hydraulic excavators serving the global surface mining industry and the global construction and infrastructure development markets.

On March 6, 1998, the Company refinanced its 1997 Credit Facility and redeemed or defeased all of its $166.7 principal amount of its then outstanding Senior Secured Notes. The refinancing included effectiveness of a revolving credit facility aggregating up to $125.0 and term loan facilities providing for loans in an aggregate principal amount of up to approximately $375.0 (collectively the "New Bank Credit Facility"). In connection with the refinancing of the Company's 1997


F-27

1997 Bank Credit Facility and the repurchase of the Senior Secured Notes, the Company incurred extraordinary losses of $1.9 and $36.5, respectively. These extraordinary charges will be recorded in the first quarter of 1998.

On March 24, 1998, the Company entered into a Purchase Agreement to issue and sell $150.0 aggregate principal amount of Senior Subordinated Notes due 2008 at 8.875%, discounted to yield 8.94% (the "New Senior Subordinated Notes"). It is expected that delivery of the New Senior Subordinated Notes will be made against payment therefore on or about March 31, 1998. The New Senior Subordinated Notes will be issued in a private placement made in reliance upon an exemption from registation under the Securities Act of 1933, as amended. It is expected that the net proceeds from the offering will be used to fund a portion of the aggregate consideration for the acquisition of O&K Mining and for general working capital purposes.

Ares Leverage Investment Fund L.P. ("Ares"), an affiliate of a director of the Company, participated as a lender under the New Bank Credit Facility for the amount of $15.0. Ares also received a fee of less than $0.1 for participating as a lender under the New Bank Credit Facility. Participation by Ares as a lender under the New Bank Credit facility was made in the ordinary course of Ares' business and on the same terms as all other lenders under the New Bank Credit Facility.

Canadian Imperial Bank of Commerce, an affiliate of CIBC Oppenheimer Corp., of which a director of the Company is a managing director, is a lender with a commitment of up to $37.5 and a Co-Documentation Agent under the New Bank Credit Facility. Canadian Imperial Bank of Commerce received a fee of $0.8 for acting as a Co-Documentation Agent under the New Bank Credit Facility. Participation by Canadian Imperial Bank of Commerce as a lender under the New Bank Credit Facility was made in the ordinary course of its business and on the same terms as all other lenders under the New Bank Credit Facility. In addition, CIBC Oppenheimer Corp. was retained by the Company in connection with the offering of the New Senior Subordinated Notes. CIBC will be paid $0.5 as an underwriting discount upon issuance of the New Senior Subordinated Notes.


F-28

TEREX CORPORATION AND SUBSIDIARIES

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(Amounts in millions)

                                                                                Additions
                                                                         ----------------------
                                                               Balance
                                                              Beginning  Charges to                                Balance
                                                               of Year    Earnings     Other      Deductions(1)  End of Year
                                                              ---------- ---------- -----------  -------------  ------------
Year ended December 31, 1997: Deducted from asset accounts:
   Allowance for doubtful accounts........................... $    7.0   $     0.4  $  ---        $     (2.9)   $      4.5
   Reserve for excess and obsolete inventory.................     18.7         8.1     ---              (2.8)         24.0
                                                              ---------- ---------- ------------  ------------- ------------
    Totals................................................... $   25.7   $     8.5  $  ---        $     (5.7)   $     28.5
                                                              ========== ========== ============  ============= ============

Year ended December 31, 1996: Deducted from asset accounts:
   Allowance for doubtful accounts........................... $    7.4   $     2.4  $  ---        $     (2.8)   $      7.0
   Reserve for excess and obsolete inventory..................    15.9         9.1     ---              (6.3)         18.7
                                                              ---------- ---------- ------------  ------------- ------------
    Totals................................................... $   23.3   $    11.5  $  ---        $     (9.1)   $     25.7
                                                              ========== ========== ============  ============= ============

Year ended December 31, 1995: Deducted from asset accounts:
   Allowance for doubtful accounts........................... $    6.1   $     6.3  $  (3.1)     $     (1.9)   $      7.4
   Reserve for excess and obsolete inventory.................     21.1         8.7     (4.4)(2)        (9.5)         15.9
                                                              ---------- ---------- ------------ ------------- ------------
    Totals................................................... $   27.2   $    15.0  $  (7.5)     $    (11.4)   $     23.3
                                                              ========== ========== ============ ============= ============

(1) Primarily represents the utilization of established reserves, net of recoveries.

(2) Added with the acquisition of businesses and the restatement to Net Assets of Discontinued Operations.


F-29

TEREX CORPORATION AND SUBSIDIARIES

SCHEDULE IV - INDEBTEDNESS OF AND TO RELATED PARTIES -- NOT CURRENT

                                                                      Indebtedness of
                                              ------------------------------------------------------------
                                                 Balance at                                   Balance at
                                                Beginning of                                    End of
Name of Person                                     Period        Additions      Deductions      Period
--------------------------------------------- --------------- --------------- -------------- -------------

Year ended December 31, 1997:
  Randolph W. Lenz
   Promissory note, interest at 6.56% due
     November 2, 2000........................ $   1,440,000   $       ---     $  (600,000)   $   840,000
   Payable for shipping charges..............        ---              ---             ---          ---
                                              =============== =============== ============== =============
     Total................................... $   1,440,000   $       ---     $  (600,000)   $   840,000
                                              =============== =============== ============== =============

Year ended December 31, 1996:
  Randolph W. Lenz
   Promissory note, interest at 6.56% due
     November 2, 2000........................ $   1,800,000   $       ---     $  (360,000)   $ 1,440,000
   Payable for shipping charges..............        33,450           ---         (33,450)         ---
                                              =============== =============== ============== =============
     Total................................... $   1,833,450   $       ---     $  (393,450)   $ 1,440,000
                                              =============== =============== ============== =============

Year ended December 31, 1995:
  Randolph W. Lenz
   Promissory note, interest at 6.56% due
     November 2, 2000........................ $      ---      $   1,800,000   $    ---       $ 1,800,000
   Payable for shipping charges..............        ---             33,450        ---            33,450
                                              =============== =============== ============== =============
     Total................................... $      ---      $   1,833,450   $    ---       $ 1,833,450
                                              =============== =============== ============== =============


E-1

INDEX TO EXHIBITS

3.1 Restated Certificate of Incorporation of Terex Corporation (incorporated by reference to Exhibit 3.1 to the Form S-1 Registration Statement of Terex Corporation, Registration No. 33-52297).

3.2 Amended and Restated Bylaws of Terex Corporation.

4.1 Warrant Agreement dated as of December 20, 1993 between Terex Corporation and Mellon Securities Trust Company, as Warrant Agent (incorporated by reference to Exhibit 4.40 to the Form S-1 Registration Statement of Terex Corporation, Registration No. 33-52297).

4.2 Form of Series A Warrant (incorporated by reference to Exhibit 4.41 to the Form S-1 Registration Statement of Terex Corporation, Registration No. 33-52297).

4.3 Certificate of Elimination with respect to the Series B Preferred Stock.

4.4 Indenture dated as of May 9, 1995 among Terex Corporation, the Guarantors named therein and United States Trust Company of New York, as Trustee (incorporated by reference to Exhibit 4.7 of Amendment No. 1 to the Form S-1 Registration Statement of Terex Corporation, Registration No. 33-52711).

4.5 Fifth Supplemental Indenture dated as of February 18, 1998 among Terex Corporation, the Guarantors named therein and United States Trust Company of New York, as Trustee.

10.1 Terex Corporation Incentive Stock Option Plan, as amended (incorporated by reference to Exhibit 4.1 to the Form S-8 Registration Statement of Terex Corporation, Registration No. 33-21483).

10.2 1994 Terex Corporation Long Term Incentive Plan (incorporated by reference to Exhibit 10.2 to the Form 10-K for the year ended December 31, 1994 of Terex Corporation, Commission File No. 1-10702).

10.3 Terex Corporation Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.3 to the Form 10-K for the year ended December 31, 1994 of Terex Corporation, Commission File No. 1-10702).

10.4 1996 Terex Corporation Long Term Incentive Plan (incorporated by reference to Exhibit 10.1 to Form S-8 Registration Statement of Terex Corporation, Registration No. 333-03983).

10.5 Share Purchase Agreement, as amended, between Terex Cranes, Inc. and Legris Industries, S.A. and Potain, S.A. (incorporated by reference to Exhibit 10.1 to the From 8-K for May 9, 1995, Commission File No. 1-10702).

10.6 Common Stock Appreciation Rights Agreement dated as of May 9, 1995 between the Company and United States Trust Company of New York, as Rights Agents (incorporated by reference to Exhibit 10.29 of the Amendment No. 1 to the Form S-1 Registration Statement of Terex Corporation, Registration No. 33-52711).

10.7 SAR Registration Rights Agreement dated as of May 9, 1995 among the Company and the Purchasers (incorporated by reference to Exhibit 10.31 of the Amendment No. 1 to the Form S-1 Registration Statement of Terex Corporation, Registration No. 33-52711).

10.8 Agreement dated as of November 2, 1995 between Terex Corporation, a Delaware corporation, and Randolph W. Lenz (incorporated by reference to Exhibit 10 to the Form 10-Q for the Three Months ended September 30, 1995, Commission File No. 1-10702).

10.9 Stock and Asset Purchase and Sales Agreement, dated as of November 9, 1996, among Terex Corporation, CMH Acquisition Corp., CMH Acquisition International Corp., Clark Material Handling International, Inc. and Clark Material Handling Company, as Sellers, and CMHC Acquisition Corporation (now known as CLARK Material Handling Company), as Buyer (incorporated by reference to Exhibit 10.1 of the Form 8-K Current Report, Commission File No. 1-10702, dated and filed with the Commission on December 11, 1996).

10.10 Service Agreement, dated as of November 27, 1996, between Terex Corporation and CLARK Material Handling Company (incorporated by reference to Exhibit 10.2 of the F orm 8-K Current Report, Commission File No. 1-10702, dated and filed with the Commission on December 11, 1996).

10.11 Agreement of Purchase and Sale, dated as of February 24, 1997, among Simon United States Holdings, Inc. and Simon Overseas Holdings as Buyer (incorporated by reference to Exhibit 10.25 of the Form 10-K Annual Report for the year ended December 31, 1996, Commission File No. 1-10702).


E-2

10.12 Standstill Agreement , dated June 27, 1997, among Terex Corporation Randolph W. Lenz and the other parties named herein (incorporated by reference to Exhibit 10.1 of Amendment No. 1 to the Form S-1 Registration Statement of Terex Corporation, Registration No. 333-27749).

10.13 Credit Agreement dated as of March 6, 1998 among Terex Corporation, certain of its subsidiaries, the lenders named therein, Credit Suisse First Boston, as Administrative Agent, Bank Boston N.A., as Syndication Agent and Canadian Imperial Bank of Commerce and First Union National Bank, as Co-Documentation Agents.

10.14 Guarantee Agreement dated as of March 6, 1998 of Terex Corporation and Credit Suisse First Boston, as Collateral Agent.

10.15 Guarantee Agreement dated as of March 6, 1998 of Terex Corporation, each of the subsidiaries of Terex Corporation listed therein and Credit Suisse First Boston, as Collateral Agent.

10.16 Security Agreement dated as of March 6, 1998 of Terex Corporation, each of the subsidiaries of Terex Corporation listed therein and Credit Suisse First Boston, as Collateral Agent.

10.17 Pledge Agreement dated as of March 6, 1998 of Terex Corporation, each of the subsidiaries of Terex Corporation listed therein and Credit Suisse First Boston, as Collateral Agent.

10.18 Form Mortgage, Leasehold Mortgage , Assignment of Leases and Rents, Security Agreement and Financing entered into by Terex Corporation and certain of the subsidiaries of Terex Corporation, as Mortgagor, and Credit Suisse first Boston, as Mortgagee.

10.19 Share Purchase Agreement dated December 18, 1997 between O&K AG and Terex Mining Equipment, Inc.

11.1 Computation of per share earnings.

21.1 Subsidiaries of Terex Corporation.

23.1 Independent Accountants' Consent of Price Waterhouse LLP, Stamford, Connecticut.

24.1 Power of Attorney.


EXHIBIT 11.1

(Page 1 of 2)

TEREX CORPORATION AND SUBSIDIARIES
Computation of Earnings per Common Share
(in millions except per share amounts)

                                                                                   Year Ended December 31,
                                                                       --------------- --------------- --------------
                                                                            1997            1996           1995
                                                                       --------------- --------------- --------------
BASIC:
Income (loss) from continuing operations before extraordinary items....$      30.3     $     (54.3)    $    (32.1)
Income from discontinued operations....................................      ---             102.0            4.4
                                                                       --------------- --------------- --------------

Income (loss) before extraordinary items...............................       30.3            47.7          (27.7)
   Less:  Accretion of Preferred Stock.................................       (4.8)          (22.9)          (7.3)
                                                                       --------------- --------------- --------------

Income (loss) before extraordinary item applicable to common stock.....       25.5            24.8          (35.0)
Extraordinary loss on retirement of debt...............................      (14.8)          ---             (7.5)
                                                                       =============== =============== ==============

Net income (loss) applicable to common stock...........................$      10.7     $      24.8     $    (42.5)
                                                                       =============== =============== ==============

Basic shares outstanding...............................................       16.2            11.8           10.4
                                                                       =============== =============== ==============

Basic income per common share
   Income (loss) from continuing operations before extraordinary item..$     1.57      $    (6.54)     $    (3.79)
   Income from discontinued operations.................................    ---               8.64            0.42
                                                                       --------------- -------------- ---------------

   Income (loss) before extraordinary items............................      1.57            2.10           (3.37)
   Extraordinary loss..................................................     (0.91)         ---              (0.72)
                                                                       =============== ============== ===============

   Net income (loss)...................................................$     0.66      $     2.10      $    (4.09)
                                                                       =============== ==============================


EXHIBIT 11.1

(Page 2 of 2)

                       TEREX CORPORATION AND SUBSIDIARIES
                    Computation of Earnings per Common Share
                     (in millions except per share amounts)

                                                                                    Year Ended December 31,
                                                                       --------------- --------------- --------------
                                                                             1997            1996            1995
                                                                       --------------- --------------- --------------
DILUTED:
Income (loss) from continuing operations before extraordinary items....$      30.3     $     (54.3)    $    (32.1)
Income from discontinued operations....................................      ---             102.0            4.4
                                                                       --------------- --------------- --------------

Income (loss) before extraordinary items...............................       30.3            47.7          (27.7)
   Less:  Accretion of Preferred Stock.................................       (4.8)          (22.9)          (7.3)
                                                                       --------------- --------------- --------------

Income (loss) before extraordinary item applicable to common stock.....       25.5            24.8          (35.0)
   Add:  Accretion of Preferred Stock assumed converted at
     beginning of period...............................................      ---             ---  (a)       ---  (a)
                                                                       --------------- --------------- --------------

                                                                              25.5            24.8          (35.0)

Extraordinary loss on retirement of debt...............................      (14.8)          ---             (7.5)
                                                                       --------------- --------------- --------------

Net income (loss) applicable to common stock...........................$      10.7     $      24.8     $    (42.5)
                                                                       =============== =============== ==============

Weighted average shares outstanding during the period..................       16.2            11.8           10.4
Assumed exercise of warrants at ratio determined as of
     December 31, 1997.................................................        0.3             1.2          ---  (a)
Assumed conversion of Preferred Stock..................................      ---             ---  (a)       ---  (a)
Assumed exercise of equity rights......................................        0.5           ---            ---
Assumed exercise of stock options......................................        0.7             0.3          ---  (a)
                                                                       =============== =============== ==============
Diluted shares outstanding.............................................       17.7            13.3           10.4
                                                                       =============== =============== ==============

Diluted income per common share
   Income (loss) from continuing operations before extraordinary item..$       1.44      $    (5.81)    $    (3.79)
   Income from discontinued operations.................................      ---               7.67           0.42
                                                                       --------------- --------------- --------------

   Income (loss) before extraordinary items............................        1.44            1.86          (3.37)
   Extraordinary loss..................................................      (0.84)          ---             (0.72)
                                                                       =============== =============== ==============
   Net income (loss)...................................................$      0.60      $     1.86     $     (4.09)
                                                                       =============== =============== ==============

(a) Excluded from the computation because the effect is anti-dilutive.


Exhibit 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 33-21483, 33-00949 and 33-03983) and on Form S-3 (No. 33-52297) of Terex Corporation of our report dated March 6, 1998 appearing on page F-2 of this Form 10-K.

PRICE WATERHOUSE LLP

Stamford, Connecticut
March 27, 1998


Exhibit 24.1

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature appears below hereby constitutes and appoints Ronald M. DeFeo and Eric I Cohen, or either of them, as his true and lawful attorneys-in-fact and agents with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign the Terex Corporation Annual Report on Form 10-K for the year ended December 31, 1997 (including, without limitation, amendments), and to file the same with all exhibits thereto, and all document in connection therewith, with the Securities and Exchange Commission, granting said attorney-in-fact and agent, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

    Signature                         Title                           Date
    ---------                         -----                           ----

/s/ Ronald M. DeFeo        Chairman, Chief Executive Officer      March 27, 1998
Ronald M. DeFeo              and Director
                           (Principal Executive Officer)

/s/ David J. Langevin      Executive Vice President               March 27, 1998
David J. Langevin          (Acting Principal Financial Officer)

/s/ Joseph F. Apuzzo       Vice President Finance and             March 27, 1998
Joseph F. Apuzzo             and Controller
                           (Principal Accounting Officer)

/s/ G. Chris Andersen      Director                               March 27, 1998
G. Chris Andersen

/s/ William H. Fike        Director                               March 27, 1998
William H. Fike

/s/ Bruce I. Raben         Director                               March 27, 1998
Bruce I. Raben

/s/ Marvin B. Rosenberg    Director                               March 27, 1998
Marvin B. Rosenberg

/s/ David A. Sachs         Director                               March 27, 1998
David A. Sachs

/s/ Adam E. Wolf           Director                               March 27, 1998


Adam E. Wolf


1

AMENDED AND RESTATED

BYLAWS

OF

TEREX CORPORATION

Dated as of March 9, 1998

ARTICLE I. OFFICES

1.1. Principal and Business Offices. The Corporation may have such principal and other business offices, either within or without the State of Delaware, as the Board of Directors may designate or as the business of the Corporation may require from time to time.

1.2. Registered Office. The registered office of the Corporation required by the Delaware General Corporation Law to be maintained in the State of Delaware may be, but need not be, identical with the principal office in the State of Delaware, and the address of the registered office may be changed from time to time by resolution of the Board of Directors or by the registered agent. The business office of the registered agent of the Corporation shall be identical to such registered office.

ARTICLE II. STOCKHOLDERS

2.1. Annual Meetings. (a) The annual meeting of the stockholders shall be held at such place, on such date and at such time as may be fixed by or under the authority of the Board of Directors, for the purpose of electing directors and for the transaction of such other business as may come before the meeting. If the election of directors shall not be held on the day fixed as herein provided for any annual meeting of the stockholders, or at any adjournment thereof, the Board of Directors shall cause the election to be held at a special meeting of the stockholders as soon thereafter as conveniently may be.

(b) Nominations of persons for election to the Board of Directors of the Corporation and the proposal of business to be considered by the stockholders may be made at an annual meeting of stockholders (i) pursuant to the Corporation's notice of meeting, (ii) by or at the direction of the Board of Directors or (iii) by any stockholder of the Corporation who was a stockholder of record at the time of giving of the notice provided for in this bylaw, who is entitled to vote at the meeting and who complied with the notice procedures set forth in this Section 2.1.

(c) For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (III) of Section 2.1(b), the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a stockholder's notice shall be delivered to the Secretary at the principal executive offices of the Corporation


2

not less than sixty (60) days nor more than ninety (90) days prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than thirty
(30) days or delayed by more than sixty (60) days from such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the 90th day prior to such annual meeting and not later than the close of business on the later of the 60th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made. Such stockholder's notice shall set forth (i) as to each person whom the stockholder proposes to nominate for election or reelection as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the "Exchange Act") (including such person's written consent to being name in the proxy statement as a nominee and to serving as a director if elected); (ii) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; and (iii) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (x) the name and address of such stockholder, as they appear on the Corporation's books, and of such beneficial owner and (y) the class and number of shares of the Corporation which are owned beneficially and of record by such stockholder and such beneficial owner.

(d) Notwithstanding anything in the second sentence of Section 2.1(c) to the contrary, in the event that the number of directors to be elected to the Board of Directors of the Corporation is increased and there is no public announcement naming all of the nominees for director or specifying the size of the increased Board of Directors made by the Corporation at least seventy (70) days prior to the first anniversary of the preceding year's annual meeting, a stockholder's notice required by this Section 2.1 shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the tenth
(10th) day following the day on which such public announcement is first made by the Corporation.

(e) Only such persons who are nominated in accordance with the procedures set forth in these bylaws shall be eligible to serve as directors and only such business shall be conducted at an annual meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in these bylaws. The chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made in accordance with the procedures set forth in these bylaws. The chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made in accordance with the procedures set forth in these bylaws and, if any proposed nomination or business is not in compliance with these bylaws, to declare that such defective proposed business or nomination shall be disregarded.

(f) For purposes of these bylaws, "public announcement" shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or a comparable national news service or in a document publicly


3

filed by the Corporation with the Securities and Exchange Commission pursuant to
Section 13, 14, or 15(d) of the Exchange Act.

(g) Notwithstanding the foregoing provisions of this Section 2.1, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this bylaw. Nothing in this bylaw shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act.

2.2 Special Meetings. (a) Except as otherwise set forth in the certificate of inCorporation, special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute, may be called by the Board of Directors or by the person or in the manner designated by the Board of Directors. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation's notice of meeting.

(b) Nominations for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be selected pursuant to the Corporation's notice of meeting (i) by or at the direction of the Board of Directors or (ii) by any stockholder of the Corporation who was a stockholder of record at the time of giving of the notice provided for in this
Section 2.2, who is entitled to vote at the meeting and who complied with the notice procedures set forth in this Section 2.2. Nominations by stockholders of persons for election to the Board of Directors may be made at such a special meeting of stockholders if the stockholder's notice complies with the notice requirements set forth in clause (i) of Section 2.1(c) and is delivered to the Secretary at the principal executive offices of the Corporation not earlier than the 90th day prior to such special meeting and not later than the close of business on the later of the 60th day prior to the date of such special meeting or the 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting.

2.3. Place of Meeting. The Board of Directors may designate any place, either within or without the State of Delaware, as the place of meeting for any annual meeting or for any special meeting called by the Board of Directors. If no designation is made or if a special meeting be otherwise called, the place of meeting shall be at the principal executive offices of the Corporation.

2.4. Notice of Meeting. Written notice stating the place, day and hour of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered to each stockholder of record entitled to vote at such meeting not less than ten (10) days (unless a longer period is required by law) nor more than sixty (60) days before the date of the meeting, either personally or by mail, by or at the direction of the President or the Secretary or other officer or persons calling the meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the stockholder at his address as it appears on the stock record books of the Corporation, with postage thereon prepaid.

2.5. Adjournment. The Board of Directors may postpone or reschedule any previously scheduled special meeting. At the adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting. No notice of the time or place of an adjournment need be given if the


4

time and place are announced at the meeting at which an adjournment is taken, unless the adjournment is for more than thirty (30) days or a new record date is fixed for the adjourned meeting, in which case notice of the adjourned meeting shall be given to each stockholder of record entitled to vote thereat. Unless a new record date for the adjourned meeting is fixed, the determination of stockholders of record entitled to notice of or to vote at the meeting at which adjournment is taken shall apply to the adjourned meeting.

2.6. Fixing of Record Date. For the purpose of determining the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board of Directors may fix a date as the record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting. For the purpose of determining the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a date as the record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall not be more than sixty (60) days prior to such action. For the purpose of determining the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than ten (10) days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. If no record date is fixed, the record date for determining:

(a) stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held;

(b) stockholders entitled to express consent to a corporate action in writing without a meeting, when no prior action of the Board of Directors is necessary, shall be the first day on which a signed written consent is delivered to the Corporation in accordance with applicable law;

(c) stockholders entitled to express consent to a corporate action in writing without a meeting, when prior action of the Board of Directors is necessary, shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action; and

(d) stockholders for any other purpose shall be the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

2.7. Voting Records. The officer having charge of the stock transfer books for shares of the Corporation shall, at least ten (10) days before each meeting of stockholders, make a complete record of the stockholders entitled to vote at such meeting, arranged in alphabetical order, showing the address of


5

each stockholder, the number of shares of each class of stock of the Corporation entitled to vote registered in the name of each stockholder and the total number of votes to which each stockholder is entitled. Such record shall be produced and kept open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held as specified in the notice of the meeting or at the place of the meeting. The record shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder present. The original stock transfer books shall be the only evidence as to who are the stockholders entitled to examine such record or transfer books or to vote at any meeting of stockholders.

2.8 Quorum; Required Vote. Except as otherwise provided in the Certificate of InCorporation or as may be required by law, a quorum at a meeting of stockholders will exist if shares of the Corporation holding a majority of all votes entitled to be cast at such meeting are represented in person or by proxy. Where a separate vote by a class or classes is required, a majority of the shares of such class or classes present in person or represented by proxy shall constitute a quorum entitled to take action with respect to that vote on that matter. In all matters other than the election of directors, the affirmative vote of the holders of a majority of the votes represented at the meeting in person or by proxy voting together as one class shall be the act of the stockholders, unless a greater vote is required by law or the certificate of inCorporation. Unless otherwise required by law or the certificate of inCorporation, directors shall be elected by a plurality of the votes of shares represented at the meeting in person or by proxy and entitled to vote on the election of directors. If a quorum shall fail to attend any meeting, the chairman of the meeting may adjourn the meeting to another place, date, or time. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified.

2.9. Conduct of Meeting. (a) Such person as the Board of directors may have designated or, in the absence of such a person, the Chairman of the Board, or, in his or her absence, the President or, in his or her absence, such person as may be chosen by the holders of a majority of the shares entitled to vote who are present, in person or by proxy, shall call to order any meeting of the stockholders and act as chairman of the meeting. In the absence of the Secretary of the Corporation, the secretary of the meeting shall be such person as the chairman appoints.

(b) The chairman of any meeting of stockholders shall determine the order of business and the procedure at the meeting, including such regulation of the manner of voting and the conduct of discussion as seem to him or her in order. The chairman shall have the power to adjourn the meeting to another place, date and time. The date and time of the opening and closing of the polls for each matter upon which the stockholders will vote at the meeting shall be announced at the meeting.

2.10. Proxies. At any meeting of the stockholders, every stockholder entitled to vote may vote in person or by proxy authorized by an instrument in writing or by a transmission permitted by law filed with the Corporation in accordance with the procedure established for the meeting. Any copy, facsimile telecommunication or other reliable reproduction of the writing or transmission


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created pursuant to this paragraph may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used, provided that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission. Unless otherwise provided in the proxy and supported by sufficient interest, a proxy may be revoked at any time before it is voted, either by written notice filed with the Secretary or the acting secretary of the meeting or by oral notice given by the stockholder to the presiding officer during the meeting. The presence of a stockholder who has filed his proxy shall not of itself constitute a revocation. No proxy shall be valid after three (3) years from the date of its execution, unless otherwise provided in the proxy. The Board of Directors shall have the power and authority to make rules establishing presumptions as to the validity and sufficiency of proxies.

2.11. Voting of Shares. (a) Each outstanding share of stock of the Corporation shall be entitled to that number of votes, if any, upon each matter submitted to a vote at a meeting of stockholders as provided in or in accordance with the certificate of inCorporation.

(b) All voting, including on the election of directors but excepting where otherwise required by law, may be by a voice vote; provided, however, that upon demand therefore by a stockholder entitled to vote or by his or her proxy, a stock vote shall be taken. Every stock vote shall be taken by ballots, each of which shall state the name of the stockholder or proxy voting and such other information as may be required under the procedure established for the meeting.

(c) The Corporation may, and to the extent required by law, shall, in advance of any meeting of stockholders, appoint one or more inspectors to act at the meeting and make a written report as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of stockholders, the person presiding at the meeting may, and to the extent required by law, shall appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his ability. Every vote taken by ballots shall be counted by a duly appointed inspector or inspectors.

2.12. Voting of Shares by Certain Holders. (a) Other Corporations. Shares standing in the name of another Corporation may be voted either in person or by proxy, by the president of such Corporation or any other officer appointed by such president. A proxy executed by any principal officer of such other Corporation or assistant thereto shall be conclusive evidence of the signer's authority to act, in the absence of express notice to this Corporation, given in writing to the Secretary of this Corporation, of the designation of some other person by the board of directors or the bylaws of such other Corporation.

(b) Legal Representatives and Fiduciaries. Shares held by any administrator, executor, guardian, conservator, trustee in bankruptcy, receiver, or assignee for creditors may be voted by duly executed proxy, without a transfer of such shares to his name. Shares standing in the name of a fiduciary may be voted by him, either in person or by proxy. A proxy executed by a fiduciary shall be conclusive evidence of the signer's authority to act in the absence of express notice to this Corporation, given in writing to the Secretary of this Corporation, that such manner of voting is expressly prohibited or otherwise directed by the document creating the fiduciary relationship.

(c) Pledgees. A stockholder whose shares are pledged shall be entitled to vote such shares unless in the transfer of the shares the pledger


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has expressly authorized the pledgee to vote the shares and thereafter the pledgee or his proxy shall be entitled to vote the shares so transferred.

(d) Treasury Stock and Subsidiaries. Neither treasury shares, nor shares held by another Corporation if a majority of the shares entitled to vote for the election of directors of such other Corporation is held by this Corporation, shall be voted at any meeting or counted in determining the total number of outstanding shares entitled to vote, but shares of its own issue held by this Corporation in a fiduciary capacity or held by such other Corporation in a fiduciary capacity may be voted and shall be counted in determining the total number of outstanding shares entitled to vote.

(e) Joint Holders. Shares of record in the names of two or more persons or shares to which two or more persons have the same fiduciary relationship, unless the Secretary of the Corporation is given notice otherwise and furnished with a copy of the instrument creating the relationship, may be voted as follows:

(i) If voted by an individual, his vote binds all holders.

(ii) If voted by more than one holder, the majority vote binds all, unless the vote is evenly split in which case the shares may be voted proportionally, or according to the ownership interest as shown in the instrument filed with the Secretary of the Corporation.

2.13. Waiver of Notice by Stockholders. Whenever any notice whatever is required to be given to any stockholder of the Corporation under the certificate of inCorporation or bylaws or any provision of the Delaware General Corporation Law, a waiver thereof in writing, signed at any time, whether before or after the time of meeting, by the stockholder entitled to such notice, shall be deemed equivalent to the giving of such notice. Attendance of a person at a meeting shall constitute waiver of notice of such meeting, except when the person attends for the express purpose of objecting to the transaction of any business. Neither the business nor purpose of any regular or special meeting of stockholders, directors or members of a committee of directors need be specified in the waiver.

2.14. Stock List. (a) A complete list of stockholders entitled to vote at any meeting of stockholders, arranged in alphabetical order for each class of stock and showing the address of each such stockholder and the number of shares registered in his or her name, shall be open to the examination of any such stockholder, for any purpose germane to the meeting, during ordinary business hours for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or if not so specified, at the place where the meeting is to be held.

(b) The stock list shall also be kept at the place of the meeting during the whole time thereof and shall be open to the examination of any such stockholder who is present. This list shall presumptively determine the identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them.

ARTICLE III. BOARD OF DIRECTORS

3.1.Number, Election, and Term of Directors. Subject to the rights of the holders of any series of preferred stock to elect directors under specified


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circumstances, the number of directors shall be fixed from time to time exclusively by the Board of Directors pursuant to a resolution adopted by a majority of the total number of directors which the Corporation would have if there were no vacancies. Except as otherwise set forth in the certificate of incorporation, each director shall hold office until the next annual meeting of stockholders and until his successor shall have been elected and qualified, or until his prior death, resignation or removal. Directors need not be residents of the State of Delaware or stockholders of the corporation.

3.2. Newly Created Directorships and Vacancies. Subject to applicable law and to the rights of the holders of any series of preferred stock with respect to such series of preferred stock, and unless the Board of Directors otherwise determines, newly created directorships resulting from any increase in the authorized number of directors or any vacancies on the Board of Directors resulting from death, resignation, retirement, disqualification, removal from office or other cause shall be filled only by a majority vote of the Directors then in office, though less than a quorum, and directors so chosen shall hold office for a term expiring at the annual meeting of stockholders at which the term of office of the class to which they have been elected expires and until such director's successor shall have been duly elected and qualified. No decrease in the number of authorized directors constituting the entire Board of Directors shall shorten the term of any incumbent director.

3.3. Removal and Resignation. Except as otherwise set forth in the certificate of incorporation, a director may be removed from office by affirmative vote of a majority of the votes represented by outstanding shares entitled to vote for the election of such director taken at a meeting of stockholders called for that purpose. A director may resign at any time by filing his written resignation with the Secretary of the Corporation.

3.4. Regular Meetings. A regular meeting of the Board of Directors shall be held without other notice than this bylaw immediately after the annual meeting of stockholders and each adjourned session thereof. The place of such regular meeting shall be the same as the place of the meeting of stockholders which precedes it, or such other suitable place as may be announced at such meeting of stockholders. The Board of Directors may provide, by resolution, the time and place, either within or without the State of Delaware, for the holding of additional regular meetings without other notice than such resolution.

3.5. Special Meetings. Except as otherwise set forth in the certificate of inCorporation, special meetings of the Board of Directors may be called by or at the request of the Chairman of the Board, President, Secretary or any two (2) or more directors. The individual(s) calling any special meeting of the Board of Directors may fix any place, either within or without the State of Delaware, as the place for holding any special meeting of the Board of Directors called by them, and if no other place is fixed the place of the meeting shall be at the principal executive offices of the Corporation.

3.6 Notice; Waiver. Notice of each special meeting of the Board of Directors shall be given by written notice to each director at his business address or at such other address as such director shall have designated in writing filed with the Secretary, by mailing such notice not less than seventy-two (72) hours prior thereto or by personal delivery, telephone, or facsimile transmission of such notice not less than twenty-four (24) hours prior thereto. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail so addressed, with postage thereon prepaid. Whenever


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any notice whatever is required to be given to any director of the Corporation under the certificate of inCorporation or bylaws or any provision of law, a waiver thereof in writing, signed at any time, whether before or after the time of meeting, by the director entitled to such notice, shall be deemed equivalent to the giving of such notice. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the sole purpose of objecting thereat to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting. Unless otherwise indicated in the notice thereof, any and all business may be transacted at a special meeting.

3.7 Quorum. Except as otherwise provided by law or by the certificate of inCorporation or these bylaws, a majority of the whole Board of Directors shall constitute a quorum for the transaction of business at any meeting of the Board of Directors. A majority of the directors present (though less than such quorum) may adjourn the meeting to another place, date, or time without further notice or waiver thereof.

3.8. Manner of Acting. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors, unless the act of a greater number is required by law or by the certificate of inCorporation or these bylaws.

3.9. Conduct of Meetings. The Chairman of the Board or, in his absence, the President or, in their absence, any director chosen by the directors present, shall call meetings of the Board of Directors to order and shall act as chairman of the meeting. The Secretary of the Corporation shall act as secretary of all meetings of the Board of Directors but in the absence of the Secretary, the presiding officer may appoint any Assistant Secretary or any director or other person present to act as secretary of the meeting.

3.10. Powers. The Board of Directors may, except as otherwise required by law, exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, including, without limiting the generality of the foregoing, the unqualified power:

(a) To declare dividends from time to time in accordance with law;

(b) To purchase or otherwise acquire any property, rights or privileges on such terms as it shall determine;

(c) To authorize the creation, making, and issuance, in such form as it may determine, of written obligations of every kind, negotiable or non-negotiable, secured or unsecured, and to do all things necessary in connection therewith;

(d) To remove any officer of the Corporation with or without cause, and from time to time to devolve the powers and duties of any officer upon any other person for the time being;

(e) To confer upon any officer of the Corporation the power to appoint, remove and suspend subordinate officers, employees and agents;

(f) To adopt from time to time such stock option, stock purchase, bonus or other compensation plans for directors, officers, employees and agents of the Corporation and its subsidiaries as it may determine;


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(g) To adopt from time to time such insurance, retirement, and other benefit plans for directors, officers, employees, and agents of the Corporation and its subsidiaries as it may determine; and

(h) To adopt from time to time regulations, not inconsistent with these bylaws, for the management of the Corporation's business and affairs.

3.11. Compensation. (a) Unless otherwise restricted by the certificate of inCorporation, the Board of Directors shall have the authority to fix the compensation of the directors. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors may be paid a fixed sum for attendance at each meeting of the Board of Directors and/or paid a stated salary and/or paid other compensation as director. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed compensation for serving on a committee and/or attending committee meetings.

(b) The Board of Directors shall also shall have authority to provide for or delegate authority to an appropriate committee to provide for reasonable pensions, disability or death benefits, and other benefits or payments, to directors, officers and employees and to their estates, families, dependents or beneficiaries on account of prior services rendered by such directors, officers and employees to the Corporation.

3.12. Presumption of Assent. Solely for the purposes of Section 174 of the Delaware General Corporation Law, a director of the Corporation who is present at a meeting of the Board of Directors or a committee thereof of which he is a member at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the Secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action.

3.13. Unanimous Consent without Meeting. Any action required or permitted by the certificate of inCorporation or bylaws or any provision of law to be taken by the Board of Directors at a meeting or by a resolution of any committee thereof may be taken without a meeting if a consent in writing, setting forth the action so taken, filed with the minutes of the proceedings, shall be signed by all of the directors then in office or comprising such committee.

ARTICLE IV. COMMITTEES

4.1. Committees of the Board of Directors. The Board of Directors, by a vote of a majority of the whole Board, may from time to time designate committees of the Board, with such lawfully delegable powers and duties as it thereby confers, to serve at the pleasure of the Board and shall, for those committees and any others provided for herein, elect a director or directors to


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serve as the member or members, designating, if it desires, other directors as alternate members who may replace any absent or disqualified member at any meeting of the committee. In the absence of disqualification of any member of any committee and any alternate member in his or her place, the member or members of the committee present at the meeting and not disqualified from voting, whether or not he or she or they constitute a quorum, may by unanimous vote appoint another member of the Board of Directors to act at the meeting in the place of the absent or disqualified member.

4.2. Conduct of Business. Each committee may determine the procedural rules for meeting and conducting its business and shall act in accordance therewith, except as otherwise provided herein or required by law. Adequate provision shall be made for notice to members of all meetings; one-third (1/3) of the members shall constitute a quorum unless the committee shall consist of one (1) or two (2) members, in which event one (1) member shall constitute a quorum; and all matters shall be determined by a majority vote of the members present. Action may be taken by any committee without a meeting if all members thereof consent thereto in writing, and the writing or writings are filed with the minutes of the proceedings of such committee.

ARTICLE V. OFFICERS

5.1. Number. The principal officers of the Corporation shall be a Chairman of the Board, a President, one or more Vice Presidents, a Secretary and a Treasurer, each of whom shall be elected by the Board of Directors. Such other officers and assistant officers as may be deemed necessary may be elected or appointed by the Board of Directors. Any number of offices may be held by the same person.

5.2. Election and Term of Office. The officers of the Corporation to be elected by the Board of Directors shall be elected annually by the Board of Directors at the first meeting of the Board of Directors held after each annual meeting of the stockholders. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as conveniently may be. Each officer shall hold office until his successors shall have been duly elected or until his prior death, resignation or removal. Any officer may resign at any time upon written notice to the Corporation. Failure to elect officers shall not dissolve or otherwise affect the Corporation.

5.3. Removal. Any officer or agent may be removed by the Board of Directors whenever in its judgment the best interests of the Corporation will be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment shall not of itself create contract rights.

5.4. Vacancies. A vacancy in any principal office because of death, resignation, removal, disqualification or otherwise, shall be filled by the Board of Directors for the unexpired portion of the term.

5.5 The Chairman of the Board. The Chairman of the Board shall be the chief executive officer of the Corporation and, subject to the control of the Board of Directors, shall in general supervise and control all of the business and affairs of the Corporation. He shall, when present, preside at all meetings of the stockholders and of the Board of Directors. He shall have authority,


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subject to such rules as may be prescribed by the Board of Directors, to appoint such agents and employees of the Corporation as he shall deem necessary, to prescribe their powers, duties and compensation, and to delegate authority to them. Such agents and employees shall hold office at the discretion of the Chairman of the Board. He shall have authority to sign, execute and acknowledge, on behalf of the Corporation, all deeds, mortgages, bonds, stock certificates, contracts, leases, reports and all other documents or instruments necessary or proper to be executed in the course of the Corporation's regular business or which shall be authorized by resolution of the Board of Directors; and, except as otherwise provided by law or the Board of Directors, he may authorize the President or any other officer or agent of the Corporation to sign, execute and acknowledge such documents or instruments in his place and stead. In general, he shall perform all duties incident to the office of Chairman of the Board and such other duties as may be prescribed by the Board of Directors from time to time.

5.6. The President. The President shall be the chief operating officer of the Corporation, and if there shall be no Chairman of the Board, the Chief Executive Officer of the Corporation) and, subject to the control of the Board of Directors, shall assist the Chairman of the Board in supervising and controlling all of the business and affairs of the Corporation. In the absence of the Chairman of the Board or in the event of his death, inability or refusal to act, or in the event for any reason it shall be impracticable for the Chairman of the Board to act personally, the President shall perform the duties of the Chairman of the Board and, when so acting, shall have all the powers of and be subject to all the restrictions upon the Chairman of the Board. He shall, in the absence of the Chairman of the Board, when present, preside at all meetings of the stockholders and of the Board of Directors. He shall have authority, subject to such rules as may be prescribed by the Board of Directors and to the approval of the Chairman of the Board, to appoint such agents and employees of the Corporation as he shall deem necessary, to prescribe their powers, duties and compensation, and to delegate authority to them. Such agents and employees shall hold office at the discretion of the President. He shall have authority to sign, execute and acknowledge, on behalf of the Corporation, all deeds, mortgages, bonds, stock certificates, contracts, leases, reports and all other documents or instruments necessary or proper to be executed in the course of the Corporation's regular business, or which shall be authorized by resolution of the Board of Directors; and, except as otherwise provided by law or the Board of Directors, he may authorize any Vice President or other officer or agent of the Corporation to sign, execute and acknowledge such documents or instruments in his place and stead. In general, he shall perform all duties incident to the office of President and such other duties as may be prescribed by the Board of Directors from time to time.

5.7. The Vice Presidents. In the absence of the President or in the event of his death, inability or refusal to act, or in the event for any reason it shall be impracticable for the President to act personally, the Vice President (or, in the event there shall be more than one Vice President, the Vice Presidents in the order designated by the Board of Directors, or in the absence of such designation, then in the order of their election) shall perform the duties of the President and, when so acting, shall have all the powers of and be subject to all the restrictions upon the President. Any Vice President may sign, with the Secretary or Assistant Secretary, certificates for shares of the Corporation; and shall perform such other duties and have such authority as from time to time may be delegated or assigned to him by the President or the Board of Directors. The execution of any instrument of the Corporation by any Vice President shall be conclusive evidence, as to third parties, of his authority to act in the stead of the President.


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5.8. The Secretary. The Secretary shall: (a) keep the minutes of the meetings of the stockholders and the Board of Directors in one or more books provided for the purpose; (b) attest instruments to be filed with the Secretary of State; (c) see that all notices are duly given in accordance with the provisions of these bylaws or as required by law; (d) be custodian of the corporate records and of the seal of the Corporation, if any, and see that the seal of the Corporation, if any, is affixed to all documents the execution of which on behalf of the Corporation under its seal is duly authorized; (e) keep or arrange for the keeping of a register of the post office address of each stockholder which shall be furnished to the Secretary by such stockholders; (f) sign with the Chairman of the Board, the President or any Vice President certificates for shares of the Corporation the issuance of which shall have been authorized by resolution of the Board of Directors; (g) have general charge of the stock transfer books of the Corporation; and (h) in general perform all duties incident to the office of the Secretary and have such other duties and exercise such authority as from time to time may be delegated or assigned to him by the President or by the Board of Directors.

5.9. The Treasurer. The Treasurer shall: (a) have charge and custody of and be responsible for all funds and securities of the Corporation; (b) receive and give receipts for moneys due and payable to the Corporation from any source whatsoever, and deposit all such moneys in the name of the Corporation in such banks, trust companies or other depositories as shall be selected in accordance with the provisions of Section 5.4; and (c) in general perform all of the duties and exercise such other authority as from time to time may be delegated or assigned to him by the President or by the Board of Directors. If required by the Board of Directors, the Treasurer shall give a bond for the faithful discharge of his duties in such sum and with such surety or sureties as the Board of Directors shall determine.

5.10. Assistant Secretaries and Assistant Treasurers. There shall be such number of Assistant Secretaries and Assistant Treasurers as the Board of Directors may from time to time authorize. The Assistant Secretaries may sign with the President or any Vice President certificates for shares of the Corporation the issuance of which shall have been authorized by a resolution of the Board of Directors. The Assistant Treasurers shall respectively, if required by the Board of Directors, give bonds for the faithful discharge of their duties in such sums and with such sureties as the Board of Directors shall determine. The Assistant Secretaries and Assistant Treasurers, in general, shall perform such duties and have such authority as shall from time to time be delegated or assigned to them by the Secretary or the Treasurer, respectively, or by the President or the Board of Directors.

5.11. Other Assistants and Acting Officers. The Board of Directors shall have the power to appoint any person to act as assistant to any officer, or as agent for the Corporation in his stead, or to perform the duties of such officer whenever for any reason it is impracticable for such officer to act personally, and such assistant or acting officer or other agent so appointed by the Board of Directors shall have the power to perform all the duties of the office to which he is so appointed to be an assistant, or as to which he is so appointed to act, except as such power may be otherwise defined or restricted by the Board of Directors.

5.12. Salaries. The salaries of the principal officers shall be fixed from time to time by the Board of Directors or by a duly authorized committee thereof, and no officer shall be prevented from receiving such salary by reason of the fact that he is also a director of the Corporation.


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5.13. Delegation of Authority. The Board of Directors may from time to time delegate the powers or duties of any officer to any other officers or agents, notwithstanding any provision hereof.

5.14. Action with Respect to Securities of Other Corporations. Unless otherwise directed by the Board of Directors, the President or any officer of the Corporation authorized by the President shall have power to vote and otherwise act on behalf of the Corporation, in person or by proxy, at any meeting of stockholders of or with respect to any action of stockholders of any other Corporation in which this Corporation may hold securities and otherwise to exercise any and all rights and powers which this Corporation may possess by reason of its ownership of securities in such other Corporation.

ARTICLE VI. CONTRACTS, CHECKS AND SPECIAL CORPORATE ACTS

6.1. Contracts. The Board of Directors may authorize any officer or officers, agent or agents, to enter into any contract or execute or deliver any instrument in the name of and on behalf of the Corporation, and such authorization may be general or confined to specific instances. In the absence of other designation, all deeds, mortgages and instruments or assignment or pledge made by the Corporation shall be executed in the name of the Corporation by the Chairman of the Board, the President or any Vice President and by the Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer; the Secretary or an Assistant Secretary, when necessary or required, shall affix the corporate seal, if any, thereto; and when so executed no other party to such instrument or any third party shall be required to make any inquiry into the authority of the signing officer or officers.

6.2. Checks, Drafts, etc. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation, shall be signed by such officer or officers, agent or agents of the Corporation and in such manner as shall from time to time be determined by or under the authority of a resolution of the Board of Directors.

6.3. Voting of Securities Owned by this Corporation. Subject always to the specific directions of the Board of Directors, (a) any shares or other securities issued by any other Corporation and owned or controlled by this Corporation may be voted at any meeting of security holders of such other Corporation by the Chairman of the Board, the President, any Vice President, the Treasurer, or the Secretary of this Corporation, and (b) whenever, in the judgment of the Chairman of the Board or in his absence, of the President, or in their absence, any Vice President, it is desirable for this Corporation to execute a proxy or written consent in respect to any shares or other securities issued by any other Corporation and owned by this Corporation, such proxy or consent shall be executed in the name of this Corporation by the Chairman of the Board, the President, any Vice President, the Treasurer or the Secretary of this Corporation, without necessity of any authorization by the Board of Directors, affixation of corporate seal, if any, or countersignature or attestation by another officer. Any person or persons designated in the manner above stated as the proxy or proxies of this Corporation shall have full right, power and authority to vote the shares or other securities issued by such other Corporation and owned by this Corporation the same as such shares or other securities might be voted by this Corporation.


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ARTICLE VII. CERTIFICATES FOR SHARES AND THEIR TRANSFER

7.1. Certificates for Shares. Certificates representing shares of the Corporation shall be in such form, consistent with law, as shall be determined by the Board of Directors. Such certificates shall be signed by the Chairman of the Board, the President or any Vice President and by the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer. All certificates for shares shall be consecutively numbered or otherwise identified. The name and address of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the stock transfer books for the Corporation. All certificates surrendered to the Corporation for transfer shall be canceled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and canceled, except as provided in Section 7.6.

7.2. Facsimile Signatures. The signatures of any officers of the Corporation upon a certificate may be facsimiles if the certificate is manually signed on behalf of a transfer agent, or a registrar, other than the Corporation itself or an employee of the Corporation.

7.3. Signature by Former Officers. In case any officer, who has signed or whose facsimile signature has been placed upon any certificate for shares, shall have ceased to be such officer before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer at the date of its issue.

7.4. Transfer of Shares. Prior to due presentment of a certificate for shares for registration of transfer the Corporation may treat the registered owner of such shares as the person exclusively entitled to vote, to receive notifications and otherwise to have and exercise all the rights and power of an owner. Transfers of shares shall be made only upon the books of the Corporation kept at an office of the Corporation or by transfer agents designated to transfer shares of the Corporation. Where a certificate for shares is presented to the Corporation with a request to register for transfer, the Corporation shall not be liable to the owner or any other person suffering loss as a result of such registration of transfer if (a) there were on or with the certificate the necessary endorsements, and (b) the Corporation had no duty to inquire into adverse claims or has discharged any such duty. The Corporation may require reasonable assurance that said endorsements are genuine and effective and in compliance with such other regulations as may be prescribed by or under the authority of the Board of Directors. Where a transfer of shares is made for collateral security, and not absolutely, it shall be so expressed in the entry of transfer if, when the shares are presented, both the transferor and the transferee so request.

7.5. Restrictions on Transfer. The face or reverse side of each certificate representing shares shall bear a conspicuous notation of any restriction imposed by the Corporation upon the transfer of such shares.

7.6. Lost, Destroyed or Stolen Certificates. Where the owner claims that his certificates for shares have been lost, destroyed or wrongfully taken, a new certificate shall be issued in place thereof if the owner (a) so requests before the Corporation has notice that such shares have been acquired by a bona fide purchaser, and (b) satisfies such other reasonable requirements as may be prescribed by or under the authority of the Board of Directors concerning proof


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of such loss, theft, or destruction and concerning the giving of a satisfactory bond or bonds of indemnity.

7.7. Consideration of Shares. The shares of the Corporation may be issued for such consideration as shall be fixed from time to time by the Board of Directors, consistent with the law of the State of Delaware.

7.8. Stock Regulations. The Board of Directors shall have the power and authority to make all such further rules and regulations not inconsistent with the statutes of the State of Delaware as it may deem expedient concerning the issue, transfer and registration of certificates representing shares of the Corporation.

7.9. Record Date. (a) In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders, or to receive payment of any dividend or other distribution or allotment of any rights or to exercise any rights in respect of any change, conversion, or exchange of stock or for the purpose of any other lawful action, the Board of Directors may, except as otherwise required by law, fix a record date, which record date shall not precede the date on which the resolution fixing the record date is adopted and which record date shall not be more than sixty (60) nor less than ten (10) days before the date of any meeting of stockholders, nor more than sixty (60) days prior to the time for such other action as hereinbefore described; provided, however, that if no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held, and, for determining stockholders entitled to receive payment of any dividend or other distribution or allotment of rights or to exercise any rights of change, conversion, or exchange of stock or for any other purpose, the record date shall be at the close of business on the day on which the Board of Directors adopts a resolution relating thereto.

(b) A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

ARTICLE VIII. SEAL

8.1. The Board of Directors may provide for a corporate seal in an appropriate form or may provide that the Corporation shall have no seal.

ARTICLE IX. AMENDMENTS

9.1. By Stockholders. Except as otherwise set forth herein, in the certificate of inCorporation or required by law, these bylaws may be adopted, amended or repealed by the stockholders entitled to vote at the stockholders annual meeting without prior notice, or at any other meeting provided the amendment under consideration has been set forth in the notice of meeting, by the affirmative vote of not less than two-thirds of the votes present or represented by outstanding shares at any meeting at which a quorum is in attendance.


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9.2. By Directors. Except as otherwise set forth herein in the certificate of inCorporation or required by law, the Board of Directors is expressly authorized to adopt, alter, amend, or repeal these bylaws by the affirmative vote of a majority of the Board of Directors at any meeting at which a quorum is present.

9.3. Implied Amendments. Any action taken or authorized by the Board of Directors which would be inconsistent with these bylaws, but is taken or authorized by the affirmative vote of not less than the number of votes or the number of directors required to amend the bylaws to conform with such action, shall be given the same effect as though the bylaws had been temporarily amended or suspended so far, but only so far, as is necessary to permit the specific action so taken or authorized.

ARTICLE X. INDEMNIFICATION

10.1. Mandatory Indemnification. (a) In all cases other than those set forth in Section 10.1(b) hereof and subject to the conditions and limitations set forth hereinafter in this Article X, the Corporation shall indemnify and hold harmless any person who is or was a party, or is threatened to be made a party, to any Action (see Section 10.17 for definitions of capitalized terms used herein) by reason of his or her status as an Executive and/or as to acts performed in the course of such Executive's duties to the Corporation and/or an Affiliate, against Liabilities and reasonable Expenses incurred by or on behalf of an Executive in connection with any Action, including, without limitation, in connection with the investigation, defense, settlement or appeal of any Action; provided, that it is not determined by the Authority, or by a court, pursuant to
Section 10.3 that the Executive engaged in misconduct which constitutes a Breach of Duty.

(b) To the extent an Executive has been successful on the merits or otherwise in connection with any Action, including, without limitation, the settlement, dismissal, abandonment or withdrawal of any such Action where the Executive does not pay, incur or assume any material Liabilities, or in connection with any claim, issue or matter therein, he or she shall be indemnified by the Corporation against reasonable Expenses incurred by or on behalf of him or her in connection therewith. The Corporation shall pay such Expenses to the Executive (net of all Expenses, if any, previously advanced to the Executive pursuant to Section 10.2), or to such other person or entity as the Executive may designate in writing to the Corporation, within ten (10) days after the receipt of the Executive's written request therefor, without regard to the provisions of Section 10.3. In the event the Corporation refuses to pay such requested Expenses the Executive may petition a court to order the Corporation to make such payment pursuant to Section 10.4.

(c) Notwithstanding any other provision contained in this Article X to the contrary, the Corporation shall not:

(i) indemnify, contribute or advance Expenses to an Executive with respect to any Action initiated or brought voluntarily by the Executive and not by way of defense, except with respect to Actions:

(1) brought to establish or enforce a right to indemnification, contribution and/or an advance of Expenses under Section 10.4,


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under the Statute as it may then be in effect or under any other applicable statute or law or otherwise as required;

(2) initiated or brought voluntarily by an Executive to the extent such Executive is successful on the merits or otherwise in connection with such an Action in accordance with and pursuant to Section 10.1(b); or

(3) as to which the Board determines it be appropriate.

(ii) indemnify an Executive against judgments, fines or penalties incurred in a Derivative Action if the Executive is finally adjudged liable to the Corporation by a court (unless the court before which such Derivative Action was brought determines that the Executive is fairly and reasonably entitled to indemnity for any or all of such judgments, fines or;

(iii) indemnify an Executive under this Article X for any amounts paid in settlement of any Action effected without the Corporation's written consent.

(d) The Corporation shall not settle any Action in any manner which would impose any Liabilities or other type of limitation on the Executive without the Executive's written consent. Neither the Corporation nor the Executive shall unreasonably withhold their consent to any proposed settlement.

(e) An Executive's conduct with respect to an employee benefit plan sponsored by or otherwise associated with the Corporation and/or an Affiliate for a purpose he or she reasonably believes to be in the interests of the participants in and beneficiaries of such plan is conduct that does not constitute a breach or failure to perform his or her duties to the Corporation or an Affiliate, as the case may be.

10.3. Advance for Expenses. (a) The Corporation shall pay to an Executive, or to such other person or entity as the Executive may designate in writing to the Corporation, his or her reasonable Expenses incurred by or on behalf of such Executive in connection with any Action, or claim, issue or matter associated with any such Action, in advance of the final disposition or conclusion of any such Action (or claim, issue or matter associated with any such Action), within ten (10) days after the receipt of the Executive's written request therefor; provided, the following conditions are satisfied:

(i) the Executive has first requested an advance of such Expenses in writing (and delivered a copy of such request to the Corporation) from the insurance carrier(s), if any, to whom a claim has been reported under an applicable insurance policy purchased by the Corporation and each such insurance carrier, if any, has declined to make such an advance;

(ii) the Executive furnishes to the Corporation an executed written certificate affirming his or her good faith belief that he or she has not engaged in misconduct which constitutes a Breach of Duty; and

(iii) the Executive furnishes to the Corporation an executed written agreement to repay any advances made under this Section 10.2 if it is ultimately determined that he or she is not entitled to be indemnified by the Corporation for such Expenses pursuant to this Article X.


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(b) If the Corporation makes an advance of Expenses to an Executive pursuant to this Section 10.2, the Corporation shall be subrogated to every right of recovery the Executive may have against any insurance carrier from whom the Corporation has purchased insurance for such purpose.

10.4. Determination of Right to Indemnification. (a) Except as otherwise set forth in this Section 10.3 or in Section 10.1(c), any indemnification to be provided to an Executive by the Corporation under Section 10.1(a) upon the final disposition or conclusion of any Action, or any claim, issue or matter associated with any such Action, unless otherwise ordered by a court, shall be paid by the Corporation to the Executive (net of all Expenses, if any, previously advanced to the Executive pursuant to Section 10.2), or to such other person or entity as the Executive may designate in writing to the Corporation, within sixty (60) days after the receipt of the Executive's written request therefor. Such request shall include an accounting of all amounts for which indemnification is being sought. No further corporate authorization for such payment shall be required other than this Section 10.3(a).

(b) Notwithstanding the foregoing, the payment of such requested indemnifiable amounts pursuant to Section 10.1(a) may be denied by the Corporation if:

(i) the Board by a majority vote thereof determines that the Executive has engaged in misconduct which constitutes a Breach of Duty; or

(ii) a majority of the directors of the Corporation is party in interest to such Action.

(c) In either event of nonpayment pursuant to Section 10.3(b), the Board shall immediately authorize and direct, by resolution, that an independent determination be made as to whether the Executive has engaged in misconduct which constitutes a Breach of Duty and, therefore, whether indemnification of the Executive is proper pursuant to this Article X.

(d) Such independent determination shall be made, at the option of the Executive(s) seeking indemnification, by (i) a panel of three arbitrators (selected as set forth below in Section 10.3(f) from the panels of arbitrators of the American Arbitration Association) in New York, New York, in accordance with the Commercial Arbitration Rules then prevailing of the American Arbitration Association; (ii) an independent legal counsel mutually selected by the Executive(s) seeking indemnification and the Board by a majority vote of a quorum thereof consisting of directors who were not parties in interest to such Action (or, if such quorum is not obtainable, by the majority vote of the entire Board); or (iii) a court in accordance with Section 10.4.

(e) In any such determination there shall exist a rebuttable presumption that the Executive has not engaged in misconduct which constitutes a Breach of Duty and is, therefore, entitled to indemnification hereunder. The burden of rebutting such presumption by clear and convincing evidence shall be on the Corporation.

(f) If a panel of arbitrators is to be employed hereunder, one


20

of such arbitrators shall be selected by the Board by a majority vote of a quorum thereof consisting of directors who were not parties in interest to such Action (or, if such quorum is not obtainable, by an independent legal counsel chosen by the majority vote of the entire Board), the second by the Executive(s) seeking indemnification and the third by the previous two arbitrators.

(g) The Authority shall make its independent determination hereunder within sixty (60) days of being selected and shall simultaneously submit a written opinion of its conclusions to both the Corporation and the Executive.

(h) If the Authority determines that an Executive is entitled to be indemnified for any amounts pursuant to this Article X, the Corporation shall pay such amounts to the Executive (net of all Expenses, if any, previously advanced to the Executive pursuant to Section 10.2), including interest thereon as provided in Section 10.6(c), or to such other person or entity as the Executive may designate in writing to the Corporation, within ten (10) days of receipt of such opinion.

(i) The Expenses associated with the indemnification process set forth in this Section 10.3, including, without limitation, the Expenses of the Authority selected hereunder, shall be paid by the Corporation.

10.5. Court-Ordered Indemnification and Advance for Expenses. (a) An Executive may, either before or within two years after a determination, if any, has been made by the Authority, petition the court before which such Action was brought or any other court of competent jurisdiction to independently determine whether or not he or she has engaged in misconduct which constitutes a Breach of Duty and is, therefore, entitled to indemnification under the provisions of this Article X. Such court shall thereupon have the exclusive authority to make such determination unless and until such court dismisses or otherwise terminates such proceeding without having made such determination. An Executive may petition a court under this Section 10.4 either to seek an initial determination by the court as authorized by Section 10.3(d) or to seek review by the court of a previous adverse determination by the Authority.

(b) The court shall make its independent determination irrespective of any prior determination made by the Authority; provided, however, that there shall exist a rebuttable presumption that the Executive has not engaged in misconduct which constitutes a Breach of Duty and is therefore entitled to indemnification hereunder. The burden of rebutting such presumption by clear and convincing evidence shall be on the Corporation.

(c) In the event the court determines that an Executive has engaged in misconduct which constitutes a Beach of Duty, it may nonetheless order indemnification to be paid by the Corporation if it determines that the Executive is fairly and reasonably entitled to indemnification in view of all of the circumstances of such Action.

(d) In the event the Corporation does not (i) advance Expenses to the Executive within ten (10) days of such Executive's compliance with
Section 10.2; or (ii) indemnify an Executive with respect to requested Expenses under Section 10.1(b) within ten (10) days of such Executive's written request therefor, the Executive may petition the court before which such Action was brought, if any, or any other court of competent jurisdiction to order the Corporation to pay such reasonable Expenses immediately. Such court, after


21

giving any notice it considers necessary, shall order the Corporation to pay such Expenses if it determines that the Executive has complied with the applicable provisions of Section 10.2 or 10.1(b), as the case may be.

(e) If the court determines pursuant to this Section 10.4 that the Executive is entitled to be indemnified for any Liabilities and/or Expenses, or to the advance of Expenses, unless otherwise ordered by such court, the Corporation shall pay such Liabilities and/or Expenses to the Executive (net of all Expenses, if any, previously advanced to the Executive pursuant to Section 10.2), including interest thereon as provided in Section 10.6(c) or to such other person or entity as the Executive may designate in writing to the Corporation, within ten (10) days of the rendering of such determination.

(f) An Executive shall pay all Expenses incurred by such Executive in connection with the judicial determination provided in this Section 10.4, unless it shall ultimately be determined by the court that he or she is entitled, in whole or in part, to be indemnified by, or to receive an advance from, the Corporation as authorized by this Article X. All Expenses incurred by an Executive in connection with any subsequent appeal of the judicial determination provided for in this Section 10.4 shall be paid by the Executive regardless of the disposition of such appeal.

10.6. Termination of an Action Is Nonconclusive. The adverse termination of any Action against an Executive by judgment, order, settlement or conviction, or upon a plea of no contest or its equivalent, shall not, of itself, create a presumption that the Executive has engaged in misconduct which constitutes a Breach of Duty.

10.7. Partial Indemnification; Reasonableness; Interest. (a) If it is determined by the Authority, or by a court, that an Executive is entitled to indemnification as to some claims, issues or matters, but not as to other claims, issues or matters, involved in any Action, the Authority, or the court, shall authorize the proration and payment by the Corporation of such Liabilities and/or reasonable Expenses with respect to which indemnification is sought by the Executive, among such claims, issues or matters as the Authority, or the court, shall deem appropriate in light of all of the circumstances of such Action.

(b) If it is determined by the Authority, or by a court, that certain Expenses incurred by or on behalf of an Executive are for whatever reason unreasonable in amount, the Authority, or the court, shall nonetheless authorize indemnification to be paid by the Corporation to the Executive for such Expenses as the Authority, or the court, shall deem reasonable in light of all of the circumstances of such Action.

(c) Interest shall be paid by the Corporation to an Executive, to the extent deemed appropriate by the Authority, or by a court, at a reasonable interest rate, for amounts for which the Corporation indemnifies or advances to the Executive.

10.8. Insurance; Subrogation. (a) The Corporation may purchase and maintain insurance on behalf of any person who is or was an Executive of the Corporation, and/or is or was serving as an Executive of an Affiliate, against Liabilities and/or Expenses asserted against him or her and/or incurred by or on behalf of him or her in any such capacity or arising out of his or her status as such an Executive, whether or not the Corporation would have the power to


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indemnify him or her against such Liabilities and/or Expenses under this Article X or under the Statute as it may then be in effect. Except as expressly provided herein, the purchase and maintenance of such insurance shall not in any way limit or affect the rights and obligations of the Corporation and/or any Executive under this Article X. Such insurance may, but need not, be for the benefit of all Executives of the Corporation and those serving as an Executive of an Affiliate.

(b) If an Executive shall receive payment from any insurance carrier or from the plaintiff in any Action against such Executive in respect of indemnified amounts after payments on account of all or part of such indemnified amounts have been made by the Corporation pursuant to this Article X, such Executive shall promptly reimburse the Corporation for the amount, if any, by which the sum of such payment by such insurance carrier or such plaintiff and payments by the Corporation to such Executive exceeds such indemnified amounts; provided, however, that such portions, if any, of such insurance proceeds that are required to be reimbursed to the insurance carrier under the terms of its insurance policy, such as deductible, retention or coinsurance-insurance amounts, shall not be deemed to be payments to such Executive hereunder.

(c) Upon payment of indemnified amounts under this Article X, the Corporation shall be subrogated to such Executive's rights against any insurance carrier in respect of such indemnified amounts and the Executive shall execute and deliver any and all instruments and/or documents and perform any and all other acts or deeds which the Corporation shall deem necessary or advisable to secure such rights. The Executive shall do nothing to prejudice such rights of recovery or subrogation.

10.9. Witness Expenses. The Corporation shall advance or reimburse any and all reasonable Expenses incurred by or on behalf of an Executive in connection with his or her appearance as a witness in any Action at a time when he or she has not been formally named a defendant or respondent to such an Action, within ten (10) days after the receipt of an Executive's written request therefor.

10.10. Contribution. (a) Subject to the limitations of this Section 10.9, if the indemnity provided for in Section 10.1 is unavailable to an Executive for any reason whatsoever, the Corporation, in lieu of indemnifying the Executive, shall contribute to the amount incurred by or on behalf of the Executive, whether for Liabilities and/or for reasonable Expenses in connection with any Action in such proportion as deemed fair and reasonable by the Authority, or by a court, in light of all of the circumstances of any such Action, in order to reflect:

(i) the relative benefits received by the Corporation and the Executive as a result of the event(s) and/or transaction(s) giving cause to such Action; and/or

(ii) the relative fault of the Corporation (and its other Executives, employees and/or agents) and the Executive in connection with such event(s) and/or transaction(s).

(b) The relative fault of the Corporation (and its other Executives, employees and/or agents) on the one hand, and of the Executive, on the other hand, shall be determined by reference to, among other things, the parties' relative intent, knowledge, access to information and opportunity to


23

correct or prevent the circumstances resulting in such Liabilities and/or Expenses. The Corporation agrees that it would not be just and equitable if contribution pursuant to this Section 10.9 were determined by pro rata allocation or any other method of allocation which does not take into account the foregoing equitable considerations.

(c) An Executive shall not be entitled to contribution from the Corporation under this Section 10.9 in the event it is determined by the Authority, or by a court, that the Executive has engaged in misconduct which constitutes a Breach of Duty.

(d) The Corporation's payment of, and an Executive's right to, contribution under this Section 10.9 shall be made and determined in accordance with and pursuant to the provisions in Sections 10.3 and/or 10.4 relating to the Corporation's payment of, and the Executive's right to, indemnification under this Article X.

10.11. Indemnification of Employees. Unless otherwise specifically set forth in this Article X, the Corporation shall indemnify and hold harmless any person who is or was a party, or is threatened to be made a party to any Action by reason of his or her status as, or the fact that he or she is or was an employee or authorized agent or representative of the Corporation and/or an Affiliate as to acts performed in the course and within the scope of such employee's, agent's or representative's duties to the Corporation and/or an Affiliate, in accordance with and to the fullest extent permitted by the Statute as it may then be in effect.

10.12. Severability. If any provision of this Article X shall be deemed invalid or inoperative, or if a court of competent jurisdiction determines that any of the provisions of this Article X contravenes public policy, this Article X shall be construed so that the remaining provisions shall not be affected, but shall remain in full force and effect, and any such provisions which are invalid or inoperative or which contravene public policy shall be deemed, without further Action or deed by or on behalf of the Corporation, to be modified, amended and/or limited, but only to the extent necessary to render the same valid and enforceable, and the Corporation shall indemnify and hold harmless an Executive as to Liabilities and reasonable Expenses with respect to any Action to the full extent permitted by any applicable provision of this Article X that shall not have been invalidated and to the full extent otherwise permitted by the Statute as it may then be in effect.

10.13. Nonexclusivity of Article X. The right to indemnification, contribution and advancement of Expenses provided to an Executive by this Article X shall not be deemed exclusive of any other rights to indemnification, contribution and/or advancement of Expenses which any Executive or other employee or agent of the Corporation and/or of an Affiliate may be entitled under any charter provision, written agreement, resolution, vote of stockholders or disinterested directors of the Corporation or otherwise, including, without limitation, under the Statute as it may then be in effect, both as to acts in his or her official capacity as such Executive or other employee or agent of the Corporation and/or of an Affiliate or as to acts in any other capacity while holding such office or position, whether or not the Corporation would have the power to indemnify, contribute and/or advance Expenses to the Executive under this Article X or under the Statute: provided that it is not determined that the Executive or other employee or agent has engaged in misconduct which constitutes a Breach of Duty.

10.14. Notice to the Corporation; Defense of Actions. (a) An Executive


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shall promptly notify the Corporation in writing upon being served with or having actual knowledge of any citation, summons, complaint, indictment or any other similar document relating to any Action which may result in a claim of indemnification, contribution or advancement of Expenses hereunder, but the omission so to notify the Corporation will not relieve the Corporation from any liability which it may have to the Executive otherwise than under this Agreement unless the Corporation shall have been irreparably prejudiced by such omission.

(b) With respect to any such Action as to which an Executive notifies the Corporation of the commencement thereof:

(i) The Corporation shall be entitled to participate therein at its own expense; and

(ii) Except as otherwise provided below, to the extent that it may wish, the Corporation ( or any other indemnifying party, including any insurance carrier, similarly notified by the Corporation or the Executive) shall be entitled to assume the defense thereof, with counsel selected by the Corporation (or such other indemnifying party) and reasonably satisfactory to the Executive.

(c) After notice from the Corporation (or such other indemnifying party) to the Executive of its election to assume the defense of an Action, the Corporation shall not be liable to the Executive under this Article X for any Expenses subsequently incurred by the Executive in connection with the defense thereof other than reasonable costs of investigation or as otherwise provided below. The Executive shall have the right to employ his or her own counsel in such Action but the Expenses of such counsel incurred after notice from the Corporation (or such other indemnifying party) of its assumption of the defense thereof shall be at the expense of the Executive unless (i) the employment of counsel by the Executive has been authorized by the Corporation;
(ii) the Executive shall have reasonably concluded that there may be a conflict of interest between the Corporation (or such other indemnifying party) and the Executive in the conduct of the defense of such Action; or (iii) the Corporation (or such other indemnifying party) shall not in fact have employed counsel to assume the defense of such Action, in each of which cases the Expenses of counsel shall be at the expense of the Corporation. The Corporation shall not be entitled to assume the defense of any Derivative Action or any Action as to which the Executive shall have made the conclusion provided for in clause (ii) above.

10.15. Continuity of Rights and Obligations. The terms and provisions of this Article X shall continue as to an Executive subsequent to his or her Termination Date and such terms and provisions shall inure to the benefit of the heirs, estate, executors and administrators of such Executive and the successors and assigns of the Corporation, including, without limitation any successor to the Corporation by way of merger, consolidation and/or sale or disposition of all or substantially all of the assets or capital stock of the Corporation. Except as provided herein, all rights and obligations of the Corporation and the Executive hereunder shall continue in full force and effect despite the subsequent amendment or modification of the Corporation's Certificate of InCorporation, as it is in effect on the date hereof, and such rights and obligations shall not be affected by any such amendment or modification, any resolution of directors or stockholders of the Corporation, or by any other corporate action which conflicts with or purports to amend, modify, limit or eliminate any of the rights or obligations of the Corporation and/or of the Executive hereunder.


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10.16. Amendment. (a) This Article X may only be altered, amended or repealed by the affirmative vote of a majority of the stockholders of the Corporation so entitled to vote; provided, however, that the Board may alter or amend this Article X without such stockholder approval if any such alteration or amendment:

(i) is made in order to conform to any amendment or revision of the Delaware General Corporation Law, including, without limitation, the Statute, which (A) expands or permits the expansion of an Executive's right to indemnification thereunder ; (B) limits or eliminates, or permits the limitation or elimination, of the liability of the Executives; or (C) is otherwise beneficial to the Executives; or

(ii) in the sole judgment and discretion of the Board, does not materially adversely affect the rights and protections of the stockholders of the Corporation.

(b) Any repeal, modification or amendment of this Article X shall not adversely affect any rights or protections of an Executive existing under this Article X immediately prior to the time of such repeal, modification or amendment.

10.17. Certain Definitions. The following terms as used in this Article X shall be defined as follows:

(a) "Action(s)" shall include, without limitation, any threatened, pending or completed action, claim, litigation, suit or proceeding, whether civil, criminal, administrative, arbitrative or investigative, whether predicated on foreign, federal, state or local law, whether brought under and/or predicated upon the Securities Act of 1933, as amended, and/or the Securities Exchange Act of 1934, as amended, and/or their respective state counterparts and/or any rule or regulation promulgated thereunder, whether a Derivative Action and/or whether formal or informal.

(b) "Affiliate" shall include, without limitation, any Corporation, partnership, joint venture, employee benefit plan, trust, or other similar enterprise that directly or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Corporation.

(c) "Authority" shall mean the panel of arbitrators or independent legal counsel selected pursuant to Section 10.3 .

(d) "Board" shall mean the Board of Directors of the Corporation.

(e) "Breach of Duty" shall mean the Executive breached or failed to perform his or her duties to the Corporation or an Affiliate, as the case may be, and the Executive's breach of or failure to perform those duties constituted:

(i) a breach of his or her "duty of loyalty" (as defined herein) to the Corporation or its stockholders;

(ii) acts or omissions not in "good faith" (as further


26

defined herein) or which involve intentional misconduct or a knowing violation of the law;

(iii) a violation of Section 174 of the Delaware General Corporation Law; or

(iv) a transaction from which the Executive derived an improper direct personal financial profit (unless such profit is determined to be immaterial in light of all the circumstances).

In determining whether an Executive has acted or omitted to act otherwise than in "good faith," as such term is used herein, the Authority, or the court, shall determine solely whether such Executive (i) in the case of conduct in his or her "official capacity" (as defined herein) with the Corporation, believed in the exercise of his or her business judgment that his or her conduct was in the best interests of the Corporation; and (ii) in all other cases reasonably believed that his or her conduct was at least not opposed to the best interests of the Corporation.

(f) "Derivative Action" shall mean any Action brought by or in the right of the Corporation and/or an Affiliate.

(g) "Duty of loyalty" shall mean a breach of fiduciary duty by an Executive which constitutes a willful failure to deal fairly with the Corporation or its stockholders in connection with a transaction in which the Executive has a material undisclosed personal conflict of interest.

(h) "Executive(s)" shall mean any individual who is, was or has agreed to become a director and/or officer of the Corporation and/or an Affiliate.

(i) "Expenses" shall include, without limitation, any and all expenses, fees, costs, charges, attorneys' fees and disbursements, other out-of-pocket costs, reasonable compensation for time spent by the Executive in connection with the Action for which he or she is not otherwise compensated by the Corporation, any Affiliate, any third party or other entity and any and all other direct and indirect costs of any type or nature whatsoever.

(j) "Liabilities" shall include, without limitation, judgments, amounts incurred in settlement, fines, penalties and, with respect to any employee benefit plan, any excise tax or penalty incurred in connection therewith, and any and all other liabilities of every type or nature whatsoever.

(k) "Official capacity" shall mean the office of director or officer in the Corporation, membership on any committee of directors, any other offices in the Corporation held by an Executive and any other employment or agency relationship between the Executive and the Corporation and "official capacity," as such term is used herein, shall not include service for any Affiliate or other foreign or domestic Corporation or any partnership, joint venture, trust, employee benefit plan, or other enterprise.

(l) "Statute" shall mean Delaware General Corporation Law
Section 145 (for any successor provisions).

(m) "Termination Date" shall mean the date an Executive


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ceases, for whatever reason, to serve in an employment relationship with the Company and/or any Affiliate.

XI. NOTICES

11.1. Notices. Except as otherwise specifically provided herein or required by law, all notices required to be given to any stockholder, director, officer, employee, or agent shall be in writing and may in every instance be effectively given by hand delivery to the recipient thereof, by depositing such notice in the mails, postage paid, recognized overnight delivery service or by sending such notice by facsimile, receipt acknowledged, or by prepaid telegram or mailgram. Any such notice shall be addressed to such stockholder, director, officer, employee or agent at his or her last known address as the same appears on the books of the Corporation. The time when such notice is received, if hand delivered, or dispatched, if delivered through the mails or by telegram or mailgram, shall be the time of the giving of the notice.

11.2. Waivers. A written waiver of any notice, signed by a stockholder, director, officer, employee, or agent, whether before or after the time of the event for which notice is to be given, shall be deemed equivalent to the notice required to be given to such stockholder, director, officer, employee, or agent. Neither the business nor the purpose of any meeting need be specified in such a waiver. Attendance at any meeting shall constitute waiver of notice except attendance for the sole purpose of objecting to the timeliness of notice.

ARTICLE XII. MISCELLANEOUS

12.1. Facsimile Signatures. In addition to the provisions for use of facsimile signatures elsewhere specifically authorized in these bylaws, facsimile signatures of any officer or officers of the Corporation may be used whenever and as authorized by the Board of Directors or a committee thereof.

12.2. Corporate Seal. The Board of Directors may provide a suitable seal, containing the name of the Corporation, which seal shall be in the charge of the Secretary. If and when so directed by the Board of Directors or a committee thereof, duplicates of the seal may be kept and used by the Treasurer or by an Assistant Secretary or Assistant Treasurer.

12.3. Reliance upon Books, Reports, and Records. Each director, each member of any committee designated by the Board of Directors, and each officer of the Corporation shall, in the performance of his or her duties, be fully protected in relying in good faith upon the books of account or other records of the Corporation and upon such information, opinions, reports, or statements presented to the Corporation by any of its officers or employees, or committees of the Board of Directors so designated, or by any other person as to matters which such director or committee member reasonably believes are within such other person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation.

12.4. Fiscal Year. The fiscal year of the Corporation shall be as fixed by the Board of Directors.

12.5. Time Periods. In applying any provision of these bylaws which requires that an act be done or not be done a specified number of days prior to


28

an event or that an act be done during a period of a specified number of days prior to an event, calendar days shall be used, the day of the doing of the act

shall be excluded, and the day of the event shall be included.


CERTIFICATE OF ELIMINATION WITH
RESPECT TO THE SERIES B CUMULATIVE REDEEMABLE
CONVERTIBLE PREFERRED STOCK OF TEREX CORPORATION
PURSUANT TO SECTION 151(g)

In accordance with Section 151(g) of the General Corporation Law of the State of Delaware, Terex Corporation, a Delaware corporation (the "Company"), does hereby certify that the following resolutions respecting its Series B Cumulative Redeemable Convertible Preferred Stock (the "Series B Preferred Stock") were duly adopted by the Company's Board of Directors:

RESOLVED, all of its issued and outstanding Series B Preferred Stock have been converted to common stock of the Company in accordance with their terms and that no shares of the Company's Series B Preferred Stock are outstanding and that no shares of the Series B Preferred Stock will be issued subject to the certificate of designations previously filed with respect to the Series B Preferred Stock.

RESOLVED, that the officers of the Company are directed to file with the Secretary of State of the State of Delaware a certificate pursuant to Section 151(g) of the General Corporation Law of the State of Delaware setting forth these resolutions in order to eliminate from the Company's certificate of incorporation all matters set forth in the certificate of designations with respect to the Series B Preferred Stock.

IN WITNESS WHEREOF, Terex Corporation has caused this certificate to be signed by its Senior Vice President this 23rd day of March, 1998.

TEREX CORPORATION

By:_______________________________
Eric I Cohen

Senior Vice President


TEREX CORPORATION

$250,000,000

13 1/4% Senior Secured Notes due 2002

Series A and Series B


FIFTH SUPPLEMENTAL INDENTURE

Dated as of February 18, 1998


UNITED STATES TRUST COMPANY OF NEW YORK,

Trustee


1

FIFTH SUPPLEMENTAL INDENTURE

FIFTH SUPPLEMENTAL INDENTURE, dated as of February 18, 1998, between TEREX CORPORATION, a Delaware corporation (the "Company"), and UNITED STATES TRUST COMPANY OF NEW YORK, a New York corporation, as trustee (the "Trustee").

WHEREAS, the Company, and CMH Acquisition Corp., Clark Material Handling Company, CMH Acquisition International Corp., Koehring Cranes, Inc., Legris Industries, Inc., PPM Cranes, Inc., as guarantors (collectively, the "Original Guarantors") and the Trustee are parties to an Indenture, dated as of May 9, 1995 (said Indenture, as it may heretofore or hereafter from time to time be amended, the "Indenture") providing for the issuance of the Company's 13 1/4% Series A Senior Secured Notes due 2002 and the Company's 13-1/4% Series B Senior Secured Notes due 2002 (collectively, the "Notes");

WHEREAS, the Company and the Trustee entered into a First Supplemental Indenture, dated as of April 7, 1997, pursuant to which Terex-Telelect Inc., Terex Aerial Inc., Terex Atlantico Inc., Terex-Ro Corporation, Terex West Coast Inc., and Terex Aviation Ground Equipment Inc. became additional guarantors under the Indenture (the "Additional Guarantors");

WHEREAS, the Company and the Trustee entered into a Second Supplemental Indenture, dated as of April 14, 1997, pursuant to which Terex Baraga Products, Inc. and M & M Enterprises of Baraga, Inc. (the "Baraga Guarantors") became additional guarantors under the Indenture;

WHEREAS, the Company and the Trustee entered into a Third Supplemental Indenture, dated as of December 9, 1997, pursuant to which Terex Cranes, Inc. (formerly known as Terex/PPM Cranes Holdings, Inc.) ("Terex Cranes") became an additional guarantor under the Indenture;

WHEREAS, the Company and the Trustee entered into a Fourth Supplemental Indenture, dated as of January 5, 1998, pursuant to which Payhauler Corp. and Progressive Components, Inc. became additional guarantors under the Indenture (together with the Original Guarantors, the Additional Guarantors, the Baraga Guarantors and Terex Cranes, the "Guarantors"); and

WHEREAS, holders of at least a majority of the principal amount of the Notes outstanding have consented in writing to certain amendments to the Indenture pursuant to Section 9.2 thereof, and the Company, the Guarantors and the Trustee desire to make such amendments to the Indenture.

NOW, THEREFORE, the Company, the Guarantors and the Trustee agree as follows for the equal and ratable benefit of the Holders of the Notes.


2

ARTICLE 1

AMENDMENT TO THE INDENTURE

Section 1.01. Article 1 of the Indenture is hereby amended as follows:

(a) The following definitions are hereby deleted: Acquired Debt, Acquisition, Acquisition Agreement, Capital Lease Obligation, Cash Equivalent, Consolidated EBITDA, Consolidated Interest Expense, Consolidated Net Income, Consolidated Net Worth, Eligible Inventory, Eligible Receivables, Existing Credit Facility, Floor Plan Guaranty, Interest Coverage Ratio, Net Assets, Net Income, Permitted Investments, Permitted Proceeds, PPM Funded Debt, PPM Subordinated Note, Restricted Investment, Revolving Credit Facility and Weighted Average Life to Maturity.

(b) The definition of "Permitted Liens" is hereby amended by (i) inserting on the third to last line thereof after the words "leases and subleases," a new clause (xii) which shall read as follows: "(xii) Liens junior to the Liens granted by the Company or any of its Subsidiaries on any of their respective properties, assets or revenues pursuant to the Security Documents,"
(ii) renumbering current clause (xii) as clause (xiii) and (iii) changing the number "(xi)" on the last line thereof to the number "(xii)."

(c) The definition of "Purchase Money Liens" is hereby amended in its entirety to read as follows:

"Purchase Money Liens" means (i) Liens to secure or securing Purchase Money Obligations and (ii) Liens to secure Indebtedness issued in exchange for, or the proceeds of which are contemporaneously used to extend, refinance, renew, replace, or refund outstanding Indebtedness of the Company or any of its Restricted Subsidiaries incurred solely to refinance Purchase Money Obligations provided that such refinancing indebtedness is incurred no later than 180 days after the satisfaction of such Purchase Money Obligations.

(d) Section 1.2 is hereby amended by (i) deleting the references to "Affiliate Transaction," "Excess Proceeds," "Purchase Money Indebtedness," "Refinance," "Refinance Indebtedness" and "Restricted Payments" and (ii) changing the references to "Excess Proceeds Offer," "Excess Proceeds Offer Period" and "Excess Proceeds Payment Date" to "Net Proceeds Offer," "Net Proceeds Offer Period" and "Net Proceeds Payment Date," respectively.

Section 1.02. Articles 4, 5, 6 and 8 of the Indenture are hereby amended as follows:

(a) Sections 4.7, 4.8, 4.9, 4.11, 4.15 and 4.16 are hereby deleted in their entirety.

(b) Section 4.10 is hereby amended in its entirety to read as follows:


3

Section 4.10. Purchase of Notes Following Asset Sales.

If the Company or any Restricted Subsidiary (i) elects to make an Asset Sale on such terms as it may determine in its sole discretion and (ii) further elects to offer to purchase the Notes with any or all of the Net Proceeds of such Asset Sale (the "Net Proceeds Offer"), the Company shall offer to purchase Notes having an aggregate principal amount equal to the Net Proceeds of such Asset Sale that the Company elects to apply to the purchase of Notes (the "Purchase Amount"), at a purchase price equal to 100% of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to the purchase date.

The Net Proceeds Offer shall remain open for a period of 20 Business Days and no longer, unless a longer period is required by law (the "Net Proceeds Offer Period"). Promptly after the termination of the Net Proceeds Offer Period (the "Net Proceeds Payment Date"), the Company shall purchase and mail or deliver payment for the Purchase Amount for the Notes or portions thereof tendered, pro rata or by such other method as may be required by law, or, if less than the Purchase Amount has been tendered, all Notes tendered pursuant to the Net Proceeds Offer. The principal amount of Notes to be purchased pursuant to a Net Proceeds Offer may be reduced by the principal amount of Notes acquired by the Company through purchase or redemption
(other than pursuant to a Change of Control Offer)
subsequent to the date of an Asset Sale and surrendered to the Trustee for cancellation.

The Net Proceeds Offer shall be conducted in compliance with all applicable laws, including (without limitation), Regulation 14E of the Exchange Act and the rules thereunder and all other applicable Federal and state securities laws.

The Company shall commence the Net Proceeds Offer by mailing to the Trustee and each Holder, at such Holder's last registered address, a notice, which shall govern the terms of the Net Proceeds Offer, and shall state:

(1) that the Net Proceeds Offer is being made pursuant to this Section 4.10, the principal amount of Notes which shall be accepted for payment and that all Notes validly tendered shall be accepted for payment on a pro rata basis;

(2) the purchase price and the date of purchase;

(3) that any Notes not tendered or accepted for payment pursuant to the Net Proceeds Offer shall continue to accrue interest;

(4) that, unless the Company defaults in the payment of the purchase price with respect to any Notes tendered, Notes accepted for payment pursuant to the Net Proceeds Offer shall cease to accrue interest after the Net Proceeds Payment Date;

(5) that Holders electing to have Notes purchased pursuant to a Net Proceeds Offer shall be required to surrender their Notes, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Note completed, to the Company prior to the close of business on the third Business Day immediately preceding the Net Proceeds Payment Date;


4

(6) that Holders shall be entitled to withdraw their election if the Company receives, not later than the close of business on the second Business Day preceding the Net Proceeds Payment Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of Notes the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Notes purchased;

(7) that Holders whose Notes are purchased only in part shall be issued Notes representing the unpurchased portion of the Notes surrendered; provided that each Note purchased and each new Note issued shall be in principal amount of $1,000 or whole multiples thereof; and

(8) the instructions that Holders must follow in order to tender their Notes.

On or before the Net Proceeds Payment Date, the Company shall (i) accept for payment on a pro rata basis the Notes or portions thereof tendered pursuant to the Net Proceeds Offer, (ii) deposit with the Paying Agent money sufficient to pay the purchase price of all Notes or portions thereof so accepted and (iii) deliver to the Trustee the Notes so accepted, together with an Officer's Certificate stating that the Notes or portions thereof tendered to the Company are accepted for payment. The Paying Agent shall promptly mail to each Holder of Notes so accepted payment in an amount equal to the purchase price of such Notes, and the Trustee shall promptly authenticate and mail to such Holders new Notes equal in principal amount to any unpurchased portion of the Note surrendered.

The Company shall make a public announcement of the results of the Net Proceeds Offer as soon as practicable after the Net Proceeds Payment Date. For the purposes of this Section 4.10, the Trustee shall act as the Paying Agent.

(c) Section 4.12 is hereby amended in its entirety to read as follows:

Section 4.12. Limitation on Liens.

(a) The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, create, incur, assume or suffer to exist any Lien on any asset (real, personal, tangible or intangible) now owned or hereafter acquired, or on any income or profits therefrom, or assign or convey any right to receive income therefrom, except (i) Liens on Accounts and Inventory and the proceeds thereof (and contract rights and general intangibles relating thereto and any other Mutual Collateral (as defined in the Intercreditor Agreement)), (ii) Purchase Money Liens and (iii) Permitted Liens.

(b) Anything in the Security Documents to the contrary notwithstanding, the Company and its Subsidiaries may grant Liens in accordance with this Section 4.12; provided, that no such Lien shall affect the attachment, perfection or priority of the Lien of the Security Documents. Subject to the foregoing, upon receipt of a written notice from the Company or a pledging Subsidiary or another


5

secured party stating that Collateral is subject to a security interest under a security agreement executed by the pledgor which contains a description of the security, the Trustee shall execute appropriate instruments acknowledging that such Collateral is subject to such other security interest.

(d) Section 4.17 is hereby amended by deleting the following clause which begins at the end of the twenty-first line thereof and ends on the twenty-fourth line thereof: "and such Person shall be permitted by virtue of its Fixed Charge Coverage Ratio to incur, immediately after giving effect to such acquisition, at least $1.00 of additional Indebtedness pursuant to Section 4.9(a) of this Indenture."

(e) Section 5.1 of the Indenture is hereby amended by (i) adding the word "and" after Section 5.1(ii), (ii) replacing the comma and the word "and" at the end of Section 5.1(iii) with a period, (iii) deleting Section 5.1(iv) in its entirety and (iv) inserting a new paragraph immediately following Section 5.1(iii) which shall read as follows:

Nothing in this Section 5.1 shall be construed to prohibit a consolidation or merger between the Company, any Guarantor and/or any Restricted Subsidiary or among Restricted Subsidiaries or Guarantors, nor prohibit the sale, assignment, transfer, lease, conveyance or other disposal by the Company or any Restricted Subsidiary of all or substantially all of its properties or assets in one or more related transactions to any Restricted Subsidiary or to the Company.

(f) Section 6.1 of the Indenture is hereby amended by (i) changing the reference to "Excess Proceeds Offer" in Section 6.1(2) to "Net Proceeds Offer,"
(ii) amending Section 6.1(3) in its entirety to read as follows: "(3) the Company defaults in the performance of or breaches any of the provisions of Sections 4.10, 4.12 or 4.14 hereof" and (iii) deleting Sections 6.1(4), 6.1(6) and 6.1(7) in their entirety.

(g) Section 8.1 of the Indenture is hereby amended by (i) deleting the words "(as certified by a nationally recognized accounting firm designated by the Company)" on the sixth and seventh lines of Section 8.1(1) and inserting therefor the words "(as certified by an Officers' Certificate delivered by the Company)", (ii) inserting the word "and" after Section 8.1(1), (iii) deleting Sections 8.1(2) and 8.1(3) and (iv) deleting the first sentence of the paragraph immediately following 8.1(4) which begins with the words "Then, this Indenture" and replacing it with a new sentence which shall read as follows:

Then, this Indenture shall cease to be of further effect (except as provided in this paragraph), and the Trustee, on demand of the Company, shall execute proper instruments acknowledging confirmation of and discharge under this Indenture in the case of clause (A) above, and the Company's ability not to comply with restrictive covenants and related Events of Default in the case of clause (B) above, and, in the case of clauses (A) and (B) above, the release of the Liens created under the Security Documents.


6

ARTICLE 2

MISCELLANEOUS

Section 2.01. The supplement to the Indenture effected hereby shall be binding upon all Holders of the Securities, their transferees and assigns. All Securities issued and outstanding on the date hereof shall be deemed to incorporate by reference or include the supplement to the Indenture effected hereby.

Section 2.02. All terms used in this Fifth Supplemental Indenture which are defined in the Indenture shall have the meanings specified in the Indenture unless the context of this Supplemental Indenture otherwise requires.

Section 2.03. This Fifth Supplemental Indenture shall become a binding agreement between the parties when counterparts hereof shall have been executed and delivered by each of the parties hereto. The amendments set forth in Article 1 shall become operative on the opening of business on the Acceptance Date, as defined in the Company's Offer to Purchase and Consent Solicitation Statement, dated February 2, 1998, relating to the Company's offer to purchase all of the outstanding Notes.

Section 2.04. This Fifth Supplemental Indenture shall be construed, interpreted and the rights of the parties determined in accordance with the laws of the State of New York, as applied to contracts made and performed within the State of New York, without regard to principles of conflicts of law.

Section 2.05. This Fifth Supplemental Indenture may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same amendment.

Section 2.06. The recitals contained in this Supplemental Indenture are made by the Company and not by the Trustee and all of the provisions contained in the Indenture, in respect of the rights, privileges, immunities, powers and duties of the Trustee shall be applicable in respect thereof as fully and with like effect as if set forth herein in full.

IN WITNESS WHEREOF, the parties hereto have caused this Fifth Supplemental Indenture to be duly executed as of the date first above written.


7

TEREX CORPORATION

By:___________________________
Name: Brian J. Henry

ATTEST: Title: Vice President-Finance/Treasurer


Eric I Cohen, Secretary

UNITED STATES TRUST COMPANY
OF NEW YORK, as Trustee

By:______________________________
Name:

ATTEST: Title:


GUARANTORS:

KOEHRING CRANES, INC.

                                      By:____________________________
                                         Name:  Brian J. Henry
ATTEST:                                  Title: Treasurer

--------------------------
Eric I Cohen, Secretary


                                      PPM CRANES, INC.


                                      By:___________________________________
                                         Name:  Brian J. Henry
ATTEST:                                  Title: Treasurer

---------------------------
Eric I Cohen, Secretary

                                       8

TEREX-TELELECT INC.

                                       By:___________________________________
                                          Name:  Brian J. Henry
ATTEST:                                   Title: Treasurer

---------------------------
Eric I Cohen, Secretary


                                       TEREX AERIALS INC.


                                       By:________________________________
                                          Name:  Brian J. Henry
ATTEST:                                   Title: Treasurer

--------------------------
Eric I Cohen, Secretary


                                        TEREX WEST COAST INC.


                                        By:________________________________
                                           Name:  Brian J. Henry
ATTEST:                                    Title: Treasurer

--------------------------
Eric I Cohen, Secretary


                                        TEREX ATLANTICO, INC.


                                        By:_________________________________
                                           Name:  Brian J. Henry
ATTEST:                                    Title: Treasurer

--------------------------
Eric I Cohen, Secretary


9

TEREX AVIATION GROUND EQUIPMENT INC.

                                        By:________________________________
                                           Name:  Brian J. Henry
ATTEST:                                    Title: Treasurer

--------------------------
Eric I Cohen, Secretary


                                        TEREX-RO CORPORATION


                                        By:________________________________
                                           Name:  Brian J. Henry
ATTEST:                                    Title: Treasurer

--------------------------
Eric I Cohen, Secretary

TEREX CRANES, INC.

By:________________________________
Name: Brian J. Henry

ATTEST: Title: Treasurer


Eric I Cohen, Secretary

PAYHAULER CORP.

By:________________________________
Name: Brian J. Henry

ATTEST: Title: Treasurer


Eric I Cohen, Secretary

10

TEREX BARAGA PRODUCTS, INC.

                                          By:________________________________
                                             Name:   Brian J. Henry
ATTEST:                                      Title:  Treasurer


--------------------------
Eric I Cohen, Secretary


                                           M & M ENTERPRISES OF BARAGA, INC.


                                           By:_______________________________
                                              Name:  Brian J. Henry
ATTEST:                                       Title: Treasurer

--------------------------
Eric I Cohen, Secretary

PROGRESSIVE COMPONENTS, INC.

By:_______________________________
Name: Brian J. Henry

ATTEST: Title: Treasurer


Eric I Cohen, Secretary



CREDIT AGREEMENT

dated as of March 6, 1998

among

TEREX CORPORATION,

CERTAIN OF ITS SUBSIDIARIES,

THE LENDERS NAMED HEREIN,

CREDIT SUISSE FIRST BOSTON,

as Administrative Agent,

BANKBOSTON N.A.,

as Syndication Agent,

and

CANADIAN IMPERIAL BANK OF COMMERCE and
FIRST UNION NATIONAL BANK
as Co-Documentation Agents



1

                                TABLE OF CONTENTS



                                    ARTICLE I

                                   Definitions                             Page


SECTION 1.01.   Defined Terms...............................................   2
SECTION 1.02.   Terms Generally.............................................  28
SECTION 1.03.   Exchange Rates..............................................  29


                                   ARTICLE II

                                   The Credits

SECTION 2.01.   Commitments.................................................  29
SECTION 2.02.   Loans.......................................................  30
SECTION 2.03.   Borrowing Procedure.........................................  32
SECTION 2.04.   Evidence of Debt; Repayment of Loans........................  33
SECTION 2.05.   Fees........................................................  33
SECTION 2.06.   Interest on Loans...........................................  35
SECTION 2.07.   Default Interest............................................  35
SECTION 2.08.   Alternate Rate of Interest..................................  36
SECTION 2.09.   Termination and Reduction of Commitments....................  36
SECTION 2.10.   Conversion and Continuation of Borrowings...................  37
SECTION 2.11.   Repayment of Term Borrowings................................  39
SECTION 2.12.   Prepayment..................................................  40
SECTION 2.13.   Mandatory Prepayments.......................................  41
SECTION 2.14.   Reserve Requirements; Change in Circumstances...............  44
SECTION 2.15.   Change in Legality..........................................  45
SECTION 2.16.   Indemnity...................................................  46
SECTION 2.17.   Pro Rata Treatment..........................................  46
SECTION 2.18.   Sharing of Setoffs..........................................  47
SECTION 2.19.   Payments....................................................  47
SECTION 2.20.   Taxes.......................................................  48
SECTION 2.21.   Assignment of Commitments Under Certain Circumstances;
                   Duty to Mitigate.........................................  50
SECTION 2.22.   Swingline Loans.............................................  51
SECTION 2.23.   Letters of Credit...........................................  52
SECTION 2.24.   A/C Fronted Loans...........................................  56
SECTION 2.25.   Reporting Requirements of A/C Fronting Lenders
                   and Issuing Banks........................................  58
SECTION 2.26.   Additional Issuing Banks....................................  59

                                       2



                                   ARTICLE III

                         Representations and Warranties

SECTION 3.01.   Organization; Powers........................................  59
SECTION 3.02.   Authorization...............................................  59
SECTION 3.03.   Enforceability..............................................  60
SECTION 3.04.   Governmental Approvals......................................  60
SECTION 3.05.   Financial Statements........................................  60
SECTION 3.06.   No Material Adverse Change..................................  60
SECTION 3.07.   Title to Properties; Possession Under Leases................  60
SECTION 3.08.   Subsidiaries................................................  61
SECTION 3.09.   Litigation; Compliance with Laws............................  61
SECTION 3.10.   Agreements..................................................  62
SECTION 3.11.   Federal Reserve Regulations.................................  62
SECTION 3.12.   Investment Company Act; Public Utility Holding
                   Company Act..............................................  62
SECTION 3.13.   Use of Proceeds.............................................  62
SECTION 3.14.   Tax Returns.................................................  62
SECTION 3.15.   No Material Misstatements...................................  62
SECTION 3.16.   Employee Benefit Plans......................................  63
SECTION 3.17.   Environmental Matters.......................................  63
SECTION 3.18.   Insurance...................................................  64
SECTION 3.19.   Security Documents..........................................  64
SECTION 3.20.   Location of Real Property and Leased Premises...............  65
SECTION 3.21.   Labor Matters...............................................  65
SECTION 3.22.   Solvency....................................................  65


                                   ARTICLE IV

                              Conditions of Lending

SECTION 4.01.   All Credit Events...........................................  66
SECTION 4.02.   First Credit Event..........................................  66

                                    ARTICLE V

                              Affirmative Covenants

SECTION 5.01.   Existence; Businesses and Properties........................  70
SECTION 5.02.   Insurance...................................................  70
SECTION 5.03.   Obligations and Taxes.......................................  72
SECTION 5.04.   Financial Statements, Reports, etc. ........................  72
SECTION 5.05.   Litigation and Other Notices................................  73
SECTION 5.06.   Employee Benefits...........................................  73
SECTION 5.07.   Maintaining Records; Access to Properties
                   and Inspections..........................................  74
SECTION 5.08.   Use of Proceeds.............................................  74
SECTION 5.09.   Compliance with Environmental Laws..........................  74

                                       3




SECTION 5.10.   Preparation of Environmental Reports........................  74
SECTION 5.11.   Further Assurances..........................................  74
SECTION 5.12.   Interest Rate Protection Agreements.........................  75


                                   ARTICLE VI

                               Negative Covenants

SECTION 6.01.   Indebtedness................................................  76
SECTION 6.02.   Liens.......................................................  77
SECTION 6.03.   Sale and Lease-Back Transactions............................  79
SECTION 6.04.   Investments, Loans and Advances.............................  79
SECTION 6.05.   Mergers, Consolidations, Sales of Assets and Acquisitions...  80
SECTION 6.06.   Dividends and Distributions; Restrictions on Ability of
                   Subsidiaries to Pay Dividends............................  81
SECTION 6.07.   Transactions with Affiliates................................  81
SECTION 6.08.   Business of Borrowers and Subsidiaries......................  81
SECTION 6.09.   Other Indebtedness and Agreements...........................  82
SECTION 6.10.   Capital Expenditures........................................  82
SECTION 6.11.   Consolidated Leverage Ratio.................................  83
SECTION 6.12.   Consolidated Interest Coverage Ratio........................  83
SECTION 6.13.   Consolidated Fixed Charge Coverage Ratio....................  83
SECTION 6.14.   Fiscal Year.................................................  83

                                   ARTICLE VII

                                Events of Default...........................  84



                                  ARTICLE VIII

               The Administrative Agent and the Collateral Agent............  86


                                   ARTICLE IX

                                  Miscellaneous

SECTION 9.01.   Notices.....................................................  88
SECTION 9.02.   Survival of Agreement.......................................  89
SECTION 9.03.   Binding Effect..............................................  89
SECTION 9.04.   Successors and Assigns......................................  89
SECTION 9.05.   Expenses; Indemnity.........................................  92
SECTION 9.06.   Right of Setoff.............................................  93
SECTION 9.07.   Applicable Law..............................................  93
SECTION 9.08.   Waivers; Amendment..........................................  94
SECTION 9.09.   Interest Rate Limitation....................................  94
SECTION 9.10.   Entire Agreement............................................  95
SECTION 9.11.   WAIVER OF JURY TRIAL........................................  95

                                       4



SECTION 9.12.   Severability................................................  95
SECTION 9.13.   Counterparts................................................  95
SECTION 9.14.   Headings....................................................  95
SECTION 9.15.   Jurisdiction; Consent to Service of Process.................  95
SECTION 9.16.   Conversion of Currencies....................................  96
SECTION 9.17.   Confidentiality.............................................  97
SECTION 9.18.   European Monetary Union.....................................  97
SECTION 9.19.   German Borrower.............................................  98


SCHEDULES

Schedule 1.01(a)  Additional Cost
Schedule 1.01(b)  Subsidiary Guarantors
Schedule 1.01(c)  Mortgaged Properties
Schedule 1.01(d)  Existing Letters of Credit
Schedule 1.01(e)  Certain Countries
Schedule 1.01(f)  Inactive Subsidiaries
Schedule 1.01(g)  Subordination Provisions
Schedule 2.01(a)  Lenders; Commitments
Schedule 2.01(b)  Sublimits for Alternative Currency Extensions of Credit
Schedule 3.08     Subsidiaries
Schedule 3.09     Litigation
Schedule 3.17     Environmental Matters
Schedule 3.18     Insurance
Schedule 3.19(d)  Mortgage Filing Offices
Schedule 3.20(a)  Owned Real Property
Schedule 3.20(b)  Leased Real Property
Schedule 4.02(a)  Local Counsel
Schedule 6.01     Indebtedness
Schedule 6.02     Liens
Schedule 6.04     Investments


EXHIBITS

Exhibit A       Form of Assignment and Acceptance
Exhibit B       Form of Borrowing Request
Exhibit C       Form of Indemnity, Subrogation and Contribution Agreement
Exhibit D       Form of Mortgage
Exhibit E       Form of Pledge Agreement
Exhibit F       Form of Security Agreement
Exhibit G       Form of Subsidiary Guarantee Agreement
Exhibit H       Form of Terex Guarantee
Exhibit I-1     Form of Opinion of Eric Cohen
Exhibit I-2     Form of Local Counsel Opinion

                                       1



                                            CREDIT  AGREEMENT  dated as of March
                                    6, 1998, among TEREX CORPORATION, a Delaware
                                    corporation   ("Terex"),   TEREX   EQUIPMENT
                                    LIMITED,  a company organized under the laws
                                    of  Scotland  (the   "Scottish   Borrower"),
                                    P.P.M.  S.A., a company  organized under the
                                    laws of the  Republic of France (the "French
                                    Borrower"),  UNIT RIG (AUSTRALIA) PTY. LTD.,
                                    a  company  organized  under the laws of the
                                    New South Wales,  Australia (the "Australian
                                    Borrower"),  and  P.P.M.  Sp.A.,  a  company
                                    organized  under the laws of the Republic of
                                    Italy (the "Italian Borrower"),  the Lenders
                                    (as defined in Article I), the Issuing Banks
                                    (as defined in Article I) and CREDIT  SUISSE
                                    FIRST  BOSTON,  a bank  organized  under the
                                    laws of Switzerland,  acting through its New
                                    York  branch  ("CSFB"),   as  administrative
                                    agent (in such capacity, the "Administrative
                                    Agent")  and as  collateral  agent  (in such
                                    capacity,  the  "Collateral  Agent") for the
                                    Lenders.

Terex intends to (a) refinance indebtedness outstanding under the Existing Credit Agreement (such term and each other capitalized term used but not defined herein having the meaning given it in Article I) and (b) offer to purchase (the "Debt Tender Offer") all its outstanding 13-1/4% Senior Secured Notes due 2002 (the "Existing Notes") and, in connection therewith, seek the consent (the "Consent Solicitation") of the holders of the Existing Notes to amend certain of the provisions of the indenture (the "Existing Note Indenture") governing the Existing Notes. Certain of the Subsidiary Borrowers intend to refinance (together with the refinancing referred to in clause (a) of the preceding sentence, the "Refinancing") certain of their existing indebtedness. In addition, following the Closing Date, Terex intends to acquire (the "Acquisition") all the outstanding capital shares of O&K Mining from O&K Orenstein & Koppel AG and to issue the Senior Subordinated Notes.

The Borrowers have requested the Lenders to extend credit in the form of (a) Tranche A Term Loans to be made on the Closing Date and on one other day during the Tranche A Term Loan Availability Period, in an aggregate principal amount not in excess of $175,000,000 (or the Dollar Equivalent thereof in Alternative Currencies), (b) Tranche B Term Loans to be made on the Closing Date, in an aggregate principal amount not in excess of $200,000,000, and (c) Revolving Loans to be made at any time and from time to time during the period from the Closing Date to the Revolving Credit Maturity Date, in an aggregate principal amount at any time outstanding not in excess of $125,000,000 (or the Dollar Equivalent thereof in Alternative Currencies). The Borrowers have requested the A/C Fronting Lenders and the Swingline Lender to extend credit, at any time and from time to time during the period from the Closing Date to the Revolving Credit Maturity Date, in the form of A/C Fronted Loans and Swingline Loans, respectively. The Borrowers have requested the Issuing Banks to issue letters of credit, in an aggregate face amount at any time outstanding not in excess of $35,000,000 (or the Dollar Equivalent thereof in Alternative Currencies), to support payment obligations incurred in the ordinary course of business by the Borrowers and their respective Subsidiaries. The proceeds of the Term Loans, together with a portion of the Revolving Loans, are to be used solely (a) on the Closing Date, (i) to effect the Refinancing, (ii) to finance the Debt Tender Offer, (iii) to pay related fees and expenses and (iv) for working capital purposes and (b) on the date on which the Acquisition is


2

consummated, to fund a portion of the cash consideration therefor and to pay related fees and expenses, and the proceeds of the Revolving Loans, A/C Fronted Loans and Swingline Loans (other than the Loans used for the purposes previously specified in this sentence) are to be used solely for working capital and other general corporate purposes, including the financing of the Acquisition and other Permitted Acquisitions.

The Lenders are willing to extend such credit to the Borrowers and the Issuing Banks are willing to issue letters of credit for the account of the Borrowers on the terms and subject to the conditions set forth herein. Accordingly, the parties hereto agree as follows:

ARTICLE I

Definitions

SECTION 1.01. Defined Terms. As used in this Agreement, the following terms shall have the meanings specified below:

"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.

"ABR Loan" shall mean any ABR Term Loan or ABR Revolving Loan.

"ABR Revolving Loan" shall mean any Revolving Loan bearing interest at a rate determined by reference to the Alternate Base Rate in accordance with the provisions of Article II.

"ABR Term Borrowing" shall mean a Borrowing comprised of ABR Term Loans.

"ABR Term Loan" shall mean any ABR Tranche A Term Loan or any ABR Tranche B Term Loan.

"ABR Tranche A Term Loan" shall mean any Tranche A Term Loan bearing interest at a rate determined by reference to the Alternate Base Rate in accordance with the provisions of Article II.

"ABR Tranche B Term Loan" shall mean any Tranche B Term Loan bearing interest at a rate determined by reference to the Alternate Base Rate in accordance with the provisions of Article II.

"A/C Fronted Base Rate" shall mean, for any day, with respect to any A/C Fronted Loan, a rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the average rate at which overnight deposits in the currency in which the applicable A/C Fronted Loan is denominated and approximately equal in principal amount to such A/C Fronted Loan are obtainable by the applicable A/C Fronting Lender on such day at its lending office for such A/C Fronted Loan in the interbank market (or any other market for overnight funds in such currency utilized by such A/C Fronting Lender), adjusted to reflect any direct or indirect costs of obtaining such deposits (including reserve and assessment costs, to the extent applicable). The A/C Fronted Base Rate applicable to any A/C Fronted Loan shall be determined for each day by the A/C Fronting Lender in respect of such Loan and such determination shall be conclusive absent manifest error. The applicable A/C Fronting Lender shall


3

notify the applicable Borrower and the Administrative Agent promptly upon establishing the A/C Fronted Base Rate for any A/C Fronted Loan, or upon any change thereto.

"A/C Fronted Base Rate Loans" shall mean any A/C Fronted Loan bearing interest at a rate determined by reference to the A/C Fronted Base Rate in accordance with the provisions of Article II.

"A/C Fronted Exposure" shall mean, at any time, the Dollar Equivalent of the aggregate principal amount of all outstanding A/C Fronted Loans at such time. The A/C Fronted Exposure of any Revolving Credit Lender at any time shall equal its Pro Rata Percentage of the aggregate A/C Fronted Exposure at such time.

"A/C Fronted Fixed Rate Loan" shall mean any A/C Fronted Loan bearing interest at a rate determined by reference to the Bank Bill Rate or the Italian Fixed Rate in accordance with the provisions of Article II.

"A/C Fronted Loan" shall mean any loan made by an A/C Fronting Lender pursuant to its A/C Fronting Commitment.

"A/C Fronting Commitment" shall mean, with respect to any Lender, the commitment of such Lender to make Loans pursuant to Section 2.24, as set forth on Schedule 2.01(a), or in the Assignment and Acceptance pursuant to which such Lender assumed its A/C Fronting Commitment, as applicable, as the same may be reduced from time to time pursuant to Section 2.24(f) and pursuant to assignments by such Lender pursuant to Section 9.04.

"A/C Fronting Fees" shall have the meaning assigned to such term in
Section 2.05(e).

"A/C Fronting Lender" shall mean (a) with respect to Australian Dollars, the Australian Fronting Lender, and (b) with respect to Lire, the Italian Fronting Lender.

"A/C Participation Fees" shall have the meaning assigned to such term in Section 2.05(d).

"Acquired Indebtedness" shall mean Indebtedness of a person or any of its subsidiaries (the "Acquired Person") (a) existing at the time such person becomes a Subsidiary of Terex or at the time it merges or consolidates with Terex or any of its Subsidiaries or (b) assumed in connection with the acquisition of assets from such person; provided in each case that (i) such Indebtedness was not created in contemplation of such acquisition, merger or consolidation and (ii) such acquisition, merger or consolidation is otherwise permitted under this Agreement.

"Acquired Person" shall have the meaning assigned to such term in the definition of the term "Acquired Indebtedness".

"Acquisition" shall have the meaning assigned to such term in the preamble to this Agreement.

"Additional Cost" shall mean, in relation to any Borrowing that is denominated in Pounds and is made by the Scottish Borrower, for any Interest Period, the cost as calculated by the Administrative Agent in accordance with


4

Schedule 1.01(a) imputed to each Lender participating in such Borrowing of compliance with the mandatory liquid assets requirements of the Bank of England during that Interest Period, expressed as a percentage.

"Additional Subordinated Notes" shall mean subordinated notes in an aggregate principal amount at any time outstanding not to exceed $150,000,000 and issued from time to time by Terex, or assumed in connection with a Permitted Acquisition, after the issuance of the Senior Subordinated Notes; provided that
(a) except in the case of Additional Subordinated Notes assumed in connection with a Permitted Acquisition, the Net Cash Proceeds thereof are used either (i) to finance one or more Permitted Acquisitions or (ii) to prepay Term Loans in accordance with Section 2.13(e), (b) such subordinated notes do not require any scheduled payment of principal prior to a date that is 12 months after the Tranche B Maturity Date and (c) the subordination provisions and other non-pricing terms and conditions of such subordinated notes are no less favorable to the Loan Parties and the Lenders than the analogous provisions of the Senior Subordinated Notes.

"Adjusted LIBO Rate" shall mean, with respect to any Eurocurrency Borrowing for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the LIBO Rate in effect for such Interest Period multiplied by Statutory Reserves; provided, however, that, if such Eurocurrency Borrowing is denominated in Pounds and is made by the Scottish Borrower, then the "Adjusted LIBO Rate" shall be the LIBO Rate in effect for such Interest Period plus Additional Cost.

"Administrative Agent Fees" shall have the meaning assigned to such term in Section 2.05(b).

"Administrative Questionnaire" shall mean an Administrative Questionnaire in the form of Exhibit A.

"Affiliate" shall mean, when used with respect to a specified person, another person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the person specified.

"Aggregate Revolving Credit Exposure" shall mean the aggregate amount of the Lenders' Revolving Credit Exposures.

"Agreement Currency" shall have the meaning assigned to such term in
Section 9.16.

"Alternate Base Rate" shall mean, for any day, a rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greater of
(a) the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. If for any reason the Administrative Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Federal Funds Effective Rate for any reason, including the inability or failure of the Administrative Agent to obtain sufficient quotations in accordance with the terms of the definition thereof, the Alternate Base Rate shall be determined without regard to clause
(b) of the preceding sentence until the circumstances giving rise to such inability no longer exist. Any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective on the effective date of such change in the Prime Rate or the Federal Funds Effective Rate, respectively. The term "Prime Rate" shall mean the rate of interest per


5

annum publicly announced from time to time by the Administrative Agent as its prime rate in effect at its principal office in New York City; each change in the Prime Rate shall be effective on the date such change is publicly announced as being effective. The term "Federal Funds Effective Rate" shall mean, for any day, the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for the day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

"Alternative Currency" shall mean (a) with respect to Tranche A Term Loans, Revolving Loans and Letters of Credit, Marks, Pounds and Francs, (b) with respect to A/C Fronted Loans and Letters of Credit, Australian Dollars and Lire and (c) with respect to Letters of Credit, any other foreign currency which is approved by the applicable A/C Fronting Lender and the applicable Issuing Bank, in each case in its sole discretion.

"Alternative Currency Borrowing" shall mean a Borrowing comprised of Alternative Currency Loans.

"Alternative Currency Equivalent" shall mean, on any date of determination, with respect to any amount denominated in dollars in relation to any specified Alternative Currency, the equivalent in such specified Alternative Currency of such amount in dollars, determined by the Administrative Agent pursuant to Section 1.03 using the applicable Exchange Rate then in effect.

"Alternative Currency Loan" shall mean any Loan denominated in an Alternative Currency.

"Alternative Currency Revolving Credit Exposure" shall mean, at any time with respect to any Alternative Currency, the sum of (a) the Dollar Equivalent of the aggregate principal amount of all A/C Fronted Loans and outstanding Revolving Loans that are denominated in such Alternative Currency at such time, (b) the Dollar Equivalent of the aggregate undrawn amount of all outstanding Letters of Credit that are denominated in such Alternative Currency at such time and (c) the Dollar Equivalent of the aggregate principal amount of all L/C Disbursements in respect of Letters of Credit that are denominated in such Alternative Currency at such time.

"Alternative Currency Revolving Loan" shall mean a Revolving Loan denominated in an Alternative Currency.

"Alternative Currency Term Loan" shall mean a Tranche A Term Loan denominated in an Alternative Currency. Each Alternative Currency Term Loan must be a Eurocurrency Term Loan.

"Applicable Percentage" shall mean, for any day, with respect to any Eurocurrency Revolving Loan, Eurocurrency Tranche A Term Loan, Eurocurrency Tranche B Term Loan, ABR Revolving Loan, ABR Tranche A Term Loan, ABR Tranche B Term Loan, A/C Fronted Loan or with respect to the Facility Fees, as the case may be, the applicable percentage set forth below under the caption "Eurocurrency Spread--Tranche A Term Loans and Revolving Loans", "Eurocurrency


6

Spread--Tranche B Term Loans", "ABR Spread--Tranche A Term Loans and Revolving Loans", "ABR Spread--Tranche B Term Loans", "A/C Fronted Loan Spread" or "Facility Fee Percentage", as the case may be, based upon the Consolidated Leverage Ratio as of the relevant date of determination; provided that, until delivery of Terex's financial statements pursuant to Section 5.04(a) with respect to its fiscal year ended December 31, 1997, the Applicable Percentage shall be deemed to be in Category 3:

                                                               ABR
                            Eurocurrency                      Spread--
                              Spread--                       Tranche A
                           Tranche A Term   Eurocurrency    Term Loans                     ABR
Consolidated                 Loans and         Spread--        and           ABR--       Spread--
Leverage Ratio               Revolving        Tranche B     Revolving     A/C Fronted   Tranche B   Facility Fee
                               Loans         Term Loans       Loans       Loan Spread   Term Loans   Percentage
Category 1
Greater than or equal          2.00%           3.00%         1.00%         1.00%        2.00%        0.5000%
to 5.25 to 1.00

Category 2

Greater than or equal          1.75%           2.75%         0.75%         0.75%        1.75%        0.5000%
to 4.75 to 1.00 but less
than 5.25 to 1.00

Category 3

Greater than or equal          1.50%           2.50%         0.50%         0.50%        1.50%        0.5000%
to 4.00 to 1.00 but less
than 4.75 to 1.00

Category 4

Greater than or equal          1.25%           2.50%         0.25%         0.25%        1.50%        0.5000%
to 3.50 to 1.00 but less
than 4.00 to 1.00

Category 5

Greater than or equal          1.125%          2.50%         0.125%       0.125%        1.50%        0.375%
to 3.00 to 1.00 but less
than 3.50 to 1.00

Category 6                     0.875%          2.25%        -0.125%       0.000%        1.25%        0.375%

Less than 3.00 to 1.00

Each change in the Applicable Percentage resulting from a change in the Consolidated Leverage Ratio shall be effective with respect to all Loans, Commitments and Letters of Credit on the date of delivery to the Administrative Agent of the financial statements and certificates required by Section 5.04(a) or (b) based upon the Consolidated Leverage Ratio as of the end of the most


7

recent fiscal quarter included in such financial statements so delivered, and shall remain in effect until the date immediately preceding the next date of delivery of such financial statements and certificates indicating another such change. Notwithstanding the foregoing, at any time after the occurrence and during the continuance of an Event of Default, the Consolidated Leverage Ratio shall be deemed to be in Category 1 for purposes of determining the Applicable Percentage.

"Asset Sale" shall mean the sale, transfer or other disposition (by way of merger or otherwise and including by way of a Sale and Leaseback) by any Borrower or any Subsidiary to any person other than any Borrower or any Guarantor of (a) any capital stock of any Subsidiary (other than directors' qualifying shares) or (b) any other assets of any Borrower or any Subsidiary (other than inventory, excess, damaged, obsolete or worn out assets, scrap, Permitted Investments and accounts receivable, in each case disposed of in the ordinary course of business and, in the case of accounts receivable, consistent with past practice); provided that any asset sale or series of related asset sales described in clause (b) above having a value not in excess of $1,000,000 shall be deemed not to be an "Asset Sale" for purposes of this Agreement.

"Assignment and Acceptance" shall mean an assignment and acceptance entered into by a Lender and an assignee, and accepted by the Administrative Agent, in the form of Exhibit B or such other form as shall be approved by the Administrative Agent.

"Australian Dollars" shall mean dollars in lawful currency of Australia.

"Australian Fronting Lender" shall mean Credit Suisse First Boston, acting through its Sydney office branch, and its successors and assigns in such capacity.

"Bank Bill Rate" shall mean, in relation to an Interest Period for any A/C Fronted Fixed Rate Loan denominated in Australian Dollars, the rate determined by the A/C Fronting Lender to be the average bid rate displayed at or about 10:10 a.m. (Sydney time) on the first day of such Interest Period on the Reuters screen BBSY page for a term equivalent to such Interest Period. If (a) for any reason there is no rate displayed for a period equivalent to such Interest Period or (b) the basis on which such rate is displayed is changed and in the reasonable opinion of the A/C Fronting Lender such rate ceases to reflect the A/C Fronting Lender's cost of funding to the same extent as at the date of this Agreement, then the Bank Bill Rate shall be the rate determined by the A/C Fronting Lender to be the average of the buying rates quoted to the A/C Fronting Lender by three reference banks selected by it at or about that time on that date for bills of exchange that are accepted by an Australian bank and that have a term equivalent to the Interest Period. If there are no such buying rates the rate shall be the rate reasonably determined by the A/C Fronting Lender to be its cost of funds. Rates will be expressed as a yield percent per annum to maturity and rounded up, if necessary, to the nearest two decimal places.

"Board" shall mean the Board of Governors of the Federal Reserve System of the United States of America.

"Borrowers" shall mean, collectively, Terex, the Scottish Borrower, the French Borrower, the Australian Borrower, the Italian Borrower and, after its accession to this Agreement pursuant to Section 9.19, the German Borrower.


8

"Borrowing" shall mean a group of Loans of a single Type made by the Lenders on a single date and as to which a single Interest Period is in effect.

"Borrowing Request" shall mean a request by any Borrower in accordance with the terms of Section 2.03 and substantially in the form of Exhibit C.

"Business Day" shall mean any day other than a Saturday, Sunday or day on which banks in New York City are authorized or required by law to close; provided, however, that when used in connection with a Eurocurrency Loan, the term "Business Day" shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market, and, when used in connection with any Calculation Date or determining any date on which any amount is to be paid or made available in an Alternative Currency, the term "Business Day" shall also exclude any day on which commercial banks and foreign exchange markets are not open for business in the principal financial center in the country of such Alternative Currency.

"Calculation Date" shall mean (a) the date of delivery of each Borrowing Request, (b) the date of issuance of any Letter of Credit, (c) the date of conversion or continuation of any Borrowing pursuant to Section 2.10 or
(d) such additional dates as the Administrative Agent or the Required Lenders shall specify.

"Capital Lease Obligations" of any person shall mean the obligations of such person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.

"Casualty" shall have the meaning assigned to such term in the Mortgages.

"Casualty Proceeds" shall have the meaning assigned to such term in the Mortgages.

A "Change in Control" shall be deemed to have occurred if (a) any person or group (within the meaning of Rule 13d-5 of the Securities Exchange Act of 1934 as in effect on the date hereof) shall own directly or indirectly, beneficially or of record, shares representing more than 30% of the aggregate ordinary voting power represented by the issued and outstanding capital stock of Terex; (b) a majority of the seats (other than vacant seats) on the board of directors of Terex shall at any time be occupied by persons who were neither (i) nominated by the board of directors of Terex, nor (ii) appointed by directors so nominated; (c) any change in control (or similar event, however denominated) with respect to Terex or any of its Subsidiaries shall occur under and as defined in any indenture or agreement in respect of Indebtedness in an outstanding principal amount in excess of $5,000,000 to which Terex or any of its Subsidiaries is a party; or (d) any person or group shall otherwise directly or indirectly Control Terex.

"Closing Date" shall mean the date of the first Credit Event.

"Code" shall mean the Internal Revenue Code of 1986, as amended from time to time.


9

"Collateral" shall mean all the "Collateral" as defined in any Security Document and shall also include the Mortgaged Properties. Notwithstanding any contrary provision contained herein, until such time as the condition described in Section 5.11(c) has been satisfied, the term "Collateral" shall not include any inventory or parts therefor of the Company which was manufactured or sold by Fiatallis Latino American, Ltda, Fiat-Hitachi Excavators, S.p.A or any of their subsidiaries or affiliated companies or inventory or parts therefor which bears the tradename "Fiatallis", and any proceeds therefrom, including without limitation accounts, contract rights, chattel paper and general intangibles generated in any manner from the sale, lease demonstration or other disposition of the inventory or parts therefor (collectively, the "Fiat Collateral").

"Commitment" shall mean, with respect to any Lender, such Lender's Revolving Credit Commitment, Term Loan Commitments, A/C Fronting Commitment and Swingline Commitment.

"Condemnation" shall have the meaning assigned to such term in the Mortgages.

"Condemnation Proceeds" shall have the meaning assigned to such term in the Mortgages.

"Confidential Information Memorandum" shall mean the Confidential Information Memorandum of the Borrowers dated February 1998.

"Consent Solicitation" shall have the meaning assigned to such term in the preamble to this Agreement.

"Consolidated Capital Expenditures" shall mean, for any period, the aggregate of all expenditures (whether paid in cash or other consideration or accrued as a liability) by Terex or any of its Subsidiaries during such period that, in accordance with GAAP, are or should be included in "additions to property, plant and equipment" or similar items reflected in the consolidated statement of cash flows of Terex and the Subsidiaries for such period (including the amount of assets leased by incurring any Capital Lease Obligation); provided that expenditures for Permitted Acquisitions shall not constitute Consolidated Capital Expenditures.

"Consolidated Current Assets" shall mean, as of any date of determination, the total assets that would properly be classified as current assets (other than cash and cash equivalents) of Terex and its Subsidiaries as of such date, determined on a consolidated basis in accordance with GAAP.

"Consolidated Current Liabilities" shall mean, as of any date of determination, the total liabilities (other than, without duplication, (a) the current portion of long-term Indebtedness and (b) outstanding Revolving Loans, A/C Fronted Loans and Swingline Loans) that would properly be classified as current liabilities of Terex and its Subsidiaries as of such date, determined on a consolidated basis in accordance with GAAP.

"Consolidated EBITDA" shall mean, for any period, Consolidated Net Income for such period, plus, without duplication and to the extent deducted from revenues in determining Consolidated Net Income for such period, the sum of
(a) the aggregate amount of Consolidated Interest Expense for such period, (b) the aggregate amount of letter of credit fees paid during such period, (c) the


10

aggregate amount of income and franchise tax expense for such period, (d) all amounts attributable to depreciation and amortization for such period, (e) all non-recurring non-cash charges during such period and (f) all non-cash adjustments made to translate foreign assets and liabilities for changes in foreign exchange rates made in accordance with FASB No. 52, and minus, without duplication and to the extent added to revenues in determining Consolidated Net Income for such period, (i) all non-recurring non-cash gains during such period and (ii) all non-cash adjustments made to translate foreign assets and liabilities for changes in foreign exchange rates made in accordance with FASB No. 52, all as determined on a consolidated basis with respect to Terex and the Subsidiaries in accordance with GAAP.

"Consolidated Fixed Charge Coverage Ratio" shall mean, for any period, the ratio of (a) Consolidated EBITDA for such period to (b) the sum, without duplication, of (i) Consolidated Interest Expense for such period; (ii) income or franchise taxes paid in cash during such period; (iii) scheduled and voluntary payments of principal with respect to all Indebtedness (including the principal portion of Capital Lease Obligations but excluding payments for inventory to be sold in the ordinary course of business) of Terex and its Subsidiaries on a consolidated basis during such period (other than repayments of Indebtedness (x) pursuant to the Refinancing on or prior to the Closing Date or (y) with the proceeds of other Indebtedness permitted to be incurred hereunder or equity); (iv) payments permitted pursuant to Section 6.06 made in cash during such period; and (v) Consolidated Capital Expenditures made in cash during such period.

"Consolidated Interest Coverage Ratio" shall mean, for any period, the ratio of (a) Consolidated EBITDA for such period to (b) Consolidated Interest Expense for such period.

"Consolidated Interest Expense" of Terex and its Subsidiaries shall mean, for any period, interest expense of Terex and its Subsidiaries for such period, net of interest income, included in the determination of Consolidated Net Income. For purposes of the foregoing, interest expense shall be determined after giving effect to any net payments made or received by Terex and its Subsidiaries under Interest Rate Protection Agreements.

"Consolidated Leverage Ratio" shall mean, as of any date of determination, the ratio of (a) Total Debt on such date to (b) the sum of (i) Consolidated EBITDA for the most recent period of four consecutive fiscal quarters ended on or prior to such date and (ii) the Pro Forma Acquisition EBITDA of all Acquired Persons acquired during such period of four consecutive fiscal quarters. For purposes of calculating the Consolidated Leverage Ratio as of any date, if any portion of the Total Debt outstanding on such date is denominated in a currency other than dollars, then the portion, if any, of Consolidated EBITDA or Pro Forma Acquisition EBITDA during the period of four consecutive fiscal quarters ending on or prior to such date and denominated in any such other currency shall be translated to dollars using the same exchange rate as is used to translate such portion of the Total Debt denominated in such other currency.

"Consolidated Net Income" shall mean, for any period, the sum of net income (or loss) for such period of Terex and its Subsidiaries on a consolidated basis determined in accordance with GAAP, but excluding: (a) the income (or loss) of any person accrued prior to the date it became a Subsidiary of Terex or is merged into or consolidated with Terex or such person's assets are acquired by Terex or any of its Subsidiaries; (b) non-recurring gains (or losses) during such period; (c) extraordinary gains (or losses), as defined under GAAP during


11

such period; and (d) the income of any Subsidiary to the extent that the declaration or payment of dividends or similar distributions by the Subsidiary of that income is prohibited by operation of the terms of its charter or any agreement, instrument, judgment, decree, statute, rule or governmental regulation applicable to the Subsidiary.

"Consolidated Senior Secured Leverage Ratio" shall mean, as of any date of determination, the ratio of (a) Total Senior Secured Debt on such date to (b) the sum of (i) Consolidated EBITDA for the most recent period of four consecutive fiscal quarters ended on or prior to such date and (ii) the Pro Forma Acquisition EBITDA of all Acquired Persons acquired during such period of four consecutive fiscal quarters. For purposes of calculating the Consolidated Senior Secured Leverage Ratio as of any date, if any portion of the Total Senior Secured Debt outstanding on such date is denominated in a currency other than dollars, then the portion, if any, of Consolidated EBITDA or Pro Forma Acquisition EBITDA during the period of four consecutive fiscal quarters ending on or prior to such date and denominated in any such other currency shall be translated to dollars using the same exchange rate as is used to translate such portion of the Total Debt denominated in such other currency.

"Control" shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a person, whether through the ownership of voting securities, by contract or otherwise, and the terms "Controlling" and "Controlled" shall have meanings correlative thereto.

"Credit Event" shall have the meaning assigned to such term in Section 4.01.

"Debt Tender Offer" shall have the meaning assigned to such term in the preamble to this Agreement.

"Default" shall mean any event or condition which upon notice, lapse of time or both would constitute an Event of Default.

"Dollar Borrowing" shall mean a Borrowing comprised of Dollar Loans.

"Dollar Equivalent" shall mean, on any date of determination, with respect to any amount denominated in any currency other than dollars, the equivalent in dollars of such amount, determined by the Administrative Agent pursuant to Section 1.03 using the applicable Exchange Rate with respect to such currency at the time in effect.

"Dollar Loan" shall mean a Dollar Revolving Loan or a Dollar Term Loan.

"Dollar Revolving Loan" shall mean a Revolving Loan denominated in dollars and made pursuant to Section 2.01.

Dollar Term Loan" shall mean a Term Loan denominated in dollars. Each Dollar Term Loan shall be either a Eurocurrency Term Loan or an ABR Term Loan.

"dollars" or "$" shall mean lawful money of the United States of America.

"Domestic Subsidiaries" shall mean all Subsidiaries incorporated or organized under the laws of the United States of America, any State thereof or the District of Columbia.


12

"environment" shall mean ambient air, surface water and groundwater (including potable water, navigable water and wetlands), the land surface or subsurface strata, the workplace or as otherwise defined in any Environmental Law.

"Environmental Claim" shall mean any written accusation, allegation, notice of violation, claim, demand, order, directive, cost recovery action or other cause of action by, or on behalf of, any Governmental Authority or any person for damages, injunctive or equitable relief, personal injury (including sickness, disease or death), Remedial Action costs, tangible or intangible property damage, natural resource damages, nuisance, pollution, any adverse effect on the environment caused by any Hazardous Material, or for fines, penalties or restrictions, resulting from or based upon (a) the existence, or the continuation of the existence, of a Release (including sudden or non-sudden, accidental or non-accidental Releases), (b) exposure to any Hazardous Material,
(c) the presence, use, handling, transportation, storage, treatment or disposal of any Hazardous Material or (d) the violation or alleged violation of any Environmental Law or Environmental Permit.

"Environmental Law" shall mean any and all applicable present and future treaties, laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by or with any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, the management, Release or threatened Release of any Hazardous Material or to health and safety matters, including the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. ss.ss. 9601 et seq. (collectively "CERCLA"), the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 and Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. Section. 6901 et seq., the Federal Water Pollution Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C. Section. 1251 et seq., the Clean Air Act of 1970, as amended 42 U.S.C. Section. 7401 et seq., the Toxic Substances Control Act of 1976, 15 U.S.C. Section. 2601 et seq., the Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. Section. 651 et seq., the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. Section. 11001 et seq., the Safe Drinking Water Act of 1974, as amended, 42 U.S.C. Section. 300(f) et seq., the Hazardous Materials Transportation Act, 49 U.S.C. Section. 5101 et seq., and any similar or implementing state or local law, and all amendments or regulations promulgated under any of the foregoing.

"Environmental Permit" shall mean any permit, approval, authorization, certificate, license, variance, filing or permission required by or from any Governmental Authority pursuant to any Environmental Law.

"Equity Issuance" shall mean any issuance or sale by any Borrower or any Subsidiary of any shares of capital stock or other equity securities of any such person or any obligations convertible into or exchangeable for, or giving any person a right, option or warrant to acquire such securities or such convertible or exchangeable obligations, except in each case for (a) any issuance or sale to any Borrower or any Subsidiary, (b) any issuance of directors' qualifying shares, (c) sales or issuances of common stock to management or employees of any Borrower or any Subsidiary under any employee stock option plan, stock purchase plan, retirement plan, deferred compensation plan or other employee benefit plan in existence from time to time to the extent that (i) the proceeds from all sales and issuances described in this clause (c) shall not exceed in the aggregate $1,000,000 in any fiscal year of Terex and


13

(ii) the shares of common stock issued pursuant to this clause (c) shall not exceed 10% of the common stock of such Borrower or such Subsidiary, as applicable.

"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as the same may be amended from time to time.

"ERISA Affiliate" shall mean any trade or business (whether or not incorporated) that, together with Terex, is treated as a single employer under
Section 414(b) or (c) of the Code, or solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.

"ERISA Event" shall mean (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder, with respect to a Plan; (b) the adoption of any amendment to a Plan that would require the provision of security pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA; (c) the existence with respect to any Plan of an "accumulated funding deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (d) the filing pursuant to Section 412(d) of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (e) the incurrence of any liability under Title IV of ERISA with respect to the termination of any Plan or the withdrawal or partial withdrawal of Terex or any of its ERISA Affiliates from any Plan or Multiemployer Plan; (f) the receipt by Terex or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to the intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (g) the receipt by Terex or any ERISA Affiliate of any notice concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA; (h) the occurrence of a "prohibited transaction" with respect to which Terex or any of its Subsidiaries is a "disqualified person" (within the meaning of Section 4975 of the Code) or with respect to which Terex or any such Subsidiary could otherwise be liable; (i) any other event or condition with respect to a Plan or Multiemployer Plan that could reasonably be expected to result in liability of any Borrower; and (j) any Foreign Benefit Event.

"Eurocurrency Borrowing" shall mean a Borrowing comprised of Eurocurrency Loans.

"Eurocurrency Loan" shall mean any Eurocurrency Revolving Loan or Eurocurrency Term Loan.

"Eurocurrency Revolving Borrowing" shall mean a Eurocurrency Borrowing comprised of Eurocurrency Revolving Loans.

"Eurocurrency Revolving Loan" shall mean any Revolving Loan bearing interest at a rate determined by reference to the Adjusted LIBO Rate in accordance with the provisions of Article II.

"Eurocurrency Term Borrowing" shall mean a Borrowing comprised of Eurocurrency Term Loans.

"Eurocurrency Term Loan" shall mean any Eurocurrency Tranche A Term Loan or Eurocurrency Tranche B Term Loan.


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"Eurocurrency Tranche A Term Loan" shall meany any Tranche A Term Loan bearing interest at a rate determined by reference to the Adjusted LIBO Rate in accordance with the provisions of Article II.

"Eurocurrency Tranche B Term Loan" shall mean any Tranche B Term Loan bearing interest at a rate determined by reference to the Adjusted LIBO Rate in accordance with the provisions of Article II.

"Event of Default" shall have the meaning assigned to such term in Article VII.

"Excess Cash Flow" shall mean, for any fiscal year of Terex, the excess of (a) the sum, without duplication, of (i) Consolidated EBITDA for such fiscal year, (ii) extraordinary or non-recurring cash receipts of Terex and its Subsidiaries, if any, during such fiscal year and not included in Consolidated EBITDA and (iii) reductions to non-cash working capital of Terex and its Subsidiaries for such fiscal year (i.e., the decrease, if any, in Consolidated Current Assets minus Consolidated Current Liabilities from the beginning to the end of such fiscal year), over (b) the sum, without duplication, of (i) the amount of any cash income taxes payable by Terex and its Subsidiaries with respect to such fiscal year, (ii) cash interest paid by Terex and its Subsidiaries during such fiscal year, (iii) Consolidated Capital Expenditures committed or made in cash in accordance with Section 6.10 during such fiscal year (and not deducted from Excess Cash Flow in any prior year), (iv) scheduled principal repayments of Indebtedness made by Terex and its Subsidiaries during such fiscal year, (v) optional and mandatory prepayments of the principal of Term Loans and reductions of Revolving Credit Commitments during such fiscal year, but only to the extent that such prepayments and reductions do not occur in connection with a refinancing of all or any portion of the Loans, (vi) extraordinary or non-recurring expenses and losses to the extent paid in cash by Terex and its Subsidiaries, if any, during such fiscal year and not included in Consolidated EBITDA and (vii) additions to non-cash working capital for such fiscal year (i.e., the increase, if any, in Consolidated Current Assets minus Consolidated Current Liabilities from the beginning to the end of such Fiscal Year); provided that, to the extent otherwise included therein, the Net Cash Proceeds of Asset Sales and Equity Issuances shall be excluded from the calculation of Excess Cash Flow.

"Exchange Rate" shall mean, on any day, with respect to any currency other than dollars (for purposes of determining the Dollar Equivalent) or any Alternative Currency (for purposes of determining the Alternative Currency Equivalent with respect to such Alternative Currency), the rate at which such currency may be exchanged into dollars or the applicable Alternative Currency, as the case may be, as set forth at approximately 11:00 a.m., New York City time, on such date on the applicable Bloomberg Key Cross Currency Rates Page. In the event that any such rate does not appear on any Bloomberg Key Cross Currency Rates Page, the Exchange Rate shall be determined by reference to such other publicly available service for displaying exchange rates selected by the Administrative Agent for such purpose, or, at the discretion of the Administrative Agent, such Exchange Rate shall instead be the arithmetic average of the spot rates of exchange of the Administrative Agent in the market where its foreign currency exchange operations in respect of such currency are then being conducted, at or about 10:00 a.m., local time, on such date for the purchase of dollars or the applicable Alternative Currency, as the case may be, for delivery two Business Days later; provided that, if at the time of any such determination, for any reason, no such spot rate is being quoted, the Administrative Agent may use any other reasonable method it deems appropriate


15

to determine such rate, and such determination shall be presumed correct absent manifest error.

"Existing Credit Agreement" shall mean the Revolving Credit Agreement dated as of April 7, 1997, among Terex, the Subsidiaries listed therein, the lenders party thereto and BankBoston, N.A., as agent.

"Existing Issuing Bank" shall mean BankBoston, N.A.

"Existing Letter of Credit" shall mean each letter of credit that is
(a) issued by an Existing Issuing Bank, (b) outstanding on the Closing Date and
(c) listed in Schedule 1.01(d).

"Existing Note Indenture" shall have the meaning assigned to such term in the preamble to this Agreement.

"Existing Notes" shall have the meaning assigned to such term in the preamble to this Agreement.

"Facility Fee" shall have the meaning assigned to such term in Section 2.05(a).

"Fee Letter" shall mean the Fee Letter dated January 30, 1998, between Terex and the Administrative Agent.

"Fees" shall mean the Facility Fees, the Administrative Agent's Fees, the A/C Participation Fees, the A/C Fronting Fees, the L/C Participation Fees and the Issuing Bank Fees.

"Financial Officer" of any corporation shall mean the chief financial officer, a Vice President-Finance, principal accounting officer, Treasurer or Controller of such corporation.

"Floor Plan Guarantees" shall mean Guarantees (including but not limited to repurchase or remarketing obligations) by Terex or a Subsidiary incurred in the ordinary course of business consistent with past practice of Indebtedness incurred by a franchise dealer, or other purchaser or lessor, for the purchase of inventory manufactured or sold by Terex or a Subsidiary, the proceeds of which Indebtedness is used solely to pay the purchase price of such inventory to such franchise dealer or other purchaser or lessor and any related reasonable fees and expenses (including financing fees); provided, however, that
(a) to the extent commercially practicable, the Indebtedness so Guaranteed is secured by a perfected first priority Lien on such inventory in favor of the holder of such Indebtedness and (b) if Terex or such Subsidiary is required to make payment with respect to such Guarantee, Terex or such Subsidiary will have the right to receive either (i) title to such inventory, (ii) a valid assignment of a perfected first priority Lien in such inventory or (iii) the net proceeds of any resale of such inventory.

"Foreign Base Rate Loans" shall mean Loans (other than A/C Fronted Loans) in any Alternative Currency the rate of interest applicable to which is based upon the rate of interest per annum maintained by the Administrative Agent as the rate of interest (in the absence of a eurocurrency rate) determined by it with the approval of a majority in interest of the Lenders participating in such Loan to be the average rate charged to borrowers of similar quality as the


16

applicable Borrower of such Loans in such Alternative Currency. Notwithstanding anything to the contrary contained herein, Loans may be made or maintained as Foreign Base Rate Loans only to the extent specified in Section 2.02(f), 2.08 or 2.15.

"Foreign Benefit Event" shall mean, with respect to any Foreign Pension Plan, (a) the existence of unfunded liabilities in excess of the amount permitted under any applicable law, or in excess of the amount that would be permitted absent a waiver from a Governmental Authority, (b) the failure to make the required contributions or payments, under any applicable law, on or before the due date for such contributions or payments, (c) the receipt of a notice by a Governmental Authority relating to the intention to terminate any such Foreign Pension Plan or to appoint a trustee or similar official to administer any such Foreign Pension Plan, or alleging the insolvency of any such Foreign Pension Plan and (d) the incurrence of any liability in excess of $5,000,000 (or the Dollar Equivalent thereof in another currency) by Terex or any of its Subsidiaries under applicable law on account of the complete or partial termination of such Foreign Pension Plan or the complete or partial withdrawal of any participating employer therein, or (e) the occurrence of any transaction that is prohibited under any applicable law and could reasonably be expected to result in the incurrence of any liability by Terex or any of its Subsidiaries, or the imposition on Terex or any of its Subsidiaries of any fine, excise tax or penalty resulting from any noncompliance with any applicable law, in each case in excess of $5,000,000 (or the Dollar Equivalent thereof in another currency).

"Foreign Pension Plan" shall mean any benefit plan which under applicable law is required to be funded through a trust or other funding vehicle other than a trust or funding vehicle maintained exclusively by a Governmental Authority.

"Foreign Subsidiary" shall mean any Subsidiary that is not a Domestic Subsidiary.

"Francs" and "Ffr" shall mean francs in lawful currency of the Republic of France.

"GAAP" shall mean generally accepted accounting principles in effect in the United States applied on a consistent basis.

"German Borrower" shall mean O&K Mining, but only following the consummation of the Acquisition and the accession to this Agreement by O&K Mining pursuant to Section 9.19.

"Governmental Authority" shall mean the government of the United States of America, the United Kingdom, Germany, France, Italy, Australia, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

"Guarantee" of or by any person shall mean any obligation, contingent or otherwise, of such person guaranteeing or having the economic effect of guaranteeing any Indebtedness of any other person (the "primary obligor") in any manner, whether directly or indirectly, and including any obligation of such person, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or to purchase (or to advance


17

or supply funds for the purchase of) any security for the payment of such Indebtedness, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness of the payment of such Indebtedness or (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness; provided, however, that the term "Guarantee" shall not include (i) endorsements for collection or deposit in the ordinary course of business and (ii) Floor Plan Guarantees except to the extent that they appear as debt on the Borrower's balance sheet.

"Guarantee Agreements" shall mean the Subsidiary Guarantee Agreement and the Terex Guarantee Agreement.

"Guarantors" shall mean Terex and the Subsidiary Guarantors.

"Hazardous Materials" shall mean all explosive or radioactive materials, substances or wastes, hazardous or toxic materials, substances or wastes, pollutants, solid, liquid or gaseous wastes, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls ("PCBs") or PCB-containing materials or equipment, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.

"Hedging Agreement" shall mean any Interest Rate Protection Agreement or any foreign currency exchange agreement, commodity price protection agreement or other interest or currency exchange rate or commodity price hedging arrangement not entered into for speculation.

"Inactive Subsidiary" shall mean each Subsidiary of Terex listed on Schedule 1.01(f) until such time as such Subsidiary shall become a Subsidiary Guarantor.

"Indebtedness" of any person shall mean, without duplication, (a) all obligations of such person for borrowed money or advances of any kind, (b) all obligations of such person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such person upon which interest charges are customarily paid, (d) all obligations of such person under conditional sale or other title retention agreements relating to property or assets purchased by such person, (e) all obligations of such person issued or assumed as the deferred purchase price of property or services (excluding trade accounts payable and accrued obligations incurred in the ordinary course of business),
(f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such person, whether or not the obligations secured thereby have been assumed, (g) all Guarantees by such person of Indebtedness of others, (h) all Capital Lease Obligations of such person, (i) all obligations of such person in respect of interest rate protection agreements, foreign currency exchange agreements or other interest or exchange rate hedging arrangements and (j) all obligations of such person as an account party in respect of letters of credit and bankers' acceptances. The Indebtedness of any person shall include the Indebtedness of any partnership in which such person is a general partner, to the extent such Indebtedness is recourse to such person either expressly or by operation of law.


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"Indemnity, Subrogation and Contribution Agreement" shall mean the Indemnity, Subrogation and Contribution Agreement, substantially in the form of Exhibit D, among the Borrowers, the Subsidiary Guarantors and the Collateral Agent.

"Interest Payment Date" shall mean, with respect to any Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurocurrency Borrowing with an Interest Period of more than three months' duration, each day that would have been an Interest Payment Date had successive Interest Periods of three months' duration been applicable to such Borrowing, and, in addition, the date of any prepayment of such Borrowing or conversion of such Borrowing to a Borrowing of a different Type.

"Interest Period" shall mean (a) as to any Eurocurrency Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day (or, if there is no numerically corresponding day, on the last day) in the calendar month that is 1, 2, 3 or 6 months thereafter (and, in the case of an Alternative Currency Borrowing maturing or required to be repaid in less than one month, the date thereafter requested by the applicable Borrower and agreed to by the Administrative Agent), as the applicable Borrower may elect, (b) as to any ABR Borrowing or Borrowing bearing interest by reference to the A/C Fronted Base Rate, the period commencing on the date of such Borrowing and ending on the earliest of (i) the next succeeding March 31, June 30, September 30 or December 31, (ii) the Revolving Credit Maturity Date, the Tranche A Maturity Date or the Tranche B Maturity Date, as applicable, and (iii) the date such Borrowing is converted to a Borrowing of a different Type in accordance with Section 2.10 or repaid or prepaid in accordance with Section 2.11 or 2.12, (c) as to any A/C Fronted Fixed Rate Loan bearing interest by reference to the Bank Bill Rate, the period commencing on the date of such Loan and ending on the date (more than 7 but not more than 92 days thereafter) as the Australian Borrower may elect and (d) as to any A/C Fronted Loan bearing interest by reference to the Italian Fixed Rate, the period commencing on the date of such Loan and ending on the numerically corresponding day (or, if there is no numerically corresponding day, on the last day) in the calendar that is 1, 2 or 3 months thereafter, as the Italian Borrower may elect; provided, however, that if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day. Interest shall accrue from and including the first day of an Interest Period to but excluding the last day of such Interest Period.

"Interest Rate Protection Agreement" shall mean any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement or similar agreement or arrangement designed to protect any Borrower or any Subsidiary against fluctuations in interest rates, and not entered into for speculation.

"Issuing Bank" shall mean CSFB and BankBoston, N.A.

"Issuing Bank Fees" shall have the meaning assigned to such term in
Section 2.05(c).

"Italian Facilities" shall mean the credit facilities of the Italian Borrower existing on the date of this agreement with Medio Credito, Min Industria, PO MI, Carisp, Rolobanca, Banco Sicilia, First S. Paolo Torino,


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Credito Bergamasco, S. Geminiano, Banco Nazionale del Lavaro and Pop Emilia.

"Italian Fixed Rate" shall mean, with respect to any A/C Fronted Fixed Rate Loan denominated in Lire, the rate per annum (rounded upwards, if necessary, to the next 1/16 of 1% and adjusted for reserve requirements, if any) determined by the Italian Fronting Lender at approximately 11:00 a.m. (London time) on the date which is two Business Days prior to or the beginning of the relevant Interest Period (as specified in the applicable Borrowing Request) by reference to page 3740 of the Telerate screen, or such other page as may replace such rate as the Telerate screen which displays the British Bankers' Association Interest Settlement Rates for deposits in Lire, for a period equal to such Interest Period; provided that, to the extent that an interest rate is not ascertainable pursuant to the foregoing provisions of this definition, the "Italian Fixed Rate" shall be the interest rate per annum determined by the Italian Fronting Lender to be the average of the rates per annum (rounded upwards, if necessary, to the next 1/16 of 1% and adjusted for reserve requirements, if any) at which deposits in Lire are offered for such relevant Interest Period to major banks in the London interbank market in London, England by the Italian Fronting Lender at approximately 11:00 a.m. (London time) on the date which is two Business Days prior to the beginning of such Interest Period.

"Italian Fronting Lender" shall mean BankBoston, N.A., and its successors and assigns in such capacity.

"Judgment Currency" shall have the meaning assigned to such term in
Section 9.16.

"L/C Commitment" shall mean the commitment of each Issuing Bank to issue Letters of Credit pursuant to Section 2.23.

"L/C Disbursement" shall mean a payment or disbursement made by an Issuing Bank pursuant to a Letter of Credit.

"L/C Exposure" shall mean at any time the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit denominated in dollars at such time, (b) the Dollar Equivalent of the aggregate undrawn amount of all outstanding Letters of Credit denominated in Alternative Currencies at such time, (c) the aggregate principal amount of all L/C Disbursements in respect of Letters of Credit denominated in dollars that have not yet been reimbursed at such time and (d) the Dollar Equivalent of the aggregate principal amount of all L/C Disbursements in respect of Letters of Credit denominated in Alternative Currencies that have not yet been reimbursed at such time. The L/C Exposure of any Revolving Credit Lender at any time shall mean its Pro Rata Percentage of the total L/C Exposure at such time.

"L/C Participation Fee" shall have the meaning assigned to such term in
Section 2.05(c).

"Lenders" shall mean (a) the financial institutions listed on Schedule
2.01(a) (other than any such financial institution that has ceased to be a party hereto pursuant to an Assignment and Acceptance) and (b) any financial institution that has become a party hereto pursuant to an Assignment and Acceptance. Unless the context clearly indicates otherwise, the term "Lenders" shall include the A/C Fronting Lenders and the Swingline Lender.


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"Letter of Credit" shall mean (a) any letter of credit issued pursuant to Section 2.23 and (b) any Existing Letter of Credit.

"LIBO Rate" shall mean, with respect to any Eurocurrency Borrowing, the rate per annum determined by the Administrative Agent at approximately 11:00
a.m. (London time) on the date which is two Business Days prior to or, with respect to Eurocurrency Borrowings denominated in Pounds, at approximately 11:00
a.m. (London time) on the same day as, the beginning of the relevant Interest Period (as specified in the applicable Borrowing Request) by reference to the British Bankers' Association Interest Settlement Rates for deposits in dollars or the relevant Alternative Currency, as applicable (as set forth by any service selected by the Administrative Agent which has been nominated by the British Bankers' Association as an authorized information vendor for the purpose of displaying such rates), for a period equal to such Interest Period; provided that, to the extent that an interest rate is not ascertainable pursuant to the foregoing provisions of this definition, the "LIBO Rate" shall be the interest rate per annum determined by the Administrative Agent to be the average of the rates per annum at which deposits in dollars or the relevant Alternative Currency, as applicable, are offered for such relevant Interest Period to major banks in the London interbank market in London, England by the Administrative Agent at approximately 11:00 a.m. (London time) on the date which is two Business Days prior to or, with respect to Eurocurrency Borrowings denominated in Pounds, at approximately 11:00 a.m. (London time) on the same day as, the beginning of such Interest Period.

"Lien" shall mean, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, encumbrance, charge or security interest in or on such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.

"Lire" and "Lit" shall mean lire in lawful currency of Italy.

"Loan Documents" shall mean this Agreement, the Guarantee Agreements, the Security Documents and the Indemnity, Subrogation and Contribution Agreement.

"Loan Parties" shall mean the Borrowers and the Guarantors.

"Loans" shall mean the Revolving Loans, the Term Loans, the A/C Fronted Loans and the Swingline Loans.

"Margin Stock" shall have the meaning assigned to such term in Regulation U.

"Marks" and "DM" shall mean deutsche marks in lawful currency of Germany.

"Material Adverse Effect" shall mean (a) a materially adverse effect on the business, assets, operations, prospects or condition, financial or otherwise, of Terex and its Subsidiaries, taken as a whole, (b) material impairment of the ability of the Loan Parties to perform their obligations under the Loan Documents or (c) material impairment of the rights of or benefits available to the Lenders under any Loan Document.


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"Mortgaged Properties" shall mean the owned real properties and leasehold and subleasehold interests specified on Schedule 1.01(c).

"Mortgages" shall mean the mortgages, deeds of trust, leasehold mortgages, assignments of leases and rents, modifications and other security documents delivered pursuant to clause (i) of Section 4.02(j) or pursuant to
Section 5.11, each substantially in the form of Exhibit F.

"Multiemployer Plan" shall mean a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.

"Net Cash Proceeds" shall mean (a) with respect to any Asset Sale, the cash proceeds (including cash proceeds subsequently received (as and when received) in respect of non-cash consideration initially received and including all insurance settlements and condemnation awards in excess of $250,000 from any single event or series of related events), net of (i) transaction expenses (including reasonable broker's fees or commissions, legal fees, accounting fees, investment banking fees and other professional fees, transfer and similar taxes and Terex's good faith estimate of income taxes paid or payable in connection with the receipt of such cash proceeds), (ii) amounts provided as a reserve, in accordance with GAAP, including pursuant to any escrow arrangement, against any liabilities under any indemnification obligations associated with such Asset Sale (provided that, to the extent and at the time any such amounts are released from such reserve, such amounts shall constitute Net Cash Proceeds), (iii) in the case of insurance settlements and condemnation awards, amounts previously paid by Terex and its Subsidiaries to replace or restore the affected property, and (iv) the principal amount, premium or penalty, if any, interest and other amounts on any Indebtedness for borrowed money which is secured by the asset sold in such Asset Sale and is required to be repaid with such proceeds (other than any such Indebtedness assumed by the purchaser of such asset); provided, however, that, with respect to the proceeds of any Asset Sale or series of related Asset Sales in an amount of less than or equal to $50,000,000 in the aggregate, if (A) Terex shall deliver a certificate of a Financial Officer to the Administrative Agent at the time of receipt thereof setting forth Terex's intent to reinvest such proceeds in productive assets of a kind then used or usable in the business of Terex and its Subsidiaries within 300 days of receipt of such proceeds and (B) no Default or Event of Default shall have occurred and shall be continuing at the time of such certificate or at the proposed time of the application of such proceeds, such proceeds shall not constitute Net Cash Proceeds except to the extent not so used at the end of such 300-day period, at which time such proceeds shall be deemed to be Net Cash Proceeds, and (b) with respect to any Equity Issuance or any other issuance or disposition of Indebtedness, the cash proceeds thereof, net of all taxes and customary fees, commissions, costs and other expenses (including reasonable broker's fees or commissions, legal fees, accounting fees, investment banking fees and other professional fees, and underwriter's discounts and commissions) incurred in connection therewith.

"O&K Mining" shall mean O&K Mining GmbH, a company organized under the laws of the Federal Republic of Germany.

"Obligations" shall mean all obligations defined as "Obligations" in any of the Guarantee Agreements and the Security Documents.


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"Payment Location" shall mean an office, branch or other place of business of any Borrower.

"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA.

"Perfection Certificate" shall mean the Perfection Certificate substantially in the form of Annex 2 to the Security Agreement.

"Permitted Acquisitions" shall mean acquisitions of not less than 100% (other than directors' qualifying shares) of the outstanding capital stock or other equity interests of any corporation, partnership, a division of any corporation or any similar business unit (or of all or substantially all the assets and business of any of the foregoing) engaged in a Related Business so long as (a) in the case of each such acquisition of capital stock or other equity interests, such acquisition was not preceded by an unsolicited tender offer for such capital stock or other equity interests by Terex or any of its Affiliates, (b) Terex shall have delivered to the Administrative Agent a certificate certifying that at the time of and immediately after giving effect to such acquisition, no Default or Event of Default shall have occurred and be continuing, and (c) either (i) the total consideration with respect to such acquisition shall not exceed $2,500,000, (ii) Terex shall have delivered to the Administrative Agent a certificate certifying that at the time of and immediately after giving effect to such acquisition, the Pro Forma Acquisition EBITDA of the entity acquired pursuant to such acquisition shall not exceed 25% of the sum of such Pro Forma Acquisition EBITDA plus Consolidated EBITDA, in each case for the period of four fiscal quarters ended on the last day of the most recent fiscal quarter ended prior to the date of such acquisition or (iii) (A) Terex shall have delivered to the Administrative Agent a certificate certifying that at the time of and immediately after giving effect to such acquisition, the ratio of (1) the Total Debt of Terex and its Subsidiaries on the date of such acquisition (including all Indebtedness incurred in connection with or resulting from such acquisition that would constitute Total Debt) to (2) the sum of (x) Pro Forma Acquisition EBITDA of the entity acquired pursuant to such acquisition, (y) Pro Forma Acquisition EBITDA for all other Acquired Persons acquired during the period of four consecutive fiscal quarters most recently ended prior to the date of such acquisition and (z) Consolidated EBITDA, in each case for the period of four fiscal quarters most recently ended prior to the date of such acquisition, shall be at least 0.15 to 1.00 less than the Consolidated Leverage Ratio required pursuant to Section 6.11 on such date and (B) such corporation, partnership, division, business or assets, as applicable, are located in the United States (or the principal place of business with respect thereto and substantially all of the applicable assets are located in the United States) or in any country included on Schedule 1.01(e) or on a list approved by the Required Lenders prior to the date of such acquisition. For purposes of determining compliance with clause (c)(i) above, the principal amount of Indebtedness assumed in connection with an acquisition shall be included in calculating the consideration therefor.

"Permitted Investments" shall mean:

(a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within one year from the date of acquisition thereof;


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(b) investments in commercial paper maturing within 270 days from the date of acquisition thereof and having, at such date of acquisition, the highest credit rating obtainable from Standard & Poor's Ratings Service or from Moody's Investors Service, Inc.;

(c) investments in certificates of deposit, banker's acceptances and time deposits maturing within one year from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, (i) the Administrative Agent or any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof or (ii) a commercial banking institution organized and located in a country recognized by the United States of America, in each case that has a combined capital and surplus and undivided profits of not less than $250,000,000 (or the Dollar Equivalent thereof in another currency);

(d) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clause (a) above entered into with any bank meeting the qualifications specified in clause (c) above;

(e) investments in money market funds which invest substantially all their assets in securities of the types described in clauses (a) through (d) above; and

(f) other short-term investments utilized by Foreign Subsidiaries in accordance with normal investment practices for cash management not exceeding $1.0 million in aggregate principal amount outstanding at any time.

"person" shall mean any natural person, corporation, business trust, joint venture, association, company, limited liability company, partnership, other business entity or government, or any agency or political subdivision thereof.

"Plan" shall mean any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 307 of ERISA, and in respect of which Terex or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.

"Pledge Agreement" shall mean the Pledge Agreement, substantially in the form of Exhibit G, between Terex, its Subsidiaries party thereto and the Collateral Agent for the benefit of the Secured Parties.

"Pounds" and "(pound)" shall mean pounds sterling in lawful currency of the United Kingdom.

"Pro Forma Acquisition EBITDA" shall mean with respect to any entity or business unit acquired or to be acquired in a Permitted Acquisition, the amount of Consolidated EBITDA of such entity or business unit (as if such entity or business unit were Terex) determined by Terex and acceptable to the Administrative Agent in its reasonable discretion, based upon and derived from financial information delivered to Administrative Agent prior to consummation of such Permitted Acquisition for the four-quarter period ending on the last day of the immediately preceding fiscal quarter of such entity or business unit for


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which such financial information for such entity or business unit has been delivered to the Administrative Agent, adjusted by the estimated amount of non-recurring revenues and expenditures with respect to the business of such entity or business unit, as calculated by Terex and acceptable to Administrative Agent in its reasonable discretion. On each subsequent determination date occurring within one year after the consummation of a Permitted Acquisition, the entity's Pro Forma Acquisition EBITDA shall include the Pro Forma Acquisition EBITDA only for those fiscal quarters in the trailing four-quarter period occurring prior to the closing of such Permitted Acquisition.

"Pro Rata Percentage" of any Revolving Credit Lender at any time shall mean the percentage of the Total Revolving Credit Commitment represented by such Lender's Revolving Credit Commitment.

"Purchase Money Indebtedness" shall mean any Indebtedness of a person to any seller or other person incurred to finance the acquisition (including in the case of a Capital Lease Obligation, the lease) of any after acquired real or personal tangible property or assets related to the business of Terex or the Subsidiaries and which is incurred substantially concurrently with such acquisition and is secured only by the assets so financed.

"Refinancing Indebtedness" shall have the meaning assigned to such term in Section 6.01(n).

"Register" shall have the meaning given such term in Section 9.04(d).

"Regulation G" shall mean Regulation G of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

"Regulation U" shall mean Regulation U of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

"Regulation X" shall mean Regulation X of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

"Related Business" shall mean any business in the manufacture or sale of capital goods or parts or services, or otherwise reasonably related, ancillary or complementary to the businesses of Terex and the Subsidiaries on the date hereof.

"Release" shall mean any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing, depositing, dispersing, emanating or migrating of any Hazardous Material in, into, onto or through the environment.

"Remedial Action" shall mean (a) "remedial action" as such term is defined in CERCLA, 42 U.S.C. Section 9601(24), and (b) all other actions required by any Governmental Authority or voluntarily undertaken to: (i) clean up, remove, treat, abate or in any other way address any Hazardous Material in the environment; (ii) prevent the Release or threat of Release, or minimize the further Release of any Hazardous Material so it does not migrate or endanger or threaten to endanger public health, welfare or the environment; or (iii) perform studies and investigations in connection with, or as a precondition to, (i) or
(ii) above.


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"Required Lenders" shall mean, at any time, Lenders having Loans (excluding Swingline Loans and A/C Fronted Loans), L/C Exposure, Swingline Exposure, A/C Fronted Exposure and unused Revolving Credit and Term Loan Commitments representing at least 51% of the sum of all Loans outstanding (excluding Swingline Loans and A/C Fronted Loans), L/C Exposure, Swingline Exposure, A/C Fronted Exposure and unused Revolving Credit and Term Loan Commitments at such time. For purposes of determining the Required Lenders on any date, any amounts denominated in an Alternative Currency shall be translated into dollars at the Dollar Equivalent in effect on the most recent Calculation Date.

"Responsible Officer" of any corporation shall mean any executive officer or Financial Officer of such corporation and any other officer or similar official thereof responsible for the administration of the obligations of such corporation in respect of this Agreement.

"Revolving Credit Borrowing" shall mean a Borrowing comprised of Revolving Loans.

"Revolving Credit Commitment" shall mean, with respect to each Lender, the commitment of such Lender to make Revolving Loans and to acquire participations in L/C Disbursements, Swingline Loans and A/C Fronted Loans hereunder as set forth on Schedule 2.01(a), or in the Assignment and Acceptance pursuant to which such Lender assumed its Revolving Credit Commitment, as applicable, as the same may be (a) reduced from time to time pursuant to Section 2.09 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04.

"Revolving Credit Exposure" shall mean, with respect to any Lender at any time, the sum of (a) the aggregate principal amount of all outstanding Dollar Revolving Loans of such Lender at such time, (b) the Dollar Equivalent of the aggregate principal amount of all outstanding Revolving Loans of such Lender that are Alternative Currency Loans at such time and (c) the aggregate amount of such Lender's L/C Exposure, Swingline Exposure and A/C Fronted Exposure at such time.

"Revolving Credit Lender" shall mean a Lender with a Revolving Credit Commitment.

"Revolving Credit Maturity Date" shall mean March 6, 2004.

"Revolving Loans" shall mean the revolving loans made by the Lenders to any Borrower pursuant to clause (c) of Section 2.01. Each Revolving Loan shall be a Eurocurrency Revolving Loan or an ABR Revolving Loan.

"Sale and Leaseback" shall have the meaning set forth in Section 6.03.

"Secured Parties" shall have the meaning assigned to such term in the Security Agreement.

"Security Agreement" shall mean the Security Agreement, substantially in the form of Exhibit H, between Terex, its Subsidiaries party thereto and the Collateral Agent for the benefit of the Secured Parties.


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"Security Documents" shall mean the Mortgages, the Security Agreement, the Pledge Agreement and each of the security agreements, mortgages and other instruments and documents executed and delivered pursuant to any of the foregoing or pursuant to Section 5.11.

"Senior Subordinated Notes" shall mean the senior subordinated notes to be issued by Terex in an aggregate principal amount not to exceed $200,000,000; provided that such senior subordinated notes shall (a) require no scheduled payments of principal prior to the date that is 12 months later than the Tranche B Maturity Date, (b) be subject to subordination provisions no less favorable to the Lenders than those described in Schedule 1.01(g) and be reasonably satisfactory in all other respects to the Administrative Agent.

"Statutory Reserves" shall mean a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by any Governmental Authority to which banks are subject for any category of deposits or liabilities customarily used to fund loans or by reference to which interest rates applicable to Loans are determined. Such reserve, liquid asset or similar percentages shall include those imposed pursuant to Regulation D of the Board (and for purposes of Regulation D, Eurocurrency Loans denominated in dollars shall be deemed to constitute Eurocurrency Liabilities). Loans shall be deemed to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under Regulation D or any other applicable law, rule or regulation. Statutory Reserves shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

"subsidiary" shall mean, with respect to any person (herein referred to as the "parent"), any corporation, partnership, association or other business entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or more than 50% of the general partnership interests are, at the time any determination is being made, owned, controlled or held, or (b) that is, at the time any determination is made, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.

"Subsidiary" shall mean any subsidiary of Terex.

"Subsidiary Borrowers" shall mean, collectively, the Scottish Borrower, the French Borrower, the Australian Borrower, the Italian Borrower and, after its accession to this Agreement pursuant to Section 9.19, the German Borrower.

"Subsidiary Guarantee Agreement" shall mean the Guarantee Agreement, substantially in the form of Exhibit I, made by the Subsidiary Guarantors in favor of the Collateral Agent for the benefit of the Secured Parties.

"Subsidiary Guarantors" shall mean each person listed on Schedule 1.01(b) and each other person that becomes party to a Subsidiary Guarantee Agreement as a Guarantor, and the permitted successors and assigns of each such person.


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"Swingline Commitment" shall mean the commitment of the Swingline Lender to make loans pursuant to Section 2.22.

"Swingline Exposure" shall mean at any time the aggregate principal amount at such time of all outstanding Swingline Loans. The Swingline Exposure of any Revolving Credit Lender at any time shall equal its Pro Rata Percentage of the aggregate Swingline Exposure at such time.

"Swingline Lender" shall mean CSFB.

"Swingline Loan" shall mean any loan made by the Swingline Lender pursuant to its Swingline Commitment.

"Terex Guarantee Agreement" shall mean the Guarantee Agreement substantially in the form of Exhibit K, made by Terex in favor of the Collateral Agent for the benefit of the Secured Parties.

"Term Borrowing" shall mean a Borrowing comprised of Tranche A Term Loans or Tranche B Term Loans.

"Term Loan Commitments" shall mean the Tranche A Commitments and the Tranche B Commitments.

"Term Loan Repayment Dates" shall mean the Tranche A Term Loan Repayment Dates and the Tranche B Term Loan Repayment Dates.

"Term Loans" shall mean the Tranche A Term Loans and the Tranche B Term Loans.

"Total Debt" shall mean, as of any date of determination, without duplication, the aggregate principal amount of Indebtedness of Terex and its Subsidiaries outstanding as of such date, determined on a consolidated basis (other than Indebtedness of the type referred to in clause (i) of the definition of the term "Indebtedness", except to the extent of any unreimbursed drawings thereunder). For purposes of calculating the Leverage Ratio on any date, the amount of Total Debt on such date shall be reduced by the amount, if any, that cash on the balance sheet of Terex and its consolidated Subsidiaries on such date exceeds $5,000,000.

"Total Revolving Credit Commitment" shall mean, at any time, the aggregate amount of the Revolving Credit Commitments, as in effect at such time.

"Total Senior Secured Debt" shall mean, as of any date of determination, the sum of the aggregate principal amount of all (a) Loans outstanding as of such date, (b) unreimbursed L/C Disbursements as of such date,
(c) Capital Lease Obligations of Terex and the Subsidiaries outstanding as of such date and (d) other Indebtedness of Terex and the Subsidiaries that is secured by any assets of Terex and the Subsidiaries.

"Tranche A Commitment" shall mean, with respect to each Lender, the commitment of such Lender to make Tranche A Term Loans hereunder as set forth on Schedule 2.01(a), or in the Assignment and Acceptance pursuant to which such Lender assumed its Tranche A Commitment, as applicable, as the same may be (a) reduced from time to time pursuant to Section 2.09 and (b) reduced or increased


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from time to time pursuant to assignments by or to such Lender pursuant to
Section 9.04.

"Tranche A Maturity Date" shall mean March 6, 2004.

"Tranche A Term Borrowing" shall mean a Borrowing comprised of Tranche A Term Loans.

"Tranche A Term Loan Availability Period" shall mean the period from and including the Closing Date, to and including the earlier of (a) the date of consummation of the Acquisition and (b) June 30, 1998.

"Tranche A Term Loan Closing Date" shall mean each date on which Tranche A Term Loans are made.

"Tranche A Term Loan Repayment Date" shall have the meaning assigned to such term in Section 2.11(a)(i).

"Tranche A Term Loans" shall mean the term loans made by the Lenders to any Borrower pursuant to clause (a) of Section 2.01. Each Tranche A Term Loan shall be either a Eurocurrency Term Loan or an ABR Term Loan.

"Tranche B Commitment" shall mean, with respect to each Lender, the commitment of such Lender to make Tranche B Term Loans hereunder as set forth on Schedule 2.01(a), or in the Assignment and Acceptance pursuant to which such Lender assumed its Tranche B Commitment, as applicable, as the same may be (a) reduced from time to time pursuant to Section 2.09 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to
Section 9.04.

"Tranche B Maturity Date" shall mean March 6, 2005.

"Tranche B Term Borrowing" shall mean a Borrowing comprised of Tranche B Term Loans.

"Tranche B Term Loan Closing Date" shall mean the Closing Date.

"Tranche B Term Loan Repayment Date" shall have the meaning assigned to such term in Section 2.11(a)(ii).

"Tranche B Term Loans" shall mean the term loans made by the Lenders to Terex pursuant to clause (b) of Section 2.01. Each Tranche B Term Loan shall be either a Eurocurrency Term Loan or an ABR Term Loan.

"Transactions" shall have the meaning assigned to such term in Section 3.02.

"Type", when used in respect of any Loan or Borrowing, shall refer to the Rate by reference to which interest on such Loan or on the Loans comprising such Borrowing is determined and the currency in which such Loan or the Loans comprising such Borrowing is denominated. For purposes hereof, the term "Rate" shall include the Adjusted LIBO Rate, the Alternate Base Rate and the rate with


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respect to any Foreign Base Rate Loan, and currency shall include dollars and any Alternative Currency permitted hereunder.

"wholly owned Subsidiary" of any person shall mean a subsidiary of such person of which securities (except for directors' qualifying shares) or other ownership interests representing 100% of the equity or 100% of the ordinary voting power or 100% of the general partnership interests are, at the time any determination is being made, owned, controlled or held by such person or one or more wholly owned subsidiaries of such person or by such person and one or more wholly owned subsidiaries of such person; provided that each of Terex Cranes, Inc., P.P.M. Cranes, Inc., P.P.M. S.A., and any future wholly owned subsidiaries of any of the foregoing shall be deemed to be wholly owned Subsidiaries, in each case so long as Terex or one or more wholly owned Subsidiaries maintains a percentage ownership interest in such entity equal to or greater than such ownership interest (on a fully diluted basis) on the later of (a) the date hereof or (b) the date such entity is incorporated or acquired by Terex or one or more wholly owned Subsidiaries.

"Withdrawal Liability" shall mean liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

SECTION 1.02. Terms Generally. The definitions in Section 1.01 shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". All references herein to Articles, Sections, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, this Agreement unless the context shall otherwise require. Except as otherwise expressly provided herein, (a) any reference in this Agreement to any Loan Document shall mean such document as amended, restated, supplemented or otherwise modified from time to time and (b) all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided, however, that if Terex notifies the Administrative Agent that Terex wishes to amend any covenant in Article VI or any related definition to eliminate the effect of any change in GAAP occurring after the date of this Agreement on the operation of such covenant (or if the Administrative Agent notifies Terex that the Required Lenders wish to amend Article VI or any related definition for such purpose), then Terex's compliance with such covenant shall be determined on the basis of GAAP in effect immediately before the relevant change in GAAP became effective, until either such notice is withdrawn or such covenant is amended in a manner satisfactory to Terex and the Required Lenders.

SECTION 1.03. Exchange Rates. On each Calculation Date, the Administrative Agent shall determine the Exchange Rate as of such Calculation Date to be used for calculating relevant Dollar Equivalent and Alternative Currency Equivalent amounts. The Exchange Rates so determined shall become effective on such Calculation Date, shall remain effective until the next succeeding Calculation Date and shall for all purposes of this Agreement (other than any provision expressly requiring the use of a current Exchange Rate) be the Exchange Rates employed in converting any amounts between the applicable currencies.


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ARTICLE II

The Credits

SECTION 2.01. Commitments. Subject to the terms and conditions and relying upon the representations and warranties herein set forth, each Lender agrees, severally and not jointly, (a) to make Tranche A Term Loans to the Borrowers, in dollars (in the case of Terex), Marks (in the case of the German Borrower), Pounds (in the case of the Scottish Borrower) and Francs (in the case of the French Borrower) on the Closing Date and on a single additional date prior to the earlier of the expiration of the Tranche A Term Loan Availability Period and the termination of the Tranche A Term Commitment of such Lender in accordance with the terms hereof, in an aggregate principal amount not to exceed its Tranche A Term Commitment; provided, however, that the Dollar Equivalent of the Alternative Currency Term Loans in any Alternative Currency made by all Tranche A Lenders shall not exceed the sublimit for such Alternative Currency set forth on Schedule 2.01(b), (b) to make Tranche B Term Loans to Terex, in dollars, on the Closing Date in accordance with the terms hereof, in an aggregate principal amount not to exceed its Tranche B Term Commitment, and (c) to make Revolving Loans to the Borrowers, at any time and from time to time on or after the date hereof, and until the earlier of the Revolving Credit Maturity Date and the termination of the Revolving Credit Commitment of such Lender in accordance with the terms hereof, in dollars (in the case of Terex), Marks (in the case of the German Borrower), Pounds (in the case of the Scottish Borrower) and Francs (in the case of the French Borrower) in an aggregate principal amount at any time outstanding that will not result in such Lender's Revolving Credit Exposure exceeding such Lender's Revolving Credit Commitment; provided, however, that the Alternative Currency Revolving Credit Exposure with respect to any Alternative Currency shall not exceed the sublimit for such Alternative Currency set forth in Schedule 2.01(b). Within the limits set forth in clause (c) of the preceding sentence and subject to the terms, conditions and limitations set forth herein, the Borrowers may borrow, pay or prepay and reborrow Revolving Loans. Amounts paid or prepaid in respect of Term Loans may not be reborrowed.

SECTION 2.02. Loans. (a) Each Loan (other than A/C Fronted Loans and Swingline Loans) shall be made as part of a Borrowing consisting of Loans made by the Lenders ratably in accordance with their applicable Tranche A Commitments, Tranche B Commitments or Revolving Credit Commitments, as applicable; provided, however, that the failure of any Lender to make any Loan shall not in itself relieve any other Lender of its obligation to lend hereunder (it being understood, however, that no Lender shall be responsible for the failure of any other Lender to make any Loan required to be made by such other Lender). Except for Loans deemed made pursuant to Section 2.02(f), the Loans comprising any Borrowing shall be in an aggregate principal amount that is (i) an integral multiple of $100,000 (or the Alternative Currency Equivalent thereof) and not less than $2,500,000 (or the Alternative Currency Equivalent thereof) or (ii) equal to the remaining available balance of the applicable Commitments. As provided in Section 2.03, each request for a Borrowing shall state the amount requested in dollars (whether or not such Borrowing is to be an Alternative Currency Borrowing). To the extent any Tranche A Term Loans are made as Alternative Currency Loans, such Loans shall continue to be Alternative Currency Loans (denominated and payable in the Alternative Currency in which such Loans are advanced) for as long as they are outstanding under this Agreement.


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(b) Subject to Sections 2.08, 2.15 and 2.24, (i) each Dollar Borrowing shall be comprised entirely of ABR Loans or Eurocurrency Loans as Terex may request pursuant to Section 2.03 and (ii) each Alternative Currency Borrowing shall be comprised entirely of Eurocurrency Loans. Each Lender may at its option make any Eurocurrency Loan by causing any domestic or foreign branch of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the applicable Borrower to repay such Loan in accordance with the terms of this Agreement. Borrowings of more than one Type may be outstanding at the same time; provided, however, that no Borrower shall be entitled to request any Borrowing that, if made, would result in more than 15 Eurocurrency Borrowings outstanding hereunder at any time. For purposes of the foregoing, Borrowings having different Interest Periods or denominated in different currencies, regardless of whether they commence on the same date, shall be considered separate Borrowings.

(c) Except with respect to Loans made pursuant to Section 2.02(f), each Lender shall make each Dollar Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds to such account in New York City as the Administrative Agent may designate not later than 11:00
a.m., New York City time, and the Administrative Agent shall, promptly upon receipt thereof, credit the amounts so received to an account as designated by Terex, in the applicable Borrowing Request or, if a Borrowing shall not occur on such date because any condition precedent herein specified shall not have been met, return the amounts so received to the respective Lenders. Each Lender shall make each Alternative Currency Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds to such account in the jurisdiction of the applicable Alternative Currency as the Administrative Agent may designate for such purposes not later than 11:00 a.m., local time of such jurisdiction, and the Administrative Agent shall, promptly upon receipt thereof, credit the amounts so received to an account as designated by the applicable Borrower in the applicable Borrowing Request or, if a Borrowing shall not occur on such date because any condition precedent herein specified shall not have been met, return the amounts so received to the respective Lenders.

(d) Unless the Administrative Agent shall have received notice from a Lender prior to the date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender's portion of such Borrowing, the Administrative Agent may assume that such Lender has made such portion available to the Administrative Agent on the date of such Borrowing in accordance with paragraph (c) above and the Administrative Agent may, in reliance upon such assumption, make available to the applicable Borrower on such date a corresponding amount. If the Administrative Agent shall have so made funds available then, to the extent that such Lender shall not have made such portion available to the Administrative Agent, such Lender and the applicable Borrower severally agree to repay to the Administrative Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to such Borrower until the date such amount is repaid to the Administrative Agent at (i) in the case of any Borrower, the interest rate applicable at the time to the Loans comprising such Borrowing and (ii) in the case of such Lender, a rate determined by the Administrative Agent to represent its cost of overnight or short-term funds in the applicable currency (which determination shall be conclusive absent manifest error). If such Lender shall repay to the Administrative Agent such corresponding amount, such amount shall constitute such Lender's Loan as part of such Borrowing for purposes of this Agreement.


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(e) Notwithstanding any other provision of this Agreement, no Borrower shall be entitled to request any Interest Period with respect to any Eurocurrency Borrowing or A/C Fronted Fixed Rate Loan that would end after the Revolving Credit Maturity Date or the Tranche A Maturity Date or the Tranche B Maturity Date, as the case may be.

(f) If any Issuing Bank shall not have received from any Borrower the payment required to be made by it pursuant to Section 2.23(e) within the time specified in such Section, such Issuing Bank will promptly notify the Administrative Agent of the L/C Disbursement and the Administrative Agent will promptly notify each Revolving Credit Lender of such L/C Disbursement and its Pro Rata Percentage thereof. In the case of Letters of Credit denominated in dollars, each Revolving Credit Lender shall pay by wire transfer of immediately available funds to the Administrative Agent not later than 2:00 p.m., New York City time, on such date (or, if such Revolving Credit Lender shall have received such notice later than 12:00 (noon), New York City time, on any day, not later than 10:00 a.m., New York City time, on the immediately following Business Day), an amount in dollars equal to such Lender's Pro Rata Percentage of such L/C Disbursement (it being understood that such amount shall be deemed to constitute an ABR Revolving Loan of such Lender and such payment shall be deemed to have reduced the L/C Exposure), and the Administrative Agent will promptly pay to the applicable Issuing Bank amounts so received by it from the Revolving Credit Lenders. In the case of Letters of Credit denominated in Marks, Pounds or Francs, each Revolving Credit Lender shall pay by wire transfer of immediately available funds to the Administrative Agent not later than 2:00 p.m., local time of the jurisdiction of such Alternative Currency, on such date (or if such Revolving Credit Lender shall have received such notice later than 12:00 (noon), local time of such jurisdiction, on the immediately following Business Day), an amount in such Alternative Currency equal to such Lender's Pro Rata Percentage of such L/C Disbursement (it being understood that such amount shall be deemed to constitute an Alternative Currency Revolving Loan of such Lender and such payment shall be deemed to have reduced the L/C Exposure), and the Administrative Agent will promptly pay to the applicable Issuing Bank amounts so received by it from the Revolving Credit Lenders. In the case of Letters of Credit denominated in any Alternative Currency except for Marks, Pounds or Francs, the Administrative Agent shall notify each Revolving Credit Lender of the Dollar Equivalent of the L/C Disbursement and of such Revolving Credit Lender's Pro Rata Percentage thereof, and each Revolving Credit Lender shall pay by wire transfer of immediately available funds to the Administrative Agent not later than 2:00 p.m., New York City time, on such date (or, if such Revolving Credit Lender shall have received such notice later than 12:00 (noon), New York City time, on any day, not later than 10:00 a.m., New York city time, on the immediately following Business Day), an amount in dollars equal to such Lender's Pro Rata Percentage of such L/C Disbursement (it being understood that such amount shall be deemed to constitute an ABR Revolving Loan of such Lender and such payment shall be deemed to have reduced the L/C Exposure), and the Administrative Agent will promptly pay to the applicable Issuing Bank amounts so received by it from the Revolving Credit Lenders. The Administrative Agent will promptly pay to the applicable Issuing Bank any amounts received by it from any Borrower pursuant to Section 2.23(e) prior to the time that any Revolving Credit Lender makes any payment pursuant to this paragraph (f); any such amounts received by the Administrative Agent thereafter will be promptly remitted by the Administrative Agent to the Revolving Credit Lenders that shall have made such payments and to the applicable Issuing Bank, as their interests may appear. If any Revolving Credit Lender shall not have made its Pro Rata Percentage of such L/C Disbursement available to the Administrative Agent as provided above, such Lender and the applicable Borrower severally agree to pay interest on such


33

amount, for each day from and including the date such amount is required to be paid in accordance with this paragraph to but excluding the date such amount is paid, to the Administrative Agent for the account of the applicable Issuing Bank at (i) in the case of any Borrower, a rate per annum equal to the interest rate applicable to Revolving Loans pursuant to Section 2.06(a), and (ii) in the case of such Lender, for the first such day, a rate determined by the Administrative Agent to represent its cost of overnight funds in the applicable currency, and for each day thereafter, (x) if such L/C Disbursement is denominated in dollars, the Alternate Base Rate, and (y) if such L/C Disbursement is denominated in an Alternative Currency, the applicable Foreign Base Rate.

SECTION 2.03. Borrowing Procedure. In order to request a Borrowing (other than a Swingline Loan, an A/C Fronted Loan or a deemed Borrowing pursuant to Section 2.02(f), as to which this Section 2.03 shall not apply), the applicable Borrower shall hand deliver or telecopy to the Administrative Agent a duly completed Borrowing Request (or telephone the Administrative Agent, promptly confirmed with a written and duly completed Borrowing Request) (a) in the case of a Eurocurrency Borrowing (other than an Alternative Currency Borrowing), not later than 12:00 (noon), New York City time, three Business Days before a proposed Borrowing, (b) in the case of an Alternative Currency Borrowing, not later than 12:00 (noon), local time of the jurisdiction of such Alternative Currency, three Business Days before the date of the proposed Borrowing and (c) in the case of an ABR Borrowing, not later than 1:00 p.m., New York City time, one Business Day before a proposed Borrowing. Each Borrowing Request (including a telephonic Borrowing Request) shall be irrevocable, shall be signed by or on behalf of such Borrower and shall specify the following information: (i) whether such Borrowing is to be a Dollar Borrowing or an Alternative Currency Borrowing; (ii) whether the Borrowing then being requested is to be a Tranche A Term Borrowing, Tranche B Term Borrowing or a Revolving Credit Borrowing; (iii) if such Borrowing is to be denominated in dollars, whether it is to be a Eurocurrency Borrowing or an ABR Borrowing; (iv) the date of such Borrowing (which shall be a Business Day); (v) the number and location of the account to which funds are to be disbursed (which shall be an account that complies with the requirements of Section 2.02(c)); (vi) the amount of such Borrowing (which shall be specified in dollars, even if such Borrowing is to be made in an Alternative Currency); (vii) subject to the limitations of Section 2.01, the currency of such Borrowing; and (viii) if such Borrowing is to be a Eurocurrency Borrowing, the initial Interest Period with respect thereto; provided, however, that, notwithstanding any contrary specification in any Borrowing Request, each requested Borrowing shall comply with the requirements set forth in Section 2.02. If no election as to the currency of Borrowing is specified in any such notice, then the requested Borrowing shall be denominated in the only currency permitted to be borrowed by such Borrower pursuant to
Section 2.01. If no election as to the Type of Borrowing is specified in any such notice, then the requested Borrowing shall be an ABR Borrowing if denominated in dollars or a Eurocurrency Borrowing if denominated in an Alternative Currency. If no Interest Period with respect to any Eurocurrency Borrowing is specified in any such notice, then such Borrower shall be deemed to have selected an Interest Period of one month's duration. The Administrative Agent shall promptly advise the applicable Lenders of any notice given pursuant to this Section 2.03 (and the contents thereof), of each Lender's portion of the requested Borrowing and the account to which Loans made in connection with the requested Borrowing are to be wired.

SECTION 2.04. Evidence of Debt; Repayment of Loans. (a) Each Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of the Swingline Lender or each other Lender entitled thereto (i) the then unpaid principal amount of each Swingline Loan, on the last day of the


34

Interest Period applicable to such Loan or, if earlier, on the Revolving Credit Maturity Date, (ii) the principal amount of each Term Loan of such Lender as provided in Section 2.11 and (iii) the then unpaid principal amount of each Revolving Loan and A/C Fronted Loan on the Revolving Credit Maturity Date.

(b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of each Borrower to such Lender resulting from each Loan made by such Lender from time to time, including the amounts of principal and interest payable and paid such Lender from time to time under this Agreement.

(c) The Administrative Agent shall maintain accounts in which it will record (i) the amount of each Loan made hereunder, the Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from each Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder from each Borrower or any Guarantor and each Lender's share thereof.

(d) The entries made in the accounts maintained pursuant to paragraphs
(b) and (c) above shall be prima facie evidence of the existence and amounts of the obligations therein recorded; provided, however, that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligations of any Borrower to repay the Loans in accordance with their terms.

(e) Any Lender may request that Loans made by it be evidenced by a promissory note. In such event, the Borrower shall execute and deliver to such Lender a promissory note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in a form and substance reasonably acceptable to the Administrative Agent and the Borrower. Notwithstanding any other provision of this Agreement, in the event any Lender shall request and receive a promissory note payable to such Lender and its registered assigns, the interests represented by such note shall at all times (including after any assignment of all or part of such interests pursuant to
Section 9.04) be represented by one or more promissory notes payable to the payee named therein or its registered assigns.

SECTION 2.05. Fees. (a) Terex agrees to pay to each Lender in dollars, through the Administrative Agent, on the last day of March, June, September and December in each year and on each date on which any Tranche A Commitment or Revolving Credit Commitment of such Lender shall expire or be terminated as provided herein, a facility fee (a "Facility Fee") equal to the Applicable Percentage per annum in effect from time to time on the total amount of the Tranche A Commitments and, without duplication, Tranche A Term Loans and the total amount (whether used or unused) of the Revolving Credit Commitments of such Lender (but not the Tranche B Commitments, the A/C Fronting Commitments or the Swingline Commitments) during the preceding quarter (or other period commencing with the date hereof or ending with the Revolving Credit Maturity Date or Tranche A Maturity Date, as applicable, or the date on which the Tranche A Commitments and Revolving Credit Commitments of such Lender shall expire or be terminated); provided, however, that if any Revolving Credit Exposure remains outstanding following any such expiration or termination of the Revolving Credit Commitments, the Facility Fees with respect to such Revolving Credit Exposure shall continue to accrue for so long as such Revolving Credit Exposure remains outstanding and shall be payable on demand. All Facility Fees shall be computed on the basis of the actual number of days elapsed in a year of 360 days. The


35

Facility Fee due to each Lender shall commence to accrue on the date hereof and shall cease to accrue on the date on which the Tranche A Commitment or Revolving Credit Commitment, as the case may be, of such Lender shall expire or be terminated as provided herein and there is not any remaining Revolving Credit Exposure.

(b) Each Borrower agrees to pay to the Administrative Agent in dollars, for its own account, the administrative fees set forth in the Fee Letter at the times and in the amounts specified therein (the "Administrative Agent Fees").

(c) Each Borrower agrees to pay (i) to each Revolving Credit Lender, through the Administrative Agent, on the last day of March, June, September and December of each year and on the date on which the Revolving Credit Commitment of such Lender shall be terminated as provided herein, a fee (an "L/C Participation Fee") calculated on such Lender's Pro Rata Percentage of the average daily aggregate L/C Exposure (excluding the portion thereof attributable to unreimbursed L/C Disbursements) during the preceding quarter (or shorter period commencing with the date hereof or ending with the Revolving Credit Maturity Date or the date on which all Letters of Credit have been canceled or have expired and the Revolving Credit Commitments of all Lenders shall have been terminated) at a rate equal to the Applicable Percentage from time to time used to determine the interest rate on Revolving Credit Borrowings comprised of Eurocurrency Loans pursuant to Section 2.06, and (ii) to each Issuing Bank with respect to each Letter of Credit issued by it on the last day of March, June, September and December in each year and on each date on which any Revolving Credit Commitment shall expire or be terminated as set forth herein a fronting fee equal to 0.125% per annum on the amount of Letters of Credit issued by such Issuing Bank and outstanding during the preceding quarter (or other period commencing on the date hereof or ending with the Revolving Credit Maturity Date or the date on which the Revolving Credit Commitments shall expire or be terminated) (the "Issuing Bank Fees"). All L/C Participation Fees and Issuing Bank Fees shall be computed on the basis of the actual number of days elapsed in a year of 360 days and shall be payable in dollars.

(d) Except as provided in Section 2.24(e), each A/C Fronting Lender agrees to pay to each Revolving Credit Lender, through the Administrative Agent, on each Interest Payment Date with respect to each A/C Fronted Loan made by such A/C Fronting Lender, a fee (an "A/C Participation Fee") equal to such Revolving Credit Lender's Pro Rata Percentage of the Applicable Percentage received by such A/C Fronting Lender from or on behalf of the applicable Borrower on such Interest Payment Date in respect of such A/C Fronted Loan. All A/C Participation Fees shall be payable (i) in the currency in which they were received by the A/C Fronting Lender and (ii) only to the extent received by the A/C Fronting Lender.

(e) Each of the Australian Borrower and the Italian Borrower severally agrees to pay to the Australian Fronting Lender and the Italian Fronting Lender, respectively, on the last day of March, June, September and December in each year and on each date on which the A/C Fronting Commitment of such Lender shall expire or be terminated as set forth herein a fronting fee equal to 0.125% per annum on the aggregate principal amount of A/C Fronted Loans of such Lender outstanding during the preceding quarter (or other period commencing on the date hereof or ending with the Revolving Credit Maturity Date or the date on which the A/C Fronting Commitment shall expire or be terminated) (the "A/C Fronting Fees"). All A/C Fronting Fees shall be computed on the basis of the actual number of days elapsed in a year of 360 days and shall be payable in Australian Dollars or Lire, as the case may be.


36

(f) All Fees shall be paid on the dates due, in immediately available funds, to the Administrative Agent for distribution, if and as appropriate, among the Lenders, except that the Issuing Bank Fees shall be paid directly to the applicable Issuing Bank. Once paid, none of the Fees shall be refundable under any circumstances.

SECTION 2.06. Interest on Loans. (a) Subject to the provisions of
Section 2.07, the Loans comprising each ABR Borrowing, including each Swingline Loan, shall bear interest (computed on the basis of the actual number of days elapsed over a year of 365 or 366 days, as the case may be, when the Alternate Base Rate is determined by reference to the Prime Rate and over a year of 360 days at all other times) at a rate per annum equal to the sum of (i) the Alternate Base Rate and (ii) the Applicable Percentage for such Loans in effect from time to time.

(b) Subject to the provisions of Section 2.07, each Foreign Base Rate Loan shall bear interest (computed on the basis of the actual number of days elapsed over a year of 360 days or, in the case of Foreign Base Rate Loans denominated in Pounds, 365 or 366 days, as the case may be) at a rate per annum equal to the sum of (i) the rate set forth in the definition of the term "Foreign Base Rate Loans" and (ii) the Applicable Percentage for ABR Revolving Loans in effect from time to time.

(c) Subject to the provisions of Section 2.07, the Loans comprising each Eurocurrency Borrowing shall bear interest (computed on the basis of the actual number of days elapsed over a year of 360 days or, in the case of Eurocurrency Loans denominated in Pounds, 365 or 366 days, as the case may be) at a rate per annum equal to the sum of (i) the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing and (ii) the Applicable Percentage for such Loans in effect from time to time.

(d) Interest on each Loan shall be payable (i) on the Interest Payment Dates applicable to such Loan except as otherwise provided in this Agreement and
(ii) in the currency in which such Loan is denominated. The applicable Alternate Base Rate or Adjusted LIBO Rate for each Interest Period or day within an Interest Period, as the case may be, shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.

SECTION 2.07. Default Interest. If any Borrower shall default in the payment of the principal of or interest on any Loan or any other amount becoming due hereunder, by acceleration or otherwise, or under any other Loan Document, such Borrower shall on demand from time to time pay interest, to the extent permitted by law, on such defaulted amount to but excluding the date of actual payment (after as well as before judgment) (a) in the case of the Loans, the rate that would otherwise be applicable thereto pursuant to Section 2.06 plus 2%, (b) in the case of reimbursement obligations with respect to L/C Disbursements owing in dollars, the rate applicable to ABR Revolving Loans plus 2% and (c) in the case of reimbursement obligations with respect to L/C Disbursements owing in Alternative Currencies, the rate applicable to Foreign Base Rate Loans that are Revolving Credit Loans for the Applicable Alternative Currency plus 2%, (d) in the case of any interest payable on any Loan or reimbursement obligation with respect to any L/C Disbursement or any Facility Fee or other amount payable hereunder, at a rate per annum equal to the rate applicable to ABR Loans (or, in the case of interest, fees or amounts owing on account of obligations denominated in Alternative Currencies, Foreign Base Rate Loans) that are Tranche A Term Loans, Tranche B Term Loans or Revolving Loans, as applicable, plus 2% (or, in the case of fees, reimbursements or any such


37

other amounts that do not relate to Tranche A Term Loans, Tranche B Term Loans or the Revolving Credit Exposure, the Alternate Base Rate plus 3.00%).

SECTION 2.08. Alternate Rate of Interest. In the event, and on each occasion, that on the day two Business Days prior to the commencement of any Interest Period for a Eurocurrency Borrowing the Administrative Agent shall have determined that (a) deposits in the principal amounts of the Loans comprising such Borrowing are not generally available in the relevant market, or (b) the rates at which such deposits are being offered will not adequately and fairly reflect the cost to any Lender of making or maintaining its Eurocurrency Loan during such Interest Period, or (c) reasonable means do not exist for ascertaining the Adjusted LIBO Rate, the Administrative Agent shall, as soon as practicable thereafter, give written or telecopy notice explaining such determination to the applicable Borrower and the Lenders. In the event of any such determination, until the Administrative Agent shall have advised such Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, any request by such Borrower for a Eurocurrency Borrowing denominated in dollars pursuant to Section 2.03 or 2.10 shall be deemed to be a request for an ABR Borrowing. Each determination by the Administrative Agent hereunder shall be conclusive absent manifest error and any request by such Borrower for a Eurocurrency Borrowing denominated in any Alternative Currency pursuant to Section 2.03 or 2.10 shall be deemed to be a request for a Foreign Base Rate Loan.

SECTION 2.09. Termination and Reduction of Commitments. (a) The Tranche B Commitments shall automatically terminate at 5:00 p.m., New York City time, on the Closing Date. The Tranche A Commitments shall automatically be reduced on the date of each borrowing of Tranche A Term Loans by an amount equal to the Dollar Equivalent of the aggregate principal amount of Tranche A Term Loans so borrowed, and any remaining unused Tranche A Commitments shall automatically terminate at 5:00 p.m., New York City time, on the last day of the Tranche A Term Loan Availability Period; provided, however, that upon not less than five Business Days' prior irrevocable written or telecopy notice from Terex, Terex may elect to convert the unused Tranche A Commitments to Revolving Credit Commitments on or prior to the last day of the Tranche A Term Loan Availability Period. The Revolving Credit Commitments, the Swingline Commitments, the A/C Fronting Commitments and the L/C Commitment shall automatically terminate on the Revolving Credit Maturity Date. Notwithstanding the foregoing, all the Commitments shall automatically terminate at 5:00 p.m., New York City time, on April 30, 1998, if the initial Credit Event shall not have occurred by such time.

(b) Upon at least three Business Days' prior irrevocable written or telecopy notice to the Administrative Agent, Terex may at any time in whole permanently terminate, or from time to time in part permanently reduce, the Tranche A Commitments, the Tranche B Commitments or the Revolving Credit Commitments; provided, however, that (i) each partial reduction of either of the Term Loan Commitments or the Revolving Credit Commitments shall be in an integral multiple of $1,000,000 and in a minimum amount of $5,000,000 and (ii) the Total Revolving Credit Commitment shall not be reduced to an amount that is less than the sum of the Aggregate Revolving Credit Exposure at the time.

(c) Each reduction in either of the Term Loan Commitments or the Revolving Credit Commitments hereunder shall be made ratably among the Lenders in accordance with their respective applicable Commitments. Terex shall pay to the Administrative Agent for the account of the applicable Lenders, on the date


38

of each termination or reduction, the Facility Fees on the amount of any Tranche A Commitments or Revolving Credit Commitments so terminated or reduced accrued to but excluding the date of such termination or reduction.

SECTION 2.10. Conversion and Continuation of Borrowings. Each Borrower shall have the right at any time upon prior irrevocable notice to the Administrative Agent (a) not later than 1:00 p.m., New York City time, one Business Day prior to conversion, to convert any Eurocurrency Borrowing denominated in dollars into an ABR Borrowing, (b) not later than 12:00 (noon), New York City time (or local time in the jurisdiction of the applicable Alternative Currency, in the case of a continuation of the Interest Period for a Eurocurrency Borrowing in an Alternative Currency), three Business Days prior to conversion or continuation, to convert any ABR Borrowing into a Eurocurrency Borrowing denominated in dollars or to continue any Eurocurrency Borrowing as a Eurocurrency Borrowing in the same currency for an additional Interest Period, and (c) not later than 12:00 (noon), New York City time (or local time in the jurisdiction of the applicable Alternative Currency), three Business Days prior to conversion, to convert the Interest Period with respect to any Eurocurrency Borrowing to another permissible Interest Period, subject in each case to the following:

(i) each conversion or continuation shall be made pro rata among the Lenders in accordance with the respective principal amounts of the Loans comprising the converted or continued Borrowing;

(ii) if less than all the outstanding principal amount of any Borrowing shall be converted or continued, then each resulting Borrowing shall satisfy the limitations specified in Sections 2.02(a) and 2.02(b) regarding the principal amount and maximum number of Borrowings of the relevant Type;

(iii) each conversion shall be effected by each Lender and the Administrative Agent by recording for the account of such Lender the new Loan of such Lender resulting from such conversion and reducing the Loan (or portion thereof) of such Lender being converted by an equivalent principal amount; accrued interest on any Eurocurrency Loan (or portion thereof) being converted shall be paid by such Borrower at the time of conversion;

(iv) if any Eurocurrency Borrowing is converted at a time other than the end of the Interest Period applicable thereto, such Borrower shall pay, upon demand, any amounts due to the Lenders pursuant to Section 2.16;

(v) any portion of a Borrowing (other than an Alternative Currency Borrowing) maturing or required to be repaid in less than one month may not be converted into or continued as a Eurocurrency Borrowing;

(vi) any portion of a Eurocurrency Borrowing denominated in dollars that cannot be converted into or continued as a Eurocurrency Borrowing by reason of the immediately preceding clause shall be automatically converted at the end of the Interest Period in effect for such Borrowing into an ABR Borrowing, and any portion of an Alternative Currency Borrowing required to be repaid in less than one month may be converted, with the consent of the Administrative Agent (which shall not be unreasonably withheld), to an Interest Period ending on the


39

date that such Borrowing is required to be repaid;

(vii) no Interest Period may be selected for any Eurocurrency Borrowing that is a Tranche A Term Borrowing or a Tranche B Term Borrowing that would end later than a Tranche A Term Loan Repayment Date or Tranche B Term Loan Repayment Date, respectively, occurring on or after the first day of such Interest Period if, after giving effect to such selection, the aggregate outstanding amount of (A) the Eurocurrency Term Borrowings that are Tranche A Term Borrowings or Tranche B Term Borrowings, as applicable, with Interest Periods ending on or prior to such Tranche A Term Loan Repayment Date or Tranche B Term Loan Repayment Date and (B) the ABR Term Borrowings would not be at least equal to the principal amount of Term Borrowings to be paid on such Tranche A Term Loan Repayment Date or Tranche B Term Loan Repayment Date; and

(viii) upon notice to any Borrower from the Administrative Agent given at the request of the Required Lenders, after the occurrence and during the continuance of a Default or Event of Default, (A) no outstanding Dollar Borrowing may be converted into, or continued as, a Eurocurrency Borrowing, (B) unless repaid, each Eurocurrency Borrowing denominated in dollars shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto and (C) no Interest Period in excess of one month may be selected for any Alternative Currency Borrowing.

Each notice pursuant to this Section 2.10 shall be irrevocable and shall refer to this Agreement and specify (i) the identity and amount of the Borrowing that the applicable Borrower requests be converted or continued, (ii) whether such Borrowing is to be converted to or continued as a Eurocurrency Borrowing or an ABR Borrowing, (iii) if such notice requests a conversion, the date of such conversion (which shall be a Business Day) and (iv) if such Borrowing is to be converted to or continued as a Eurocurrency Borrowing, the Interest Period with respect thereto. If no Interest Period is specified in any such notice with respect to any conversion to or continuation as a Eurocurrency Borrowing, such Borrower shall be deemed to have selected an Interest Period of one month's duration. The Administrative Agent shall advise the Lenders of any notice given pursuant to this Section 2.10 and of each Lender's portion of any converted or continued Borrowing. If such Borrower shall not have given notice in accordance with this Section 2.10 to continue any Borrowing into a subsequent Interest Period (and shall not otherwise have given notice in accordance with this Section 2.10 to convert such Borrowing), such Borrowing shall, at the end of the Interest Period applicable thereto (unless repaid pursuant to the terms hereof), (i) in the case of a Dollar Borrowing, automatically be continued into a new Interest Period as an ABR Borrowing and (ii) in the case of an Alternative Currency Borrowing, automatically be continued into a new Interest Period of one month. Notwithstanding any contrary provisions herein, the currency of an outstanding Borrowing may not be changed in connection with any conversion or continuation of such Borrowing.

SECTION 2.11. Repayment of Term Borrowings. (a) (i) Each Borrower shall pay to the Administrative Agent, for the account of the Lenders, on the dates set forth below, or if any such date is not a Business Day, on the next succeeding Business Day (each such date being a "Tranche A Term Loan Repayment Date"), a principal amount of the Tranche A Term Loans (as adjusted from time to time pursuant to Sections 2.12(b) and 2.13(g)) equal to the percentage set


40

forth below opposite such date multiplied by the aggregate principal amount of all Tranche A Term Loans made to such Borrower hereunder and outstanding on the last Tranche A Term Loan Closing Date, together in each case with accrued and unpaid interest on the principal amount to be paid to but excluding the date of such payment:

Date                                              Percentage
----                                              ----------
June 30, 1999                                        4.00%
September 30, 1999                                   4.00%
December 31, 1999                                    4.00%
March 31, 2000                                       4.00%
June 30, 2000                                        4.00%
September 30, 2000                                   4.00%
December 31, 2000                                    4.00%
March 31, 2001                                       4.00%
June 30, 2001                                        5.25%
September 30, 2001                                   5.25%
December 31, 2001                                    5.25%
March 31, 2002                                       5.25%
June 30, 2002                                        5.25%
September 30, 2002                                   5.25%
December 31, 2002                                    5.25%
March 31, 2003                                       5.25%
June 30, 2003                                        6.50%
September 30, 2003                                   6.50%
December 31, 2003                                    6.50%
Tranche A Maturity Date                              6.50%

(ii) Terex shall pay to the Administrative Agent, for the account of the Lenders, on the dates set forth below or, if any such date is not a Business Day, on the next succeeding Business Day (each such date being a "Tranche B Term Loan Repayment Date"), a principal amount of the Tranche B Term Loans (as adjusted from time to time pursuant to Sections 2.12(b) and 2.13(g)) equal to the percentage set forth below opposite such date multiplied by the aggregate principal amount of all Tranche B Term Loans made on the Closing Date, together in each case with accrued and unpaid interest on the principal amount to be paid to but excluding the date of such payment:

Date                                              Percentage
----                                              ----------
June 30, 1998                                        0.25%
September 30, 1998                                   0.25%
December 31, 1998                                    0.25%
March 31, 1999                                       0.25%
June 30, 1999                                        0.25%


41

Date                                              Percentage
----                                              ----------
June 30, 1998                                        0.25%
September 30, 1999                                   0.25%
December 31, 1999                                    0.25%
March 31, 2000                                       0.25%
June 30, 2000                                        0.25%
September 30, 2000                                   0.25%
December 31, 2000                                    0.25%
March 31, 2001                                       0.25%
June 30, 2001                                        0.25%
September 30, 2001                                   0.25%
December 31, 2001                                    0.25%
March 31, 2002                                       0.25%
June 30, 2002                                        0.25%
September 30, 2002                                   0.25%
December 31, 2002                                    0.25%
March 31, 2003                                       0.25%
June 30, 2003                                        0.25%
September 30, 2003                                   0.25%
December 31, 2003                                    0.25%
March 31, 2004                                       0.25%
June 30, 2004                                        23.5%
September 30, 2004                                   23.5%
December 31, 2004                                    23.5%
Tranche B Maturity Date                              23.5%

(b) To the extent not previously paid, all Tranche A Term Loans and Tranche B Term Loans shall be due and payable on the Tranche A Maturity Date and Tranche B Matu rity Date, respectively, together with accrued and unpaid interest on the principal amount to be paid to but excluding the date of payment.

(c) All repayments pursuant to this Section 2.11 shall be subject to
Section 2.16, but shall otherwise be without premium or penalty.

SECTION 2.12. Prepayment. (a) Each Borrower shall have the right at any time and from time to time to prepay any Borrowing, in whole or in part, upon prior written or telecopy notice (or telephone notice promptly confirmed by written or telecopy notice) to the Administrative Agent (i) in the case of a prepayment of a Eurocurrency Borrowing, given before 12:00 (noon), New York City time (or, in the case of prepayment of an Alternative Currency Borrowing, local time of the jurisdiction of such Alternative Currency) three Business Days before such prepayment and (ii) in the case of a prepayment of ABR Loans or Foreign Base Rate Loans, given before 1:00 p.m. local time, one Business Day before such prepayment; provided, however, that each partial prepayment shall be in an amount that is an integral multiple of $100,00 (or the Alternative


42

Currency Equivalent thereof) and not less than $2,500,000 (or the Alternative Currency Equivalent thereof).

(b) Optional prepayments of Term Loans shall be allocated against the then-outstanding Tranche A Term Loans and Tranche B Term Loans pro rata, and such prepayments shall be applied (i) first, against the remaining scheduled installments of principal due in respect of the Tranche A Term Loans and Tranche B Term Loans under Sections 2.11(a)(i) and (ii), respectively, in the next twelve months in the order of maturity and (ii) second, pro rata against such remaining scheduled installments of principal.

(c) Each notice of prepayment shall specify the prepayment date and the principal amount of each Borrowing (or portion thereof) to be prepaid, shall be irrevocable and shall commit the applicable Borrower to prepay such Borrowing by the amount stated therein on the date stated therein. All prepayments under this
Section 2.12 shall be subject to Section 2.16 but otherwise without premium or penalty. All prepayments under this Section 2.12 shall be accompanied by accrued interest on the principal amount being prepaid to the date of payment.

SECTION 2.13. Mandatory Prepayments. (a) In the event of any termination of all the Revolving Credit Commitments, each Borrower shall repay or prepay all its outstanding Revolving Credit Borrowings, all outstanding Swingline Loans and all outstanding A/C Fronted Loans on the date of such termination. In the event of any partial reduction of the Revolving Credit Commitments, then at or prior to the effective date of such reduction, the Administrative Agent shall notify the Borrowers and the Revolving Credit Lenders of the Aggregate Revolving Credit Exposure after giving effect thereto. If at any time, as a result of such a partial reduction or termination, as a result of fluctuations in exchange rates or otherwise, the Aggregate Revolving Credit Exposure would exceed the Total Revolving Credit Commitment or the Alternative Currency Revolving Credit Exposure in any Alternative Currency would exceed the sublimit for such Alternative Currency set forth on Schedule 2.01(b), then the Borrowers shall (i) on the date of such reduction or termination of Revolving Credit Commitments or (ii) within three Business Day following notice from the Administrative Agent of any such fluctuation in exchange rate or otherwise, repay or prepay Revolving Credit Borrowings, Swingline Loans or A/C Fronted Loans (or a combination thereof) in an amount sufficient to eliminate such excess.

(b) Not later than the third Business Day following the receipt of Net Cash Proceeds in respect of any Asset Sale (other than (i) any Asset Sale the Net Cash Proceeds of which are not greater than $250,000 from any single event or series of related events and (ii) Asset Sales the aggregate Net Cash Proceeds of which are not greater than $5,000,000 in any fiscal year of Terex), the outstanding Term Loans shall be prepaid in accordance with Section 2.13(g) in an aggregate principal amount equal to 100% of such Net Cash Proceeds.

(c) In the event and on each occasion that an Equity Issuance occurs, then substantially simultaneously with (and in any event not later than the third Business Day next following) the receipt of Net Cash Proceeds in respect of such Equity Issuance, outstanding Term Loans shall be prepaid in accordance with Section 2.13(g) in an aggregate principal amount equal to 100% of such Net Cash Proceeds; provided, however, that no such prepayment shall be required if
(i) the Consolidated Leverage Ratio as of the end of the most recent four fiscal quarters for which financial statements shall have been delivered pursuant to
Section 5.04(a) or (b), as applicable, shall be less than 3.00 to 1.00, (ii) Terex shall have received at least $150,000,000 in gross cash proceeds from


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the issuance of Senior Subordinated Notes and shall have used the Net Cash Proceeds thereof either to prepay Term Loans pursuant to Section 2.13(e) or to finance the Acquisition or another Permitted Acquisition or (iii) (A) Terex shall have received at least $100,000,000 in gross cash proceeds from the issuance of Senior Subordinated Notes and shall have used the Net Cash Proceeds thereof to prepay Term Loans pursuant to Section 2.13(e) and (B) the Consolidated Senior Secured Leverage Ratio as of the end of the most recent four fiscal quarters for which financial statements have been delivered pursuant to
Section 5.04(a) or (b), as applicable, shall be less than 2.75 to 1.00.

(d) No later than the earlier of (i) 90 days after the end of each fiscal year of Terex, commencing with the fiscal year ending on December 31, 1998, and (ii) the date on which the financial statements with respect to such fiscal year are delivered pursuant to Section 5.04(a), outstanding Term Loans shall be prepaid in accordance with Section 2.13(g) in an aggregate principal amount equal to 50% of Excess Cash Flow for the fiscal year then ended; provided, however, that no such prepayment shall be required if the Consolidated Leverage Ratio as of the end of such fiscal year shall be less than 3.85 to 1.00.

(e) In the event that Terex or any Subsidiary shall receive Net Cash Proceeds from (i) the issuance of any Senior Subordinated Notes or Additional Subordinated Notes or (ii) the issuance or incurrence of any other Indebtedness for money borrowed (other than Indebtedness for money borrowed permitted pursuant to Section 6.01), then, substantially simultaneously with (and in any event not later than the third Business Day next following) the receipt of such Net Cash Proceeds, 100% of such Net Cash Proceeds shall be used either (i) to fund the consideration for the Acquisition or, in the case of the Senior Subordinated Notes or Additional Subordinated Notes, another Permitted Acquisition, and/or (ii) to prepay outstanding Term Loans in accordance with
Section 2.13(g) in an aggregate principal amount equal to 100% of such Net Cash Proceeds.

(f) In the event that there shall occur any Casualty or Condemnation and, pursuant to the applicable Mortgage, the Casualty Proceeds or Condemnation Proceeds, as the case may be, are required to be used to prepay the Term Loans, then the outstanding Term Loans shall be prepaid in accordance with Section 2.13(g) in an aggregate principal amount equal to 100% of such Casualty Proceeds or Condemnation Proceeds, as the case may be.

(g) Subject to paragraph (j) below, each prepayment of outstanding Term Loans required to be made pursuant to any paragraph of this Section 2.13 shall be made by all Borrowers of their respective Term Loans pro rata among the then-outstanding Tranche A Term Loans and Tranche B Term Loans, and, subject to paragraph (j) below, shall be applied (i) first against the remaining scheduled installments of principal due in respect of Tranche A Term Loans and Tranche B Term Loans under Sections 2.11(a)(i) and (ii), respectively, in the next twelve months in the order of maturity and (ii) second, pro rata against such remaining scheduled installments of principal.

(h) Terex shall deliver to the Administrative Agent, at the time of each prepayment required under this Section 2.13, (i) a certificate signed by a Financial Officer of Terex setting forth in reasonable detail the calculation of the amount of such prepayment and (ii) to the extent practicable, at least three Business Days' prior written notice of such prepayment. Each notice of prepayment shall specify the prepayment date, the Type of each Loan being prepaid and the principal amount of each Loan (or portion thereof) to be prepaid.


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All pre payments of Borrowings under this Section 2.13 shall be subject to
Section 2.16, but shall otherwise be without premium or penalty.

(i) To the extent possible consistent with Section 2.13(g), amounts to be applied pursuant to this Section 2.13 to the prepayment of Term Loans and Revolving Loans shall be applied, as applicable, first to prepay outstanding ABR Term Loans and ABR Revolving Loans. Any amounts remaining after each such application shall, at the option of the applicable Borrower, be applied to prepay Eurocurrency Term Loans or Eurocurrency Revolving Loans, as the case may be, immediately and/or shall be deposited in the Pre payment Account (as defined below). The Administrative Agent shall apply any cash deposited in the Prepayment Account (i) allocable to Term Loans to prepay Eurocurrency Term Loans and (ii) allocable to Revolving Loans to prepay Eurocurrency Revolving Loans, in each case on the last day of their respective Interest Periods (or, at the direction of such Borrower, on any earlier date) until all outstanding Term Loans or Revolving Loans, as the case may be, have been prepaid or until all the allocable cash on deposit with respect to such Loans has been exhausted. For purposes of this Agreement, the term "Prepayment Account" shall mean an account established by such Borrower with the Administrative Agent and over which the Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal for application in accordance with this paragraph
(i). The Administrative Agent will, at the request of such Borrower, invest amounts on deposit in the Prepayment Account in Permitted Investments that mature prior to the last day of the applicable Interest Periods of the Eurocurrency Term Borrowings or Eurocurrency Revolving Borrowings to be prepaid, as the case may be; provided, however, that (i) the Administrative Agent shall not be required to make any investment that, in its sole judgment, would require or cause the Administrative Agent to be in, or would result in any, violation of any law, statute, rule or regulation and (ii) the Administrative Agent shall have no obligation to invest amounts on deposit in the Prepayment Account if a Default or Event of Default shall have occurred and be continuing. Such Borrower shall indemnify the Administrative Agent for any losses relating to the investments so that the amount available to prepay Eurocurrency Borrowings on the last day of the applicable Interest Period is not less than the amount that would have been available had no investments been made pursuant thereto. Other than any interest earned on such investments (which shall be for the account of the applicable Borrower, to the extent not necessary for the prepayment of Eurocurrency Loans in accordance with this Section 2.13), the Prepayment Account shall not bear interest. Interest or profits, if any, on such investments shall be deposited in the Prepayment Account and reinvested and disbursed as specified above. If the maturity of the Loans has been accelerated pursuant to Article VII, the Administrative Agent may, in its sole discretion, apply all amounts on deposit in the Prepayment Account to satisfy any of the Obligations. Each Borrower hereby grants to the Administrative Agent, for its benefit and the benefit of the Issuing Banks, the Swingline Lender and the Lenders, a security interest in its Prepay ment Account to secure the Obligations. This paragraph
(i) shall not be construed to alter the application required by Section 2.13(g).

(j) Any Tranche B Lender may elect, by notice to the Administrative Agent in writing (or by telephone or telecopy promptly confirmed in writing) prior to 12:00 (noon), New York City time, at least three Business Days prior to any prepayment of Tranche B Term Loans required to be made by any Borrower for the account of such Lender pursuant to this Section 2.13, to cause all or a portion of such prepayment to be applied instead to prepay Tranche A Term Loans in accordance with paragraph (g) above. Any such prepayment of Tranche A Term Loans shall be made by all Borrowers of their respective Tranche A Term Loans


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pro rata among the then outstanding Tranche A Term Loans and in the order set forth in Section 2.13(g).

SECTION 2.14. Reserve Requirements; Change in Circumstances. (a) Notwithstanding any other provision of this Agreement, if after the date of this Agreement any change in applicable law or regulation or in the interpretation or administration thereof by any Governmental Authority charged with the interpretation or administration thereof (whether or not having the force of law) shall change the basis of taxation of payments to any Lender or any Issuing Bank of the principal of or interest on any Eurocurrency Loan or A/C Fronted Fixed Rate Loan made by such Lender or any Fees or other amounts payable hereunder (other than changes in respect of taxes imposed on the overall net income of such Lender or such Issuing Bank by the jurisdiction in which such Lender or such Issuing Bank has its principal office or by any political subdivision or taxing authority therein), or shall impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of or credit extended by any Lender or any Issuing Bank (except any such reserve requirement which is reflected in the Adjusted LIBO Rate, the Bank Bill Rate or the Italian Fixed Rate, as the case may be) or shall impose on such Lender or such Issuing Bank or the London interbank market (or other relevant interbank market) any other condition affecting this Agreement or Eurocurrency Loans or A/C Fronted Fixed Rate Loans made by such Lender or any Letter of Credit or participation therein, and the result of any of the foregoing shall be to increase the cost to such Lender or such Issuing Bank of making or maintaining any Eurocurrency Loan or A/C Fronted Fixed Rate Loan or increase the cost to any Lender of issuing or maintaining any Letter of Credit or purchasing or maintaining a participation therein or to reduce the amount of any sum received or receivable by such Lender or such Issuing Bank hereunder (whether of principal, interest or otherwise) by an amount deemed by such Lender or such Issuing Bank to be material, then the Borrowers will pay to such Lender or such Issuing Bank, as the case may be, upon demand such additional amount or amounts as will compensate such Lender or such Issuing Bank, as the case may be, for such additional costs incurred or reduction suffered.

(b) If any Lender or any Issuing Bank shall have determined that the adoption after the date hereof of any law, rule, regulation, agreement or guideline regarding capital adequacy, or any change after the date hereof in any such law, rule, regulation, agreement or guideline (whether such law, rule, regulation, agreement or guideline has been adopted) or in the interpretation or administration thereof by any Governmental Authority charged with the interpretation or administration thereof, or compliance by any Lender (or any lending office of such Lender) or any Issuing Bank or any Lender's or any Issuing Bank's holding company with any request or directive regarding capital adequacy (whether or not having the force of law) of any Governmental Authority has or would have the effect of reducing the rate of return on such Lender's or such Issuing Bank's capital or on the capital of such Lender's or such Issuing Bank's holding company, if any, as a consequence of this Agreement or the Loans made or participations in Letters of Credit purchased by such Lender pursuant hereto or the Letters of Credit issued by such Issuing Bank pursuant hereto to a level below that which such Lender or such Issuing Bank or such Lender's or such Issuing Bank's holding company could have achieved but for such applicability, adoption, change or compliance (taking into consideration such Lender's or such Issuing Bank's policies and the policies of such Lender's or such Issuing Bank's holding company with respect to capital adequacy) by an amount deemed by such Lender or such Issuing Bank to be material, then from time to time the Borrowers shall pay to such Lender or such Issuing Bank, as the case may be, such


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additional amount or amounts as will compensate such Lender or such Issuing Bank or such Lender's or such Issuing Bank's holding company for any such reduction suffered.

(c) A certificate of a Lender or an Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or such Issuing Bank or its holding company, as applicable, as specified in paragraph (a) or (b) above shall be delivered to the Borrowers and shall be conclusive absent manifest error. The Borrowers shall pay such Lender or such Issuing Bank the amount shown as due on any such certificate delivered by it within 10 days after its receipt of the same.

(d) Failure or delay on the part of any Lender or any Issuing Bank to demand compensation for any increased costs or reduction in amounts received or receivable or reduction in return on capital shall not constitute a waiver of such Lender's or such Issuing Bank's right to demand such compensation. The protection of this Section shall be available to each Lender and each Issuing Bank regardless of any possible contention of the invalidity or inapplicability of the law, rule, regulation, agreement, guideline or other change or condition that shall have occurred or been imposed.

SECTION 2.15. Change in Legality. (a) Notwithstanding any other provision of this Agreement, if, after the date hereof, any change in any law or regulation or in the interpretation thereof by any Governmental Authority charged with the administration or interpretation thereof shall make it unlawful for any Lender to make or maintain any Eurocurrency Loan or to give effect to its obligations as contemplated hereby with respect to any Eurocurrency Loan, then, by written notice to the Borrowers and to the Administrative Agent:

(i) such Lender may declare that Eurocurrency Loans will not thereafter (for the duration of such unlawfulness) be made by such Lender hereunder (or be continued for additional Interest Periods and ABR Loans and Foreign Base Rate Loans will not thereafter (for such duration) be converted into Eurocurrency Loans), whereupon any request for a Eurocurrency Borrowing (or to convert an ABR Borrowing or a Foreign Base Rate Loan to a Eurocurrency Borrowing or to continue a Eurocurrency Borrowing for an additional Interest Period) shall, as to such Lender only, be deemed a request for an ABR Loan (in the case of Dollar Loans) or Foreign Base Rate Loans (in the case of Alternative Currency Loans) (or a request to continue an ABR Loan or a Foreign Base Rate Loan as such for an additional Interest Period or to convert a Eurocurrency Loan into an ABR Loan or a Foreign Base Rate Loan, as the case may be), unless such declaration shall be subsequently withdrawn; and

(ii) such Lender may require that all outstanding Eurocurrency Loans made by it be converted to ABR Loans (in the case of Dollar Loans) or Foreign Base Rate Loans (in the case of Alternative Currency Loans) in which event all such Eurocurrency Loans shall be automatically converted to such ABR Loans or Foreign Base Rate Loans as of the effective date of such notice as provided in paragraph (b) below.

In the event any Lender shall exercise its rights under (i) or (ii) above, all payments and prepayments of principal that would otherwise have been applied to repay the Eurocurrency Loans that would have been made by such Lender or the converted Eurocurrency Loans of such Lender shall instead be applied to repay


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ABR Loans made by such Lender in lieu of, or resulting from the conversion of, such Eurocurrency Loans.

(b) For purposes of this Section 2.15, a notice to Terex by any Lender shall be effective as to each Eurocurrency Loan made by such Lender, if lawful, on the last day of the Interest Period currently applicable to such Eurocurrency Loan; in all other cases such notice shall be effective on the date of receipt by Terex.

SECTION 2.16. Indemnity. Each Borrower shall indemnify each Lender against any loss or expense, including any break-funding cost or any loss sustained in converting between any Alternative Currency and dollars, as the case may be, that such Lender may sustain or incur as a consequence of (a) any event, other than a default by such Lender in the performance of its obligations hereunder, which results in (i) such Lender receiving or being deemed to receive any amount on account of the principal of any Eurocurrency Loan or A/C Fronted Fixed Rate Loan prior to the end of the Interest Period in effect therefor, (ii) the conversion of any Eurocurrency Loan or A/C Fronted Fixed Rate Loan to an ABR Loan, or Fronted Base Rate Loan, respectively, or the conversion of the Interest Period with respect to any Eurocurrency Loan or A/C Fronted Fixed Rate Loan, in each case other than on the last day of the Interest Period in effect therefor, or (iii) any Eurocurrency Loan or A/C Fronted Fixed Rate Loan to be made by such Lender (including any Eurocurrency Loan or A/C Fronted Fixed Rate Loan to be made pursuant to a conversion or continuation under Section 2.10) not being made after notice of such Loan shall have been given by the applicable Borrower hereunder (any of the events referred to in this clause (a) being called a "Breakage Event") or (b) any default in the making of any payment or prepayment required to be made hereunder. In the case of any Breakage Event, such loss shall include an amount equal to the excess, as reasonably determined by such Lender, of (i) its cost of obtaining funds for the Eurocurrency Loan or A/C Fronted Fixed Rate Loan that is the subject of such Breakage Event for the period from the date of such Breakage Event to the last day of the Interest Period in effect (or that would have been in effect) for such Loan over (ii) the amount of interest likely to be realized by such Lender in redeploying the funds released or not utilized by reason of such Breakage Event for such period. A certificate of any Lender setting forth any amount or amounts which such Lender is entitled to receive pursuant to this Section 2.16, together with a reasonably detailed calculation thereof, shall be delivered to the applicable Borrower and shall be conclusive absent manifest error.

SECTION 2.17. Pro Rata Treatment. Except as provided below in this
Section 2.17 with respect to Swingline Loans and as required under Sections 2.13(j) and 2.15, each Borrowing, each payment or prepayment of principal of any Borrowing, each payment of interest on the Loans, each payment of the Facility Fees, each reduction of the Term Loan Commitments or the Revolving Credit Commitments and each conversion of any Borrowing to or continuation of any Borrowing as a Borrowing of any Type shall be allocated pro rata among the Lenders in accordance with their respective applicable Commitments (or, if such Commitments shall have expired or been terminated, in accordance with the respective principal amounts of their outstanding Loans). For purposes of determining the available Revolving Credit Commitments of the Lenders at any time, each outstanding Swingline Loan shall be deemed to have utilized the Revolving Credit Commitments of the Lenders (including those Lenders which shall not have made Swingline Loans) pro rata in accordance with such respective Revolving Credit Commitments. Each Lender agrees that in computing such Lender's portion of any Borrowing to be made hereunder, the Administrative Agent may, in its discretion, round each Lender's percentage of such Borrowing to the next


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higher or lower whole dollar or applicable Alternative Currency amount.

SECTION 2.18. Sharing of Setoffs. Each Lender agrees that if it shall, through the exercise of a right of banker's lien, setoff or counterclaim against any Borrower or any other Loan Party, or pursuant to a secured claim under
Section 506 of Title 11 of the United States Code or other security or interest arising from, or in lieu of, such secured claim, received by such Lender under any applicable bankruptcy, insolvency or other similar law or otherwise, or by any other means, obtain payment (voluntary or involuntary) in respect of any Loan or Loans or L/C Disbursement as a result of which the unpaid principal portion of its Tranche A Term Loans, Tranche B Term Loans and Revolving Loans and participations in L/C Disbursements and A/C Fronted Loans shall be proportionately less than the unpaid principal portion of the Tranche A Term Loans, Tranche B Term Loans and Revolving Loans and participations in L/C Disbursements and A/C Fronted Loans of any other Lender, it shall be deemed simultaneously to have purchased from such other Lender at face value, and shall promptly pay to such other Lender the purchase price for, a participation in the Tranche A Term Loans, Tranche B Term Loans and Revolving Loans and L/C Exposure and A/C Fronted Exposure, as the case may be of such other Lender, so that the aggregate unpaid principal amount of the Tranche A Term Loans, Tranche B Term Loans and Revolving Loans and L/C Exposure and A/C Fronted Exposure and participations in Tranche A Term Loans, Tranche B Term Loans and Revolving Loans and L/C Exposure and A/C Fronted Exposure held by each Lender shall be in the same proportion to the aggregate unpaid principal amount of all Tranche A Term Loans, Tranche B Term Loans and Revolving Loans and L/C Exposure and A/C Fronted Exposure then outstanding as the principal amount of its Tranche A Term Loans, Tranche B Term Loans and Revolving Loans and L/C Exposure and A/C Fronted Exposure prior to such exercise of banker's lien, setoff or counterclaim or other event was to the principal amount of all Tranche A Term Loans, Tranche B Term Loans and Revolving Loans and L/C Exposure and A/C Fronted Exposure outstanding prior to such exercise of banker's lien, setoff or counterclaim or other event; provided, however, that if any such purchase or purchases or adjustments shall be made pursuant to this Section 2.18 and the payment giving rise thereto shall thereafter be recovered, such purchase or purchases or adjustments shall be rescinded to the extent of such recovery and the purchase price or prices or adjustment restored without interest. Each Borrower expressly consents to the foregoing arrangements and agrees that any Lender holding a participation in a Term Loan or Revolving Loan or L/C Disbursement and A/C Fronted Loan deemed to have been so purchased may exercise any and all rights of banker's lien, setoff or counterclaim with respect to any and all moneys owing by such Borrower to such Lender by reason thereof as fully as if such Lender had made a Loan directly to such Borrower in the amount of such participation.

SECTION 2.19. Payments. (a) Each Borrower shall make each payment (including principal of or interest on any Borrowing or any L/C Disbursement or any Fees or other amounts) hereunder and under any other Loan Document from a Payment Location in the United States or the jurisdiction of any Alternative Currency prior to (i) 1:00 p.m., New York City time on the date when due, in the case of any amount payable in dollars, and (ii) 12:00 (noon), local time of such other jurisdiction, on the date when due, in the case of any amount payable in any Alternative Currency, in each case, in immediately available funds, without setoff, defense or counterclaim. Each such payment (other than (i) Issuing Bank Fees, which shall be paid directly to applicable Issuing Bank, (ii) principal of and interest on Swingline Loans, which shall be paid directly to the Swingline Lender except as otherwise provided in Section 2.22 (e) and (iii) A/C Fronting


49

Fees, which shall be paid directly to the applicable A/C Fronting Lender except as otherwise provided in Section 2.24(e)) shall be made to such account as shall from time to time be specified in a writing delivered to Terex and each Borrower by the Administrative Agent. Except as provided in Section 2.24 (Conversion of A/C Fronted Loans) with respect to defaulted A/C Fronted Loans, all Alternative Currency Loans hereunder shall be denominated and made, and all payments hereunder or under any other Loan Document in respect thereof (whether of principal, interest, fees or otherwise) shall be made, in such Alternative Currency. All Dollar Loans hereunder shall be denominated and made, and all payments of principal and interest, Fees or otherwise hereunder or under any other Loan Document in respect thereof shall be made, in dollars, except as otherwise expressly provided herein. Unless otherwise agreed by the applicable Borrower and each Lender to receive any such payment, all other amounts due hereunder or under any other Loan Document shall be payable in dollars.

(b) Whenever any payment (including principal of or interest on any Borrowing or any Fees or other amounts) hereunder or under any other Loan Document shall become due, or otherwise would occur, on a day that is not a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of interest or Fees, if applicable.

SECTION 2.20. Taxes. (a) Any and all payments by or on behalf of any Borrower or any Loan Party (or, with respect to payments by an A/C Fronting Lender of the A/C Participation Fee, an A/C Fronting Lender) hereunder and under any other Loan Document shall be made, in accordance with Section 2.19, free and clear of and without deduction for any and all current or future taxes, levies, imposts, deductions, charges or withholdings imposed by any Governmental Authority in the United States, the jurisdiction of any Alternative Currency or the jurisdiction of any Payment Location, and all liabilities with respect thereto, excluding (i) income taxes imposed on the net income of the Administrative Agent, any Lender or an Issuing Bank (or any transferee or assignee thereof, including a participation holder (any such entity a "Transferee")) and (ii) franchise taxes imposed on the net income of the Administrative Agent, any Lender or an Issuing Bank (or Transferee), in each case by the jurisdiction under the laws of which the Administrative Agent, such Lender or an Issuing Bank (or Transferee) is organized or any political subdivision thereof (all such nonexcluded taxes, levies, imposts, deductions, charges, withholdings and liabilities, collectively or individually, being called "Taxes"). If any Borrower or any Loan Party shall be required to deduct any Taxes from or in respect of any sum payable hereunder or under any other Loan Document to the Administrative Agent, any Lender or an Issuing Bank (or any Transferee), (i) the sum payable shall be increased by the amount (an "additional amount") necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.20) the Administrative Agent, such Lender or such Issuing Bank (or Transferee), as the case may be, shall receive an amount equal to the sum it would have received had no such deductions been made, (ii) such Borrower or such Loan Party shall make such deductions and (iii) such Borrower or such Loan Party shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law. If any A/C Fronting Lender shall be required to deduct any Taxes from or in respect of any A/C Participation Fee, Terex or the applicable Borrower shall pay to the applicable Revolving Credit Lender the "additional amount" referred to in the preceding sentence.


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(b) In addition, each Borrower agrees to pay to the relevant Governmental Authority in accordance with applicable law any current or future stamp, documentary, excise, transfer, sales, property or similar taxes, charges or levies (including, without limitation, mortgage recording taxes and similar fees) that arise from any payment made hereunder or under any other Loan Document or from the execution, delivery, enforcement or registration of, or otherwise with respect to, this Agreement or any other Loan Document imposed by any Governmental Authority in the United States, the jurisdiction of any Alternative Currency or the jurisdiction of any Payment Location ("Other Taxes").

(c) Each Borrower will indemnify the Administrative Agent, each Lender and each Issuing Bank (or Transferee) for the full amount of Taxes and Other Taxes paid by the Administrative Agent, such Lender or such Issuing Bank (or Transferee), as the case may be, and any liability (including penalties, interest and expenses (including reasonable attorney's fees and expenses)) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability prepared by the Administrative Agent, a Lender or an Issuing Bank (or Transferee), or the Administrative Agent on its behalf, absent manifest error, shall be final, conclusive and binding for all purposes. Such indemnification shall be made within 30 days after the date the Administrative Agent, any Lender or an Issuing Bank (or Transferee), as the case may be, makes written demand therefor.

(d) As soon as practicable after the date of any payment of Taxes or Other Taxes by any Borrower or any other Loan Party to the relevant Governmental Authority, such Borrower or such other Loan Party will deliver to the Administrative Agent, at its address referred to in Section 9.01, the original or a certified copy of a receipt issued by such Governmental Authority evidencing payment thereof.

(e) Each Lender (or Transferee) that is organized under the laws of a jurisdiction other than the United States, any State thereof or the District of Columbia (a "Non-U.S. Lender") that is entitled to an exemption from, or reduction of, withholding tax under the law of the jurisdiction in which any Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments by such Borrower under this Agreement and the other Loan Documents shall deliver to such Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law or reasonably requested by such Borrower as will permit such payments to be made without withholding or at a reduced rate; provided that such Non-U.S. Lender has received written notice from such Borrower advising it of the availability of such exemption or reduction and containing all applicable documentation. In addition, each Non-U.S. Lender shall deliver such documentation promptly upon the obsolescence or invalidity of any documentation previously delivered by such Non-U.S. Lender. Notwithstanding any other provision of this Section 2.20(e), a Non-U.S. Lender shall not be required to deliver any documentation pursuant to this Section 2.20(e) that such Non-U.S. Lender is not legally able to deliver.

(f) No Borrower shall be required to indemnify any Non-U.S. Lender or to pay any additional amounts to any Non-U.S. Lender, in respect of United States Federal withholding tax pursuant to paragraph (a) or (c) above to the extent that (i) the obligation to withhold amounts with respect to United States Federal withholding tax existed and would apply to payments made to such Non-U.S. Lender on the date such Non-U.S. Lender became a party to this


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Agreement (or, in the case of a Transferee that is a participation holder, on the date such participation holder became a Transferee hereunder) or, with respect to payments to a New Lending Office, the date such Non-U.S. Lender designated such New Lending Office with respect to a Loan; provided, however, that this paragraph (f) shall not apply (x) to any Transferee or New Lending Office that becomes a Transferee or New Lending Office as a result of an assignment, participation, transfer or designation made at the request of any Borrower and (y) to the extent the indemnity payment or additional amounts any Transferee, or any Lender (or Transferee), acting through a New Lending Office, would be entitled to receive (without regard to this paragraph (f)) do not exceed the indemnity payment or additional amounts that the person making the assignment, participation or transfer to such Transferee, or Lender (or Transferee) making the designation of such New Lending Office, would have been entitled to receive in the absence of such assignment, participation, transfer or designation or (ii) the obligation to pay such additional amounts would not have arisen but for a failure by such Non-U.S. Lender to comply with the provisions of paragraph (e) above.

(g) Nothing contained in this Section 2.20 shall require any Lender or an Issuing Bank (or any Transferee) or the Administrative Agent to make available any of its tax returns (or any other information that it deems to be confidential or proprietary).

SECTION 2.21. Assignment of Commitments Under Certain Circumstances; Duty to Mitigate. (a) In the event (i) any Lender or an Issuing Bank delivers a certificate requesting compensation pursuant to Section 2.14, (ii) any Lender or an Issuing Bank delivers a notice described in Section 2.15 or (iii) any Borrower is required to pay any additional amount to any Lender or an Issuing Bank or any Governmental Authority on account of any Lender or an Issuing Bank pursuant to Section 2.20, such Borrower may, at its sole expense and effort (including with respect to the processing and recordation fee referred to in
Section 9.04(b)), upon notice to such Lender or such Issuing Bank and the Administrative Agent, require such Lender or such Issuing Bank to transfer and assign, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all of its interests, rights and obligations under this Agreement to an assignee that shall assume such assigned obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (x) such assignment shall not conflict with any law, rule or regulation or order of any court or other Governmental Authority having jurisdiction, (y) such Borrower shall have received the prior written consent of the Administrative Agent (and, if a Revolving Credit Commitment is being assigned, of the Issuing Banks and the Swingline Lender), which consent shall not unreasonably be withheld, and (z) such Borrower or such assignee shall have paid to the affected Lender or Issuing Bank in immediately available funds (and in the currency or currencies in which payment would be required if all amounts were to be paid by such Borrower) an amount equal to the sum of the principal of and interest accrued to the date of such payment on the outstanding Loans or L/C Disbursements of such Lender or such Issuing Bank, respectively, plus all Fees and other amounts accrued for the account of such Lender or such Issuing Bank hereunder (including any amounts under Section 2.14 and Section 2.16); provided further that, if prior to any such transfer and assignment the circumstances or event that resulted in such Lender's or such Issuing Bank's claim for compensation under Section 2.14 or notice under Section 2.15 or the amounts paid pursuant to Section 2.20, as the case may be, cease to cause such Lender or such Issuing Bank to suffer increased costs or reductions in amounts received or receivable or reduction in return on capital, or cease to have the consequences specified in Section 2.15, or cease to result in amounts being payable under
Section 2.20, as the case may be (including as a result of any action taken by such Lender or such Issuing Bank pursuant to paragraph (b) below), or it such


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Lender or such Issuing Bank shall waive its right to claim further compensation under Section 2.14 in respect of such circumstances or event or shall withdraw its notice under Section 2.15 or shall waive its right to further payments under
Section 2.20 in respect of such circumstances or event, as the case may be, then such Lender or such Issuing Bank shall not thereafter be required to make any such transfer and assignment hereunder.

(b) If (i) any Lender or an Issuing Bank shall request compensation under Section 2.14, (ii) any Lender or an Issuing Bank delivers a notice described in Section 2.15 or (iii) any Borrower is required to pay any additional amount to any Lender or an Issuing Bank or any Governmental Authority on account of any Lender or an Issuing Bank, pursuant to Section 2.20, then such Lender or such Issuing Bank shall use reasonable efforts (which shall not require such Lender or such Issuing Bank to incur an unreimbursed loss or unreimbursed cost or expense or otherwise take any action inconsistent with its internal policies or legal or regulatory restrictions or suffer any disadvantage or burden deemed by it to be significant) (x) to file any certificate or document reasonably requested in writing by such Borrower or (y) to assign its rights and delegate and transfer its obligations hereunder to another of its offices, branches or affiliates, if such filing or assignment would materially reduce its claims for compensation under Section 2.14 or enable it to withdraw its notice pursuant to Section 2.15 or would materially reduce amounts payable pursuant to Section 2.20, as the case may be, in the future. Terex hereby agrees to pay all reasonable costs and expenses incurred by any Lender or any Issuing Bank in connection with any such filing or assignment, delegation and transfer.

SECTION 2.22. Swingline Loans. (a) Swingline Commitment. Subject to the terms and conditions and relying upon the representations and warranties herein set forth, the Swingline Lender agrees to make loans, in dollars, to Terex at any time and from time to time on and after the Closing Date and until the earlier of the Revolving Credit Maturity Date and the termination of the Revolving Credit Commitments in accordance with the terms hereof, in an aggregate principal amount at any time outstanding that will not result in (i) the aggregate principal amount of all Swingline Loans exceeding $10,000,000 in the aggregate or (ii) the Aggregate Revolving Credit Exposure, after giving effect to any Swingline Loan, exceeding the Total Revolving Credit Commitment. Each Swingline Loan shall be in a principal amount that is an integral multiple of $250,000. The Swingline Commitments may be terminated or reduced from time to time as provided herein. Within the foregoing limits, Terex may borrow, pay or prepay and reborrow Swingline Loans hereunder, subject to the terms, conditions and limitations set forth herein.

(b) Swingline Loans. Terex shall notify the Swingline Lender, with a copy to the Administrative Agent, by telecopy, or by telephone (confirmed by telecopy), not later than 2:00 p.m., New York City time, on the day of a proposed Swingline Loan. Such notice shall be delivered on a Business Day, shall be irrevocable and shall refer to this Agreement and shall specify the requested date (which shall be a Business Day) and amount of such Swingline Loan.

(c) Prepayment. Terex shall have the right at any time and from time to time to prepay any Swingline Loan, in whole or in part, upon giving written or telecopy notice (or telephone notice promptly confirmed by written, or telecopy notice) to the Swingline Lender and to the Administrative Agent before 1:00
p.m., New York City time, on the date of prepayment at the Swingline Lender's address for notices specified on Schedule 2.01. All principal payments of


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Swingline Loans shall be accompanied by accrued interest on the principal amount being repaid to the date of payment.

(d) Interest. Each Swingline Loan shall be an ABR Loan and, subject to the provisions of Section 2.07, shall bear interest as provided in Section 2.06(a).

(e) Participations. If Terex does not fully repay a Swingline Loan on or prior to the last day of the Interest Period with respect thereto, the Swingline Lender shall notify the Administrative Agent thereof by 2:00 p.m., New York City time (by telecopy or by telephone, confirmed in writing), and the Administrative Agent shall promptly notify each Revolving Credit Lender thereof (by telecopy or by telephone, confirmed in writing) and of its Pro Rata Percentage of such Swingline Loan. Upon such notice but without any further action, the Swingline Lender hereby agrees to grant to each Revolving Credit Lender, and each Revolving Credit Lender hereby agrees to acquire from the Swingline Lender, a participation in such defaulted Swingline Loan equal to such Revolving Credit Lender's Pro Rata Percentage of the aggregate principal amount of such defaulted Swingline Loan. In furtherance of the foregoing, each Revolving Credit Lender hereby absolutely and unconditionally agrees, upon receipt of notice as provided above, to pay to the Administrative Agent, for the account of the Swingline Lender, such Revolving Credit Lender's Pro Rata Percentage of each Swingline Loan that is not repaid on the last day of the Interest Period with respect thereto. Each Revolving Credit Lender acknowledges and agrees that its obligation to acquire participations in Swingline Loans pursuant to this paragraph is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or an Event of Default, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. Each Revolving Credit Lender shall comply with its obligation under this paragraph by wire transfer of immediately available funds, in the same manner as provided in Section 2.02(c) with respect to Loans made by such Revolving Credit Lender (and Section 2.02(c) shall apply, mutatis mutandis, to the payment obligations of the Revolving Credit Lenders) and the Administrative Agent shall promptly pay to the Swingline Lender the amounts so received by it from the Revolving Credit Lenders. The Administrative Agent shall notify Terex of any participations in any Swingline Loan acquired pursuant to this paragraph and thereafter payments in respect of such Swingline Loan shall be made to the Administrative Agent and not to the Swingline Lender. Any amounts received by the Swingline Lender from Terex (or other party on behalf of Terex) in respect of a Swingline Loan after receipt by the Swingline Lender of the proceeds of a sale of participations therein shall be promptly remitted to the Administrative Agent; any such amounts received by the Administrative Agent shall be promptly remitted by the Administrative Agent to the Revolving Credit Lenders that shall have made their payments pursuant to this paragraph and to the Swingline Lender, as their interests may appear. The purchase of participations in a Swingline Loan pursuant to this paragraph shall not relieve Terex (or other party liable for obligations of Terex) of any default in the payment thereof.

SECTION 2.23. Letters of Credit. (a) Subject to the terms and conditions set forth herein, (i) each of the Existing Letters of Credit shall, upon the initial funding of Loans on the Closing Date and without any further action on the part of the applicable Issuing Bank or any other person, be deemed for all purposes to have been issued by the applicable Issuing Bank on the Closing Date as a Letter of Credit hereunder and (ii) any Borrower may request the issuance of a Letter of Credit for its own account, in a form reasonably acceptable to the Administrative Agent and the applicable Issuing Bank, at any time and from time to time while the Revolving Credit Commitments remain in


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effect. This Section shall not be construed to impose an obligation upon an Issuing Bank to issue any Letter of Credit that is inconsistent with the terms and conditions of this Agreement.

(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. In order to request the issuance of a Letter of Credit (or to amend, renew or extend an existing Letter of Credit), the applicable Borrower shall hand deliver or telecopy to the applicable Issuing Bank and the Administrative Agent (three Business Days in advance of the requested date of issuance, amendment, renewal or extension, or such shorter period as the applicable Borrower, the Administrative Agent and the applicable Issuing Bank shall agree) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, the date of issuance, amendment, renewal or extension, the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) below), the amount and currency (which must be dollars or an Alternative Currency) of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare such Letter of Credit. A Letter of Credit shall be issued, amended, renewed or extended only if, and upon issuance, amendment, renewal or extension of each Letter of Credit the applicable Borrower shall be deemed to represent and warrant that, after giving effect to such issuance, amendment, renewal or extension (A) the L/C Exposure shall not exceed $35,000,000, (B) the Aggregate Revolving Credit Exposure shall not exceed the Total Revolving Credit Commitment and (C) the Alternative Currency Revolving Credit Exposure with respect to any Alternative Currency shall not exceed the sublimit for such Alternative Currency set forth in Schedule 2.01(b).

(c) Expiration Date. Each Letter of Credit shall expire at the close of business on the earlier of the date one year after the date of the issuance of such Letter of Credit and the date that is five Business Days prior to the Revolving Credit Maturity Date, unless such Letter of Credit expires by its terms on an earlier date.

(d) Participations. By the issuance of a Letter of Credit (or, in the case of the Existing Letters of Credit, deemed issuance) and without any further action on the part of such Issuing Bank or the Lenders, the applicable Issuing Bank hereby grants to each Revolving Credit Lender, and each such Lender hereby acquires from the applicable Issuing Bank, a participation in such Letter of Credit equal to such Lender's Pro Rata Percentage of the aggregate amount available to be drawn under such Letter of Credit, effective upon the issuance of such Letter of Credit. In consideration and in furtherance of the foregoing, each Revolving Credit Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the applicable Issuing Bank, such Lender's Pro Rata Percentage of each L/C Disbursement made by such Issuing Bank and not reimbursed by the applicable Borrower (or, if applicable, another party pursuant to its obligations under any other Loan Document) forthwith on the date due as provided in Section 2.02(f) and in the same currency as such L/C Disbursement. Each Revolving Credit Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or an Event of Default or the fact that, as a result of fluctuations in exchange rates, such Revolving Credit Lender's Revolving Credit Exposure at any time might exceed its Revolving Credit Commitment at such time (in which case Section 2.13(a) would apply), and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.


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(e) Reimbursement. If an Issuing Bank shall make any L/C Disbursement in respect of a Letter of Credit denominated in dollars, the applicable Borrower shall pay to the Administrative Agent an amount equal to such L/C Disbursement not later than two hours after such Borrower shall have received notice from the applicable Issuing Bank that payment of such draft will be made, or, if such Borrower shall have received such notice later than 10:00 a.m., New York City time, on any Business Day, not later than 10:00 a.m., New York City time, on the immediately following Business Day. If an Issuing Bank shall make any L/C Disbursement in respect of a Letter of Credit denominated in any Alternative Currency, the applicable Borrower shall pay to the Administrative Agent an amount equal to such L/C Disbursement not later than two hours after such Borrower shall have received notice from the applicable Issuing Bank that payment of such draft will be made, or, if such Borrower shall have received such notice later than 10:00 a.m., London time, on any Business Day, not later than 10:00 a.m., London time, on the immediately following Business Day.

(f) Obligations Absolute. Each Borrower's obligations to reimburse L/C Disbursements as provided in paragraph (e) above shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement, under any and all circumstances whatsoever, and irrespective of:

(i) any lack of validity or enforceability of any Letter of Credit or any Loan Document, or any term or provision therein;

(ii) any amendment or waiver of or any consent to departure from all or any of the provisions of any Letter of Credit or any Loan Document;

(iii) the existence of any claim, setoff, defense or other right that any Borrower, any other party guaranteeing, or otherwise obligated with, such Borrower, any Subsidiary or other Affiliate thereof or any other person may at any time have against the beneficiary under any Letter of Credit, the applicable Issuing Bank, the Administrative Agent or any Lender or any other person, whether in connection with this Agreement, any other Loan Document or any other related or unrelated agreement or transaction;

(iv) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect;

(v) payment by an Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit; and

(vi) any other act or omission to act or delay of any kind of an Issuing Bank, the Lenders, the Administrative Agent or any other person or any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of any Borrower's obligations hereunder.

Without limiting the generality of the foregoing, it is expressly understood and agreed that the absolute and unconditional obligation of each Borrower hereunder to reimburse L/C Disbursements will not be excused by the


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gross negligence or wilful misconduct of an Issuing Bank. However, the foregoing shall not be construed to excuse an Issuing Bank from liability to any Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by each Borrower to the extent permitted by applicable law) suffered by any Borrower that are caused by an Issuing Bank's gross negligence or wilful misconduct in determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof; it is understood that an Issuing Bank may accept documents that appear on their face to be in order, without responsibility for further investigation and, in making any payment under any Letter of Credit (i) an Issuing Bank's exclusive reliance on the documents presented to it under such Letter of Credit as to any and all matters set forth therein, including reliance on the amount of any draft presented under such Letter of Credit, whether or not the amount due to the beneficiary thereunder equals the amount of such draft and whether or not any document presented pursuant to such Letter of Credit proves to be insufficient in any respect, if such document on its face appears to be in order, and whether or not any other statement or any other document presented pursuant to such Letter of Credit proves to be forged or invalid or any statement therein proves to be inaccurate or untrue in any respect whatsoever and (ii) any noncompliance in any immaterial respect of the documents presented under such Letter of Credit with the terms thereof shall, in each case, be deemed not to constitute wilful misconduct or gross negligence of an Issuing Bank.

(g) Disbursement Procedures. The applicable Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. Such Issuing Bank shall as promptly as possible give telephonic notification, confirmed by telecopy, to the Administrative Agent and the applicable Borrower of such demand for payment and whether such Issuing Bank has made or will make an L/C Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve any Borrower of its obligation to reimburse such Issuing Bank and the Revolving Credit Lenders with respect to any such L/C Disbursement. The Administrative Agent shall promptly give each Revolving Credit Lender notice thereof.

(h) Interim Interest. If an Issuing Bank shall make any L/C Disbursement in respect of a Letter of Credit, then, unless the applicable Borrower shall reimburse such L/C Disbursement in full on such date, the unpaid amount thereof shall bear interest for the account of such Issuing Bank, for each day from and including the date of such L/C Disbursement, to but excluding the earlier of the date of payment by such Borrower or the date on which interest shall commence to accrue thereon as provided in Section 2.02(f), at the rate per annum that would apply to such amount if such amount were (i) in the case of a Dollar Loan, an ABR Revolving Loan and (ii) in the case of an Alternative Currency, a Eurocurrency Revolving Loan with an Interest Period of one month's duration.

(i) Resignation or Removal of an Issuing Bank. An Issuing Bank may resign at any time by giving 180 days' prior written notice to the Administrative Agent, the Lenders and Terex, and may be removed at any time by Terex by notice to such Issuing Bank, the Administrative Agent and the Lenders. Subject to the next succeeding paragraph, upon the acceptance of any appointment as an Issuing Bank hereunder by a Lender that shall agree to serve as a successor Issuing Bank, such successor shall succeed to and become vested with all the interests, rights and obligations of the retiring Issuing Bank and the retiring Issuing Bank shall be discharged from its obligations to issue additional Letters of Credit hereunder. At the time such removal or resignation shall become effective, the Borrowers shall pay all accrued and unpaid fees


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pursuant to Section 2.05(c)(ii). The acceptance of any appointment as an Issuing Bank hereunder by a successor Lender shall be evidenced by an agreement entered into by such successor, in a form satisfactory to the Borrowers and the Administrative Agent, and, from and after the effective date of such agreement,
(i) such successor Lender shall have all the rights and obligations of the previous Issuing Bank under this Agreement and the other Loan Documents and (ii) references herein and in the other Loan Documents to the term "Issuing Bank" shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require. After the resignation or removal of an Issuing Bank hereunder, the retiring Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement and the other Loan Documents with respect to Letters of Credit issued by it prior to such resignation or removal, but shall not be required to issue additional Letters of Credit.

(j) Cash Collateralization. If (i) any Event of Default shall occur and be continuing or (ii) to the extent and so long as the L/C Exposure exceeds the Total Revolving Credit Commitment, the Borrowers shall, on the Business Day after Terex receives notice from the Administrative Agent or the Required Lenders (or, if the maturity of the Loans has been accelerated, Revolving Credit Lenders holding participations in outstanding Letters of Credit representing greater than 50% of the aggregate undrawn amount of all outstanding Letters of Credit) thereof and of the amount to be deposited, deposit in an account with the Collateral Agent, for the benefit of the Revolving Credit Lenders, an amount in cash in the currency determined by the Collateral Agent equal to the L/C Exposure as of such date. Such deposit shall be held by the Collateral Agent as collateral for the payment and performance of the Obligations. The Collateral Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account. Other than any interest earned on the investment of such deposits in Permitted Investments, which investments shall be made at the option and sole discretion of the Collateral Agent, such deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate in such account. Moneys in such account shall (i) automatically be applied by the Administrative Agent to reimburse any Issuing Bank for L/C Disbursements for which it has not been reimbursed, (ii) be held for the satisfaction of the reimbursement obligations of the Borrowers for the L/C Exposure at such time and (iii) if the maturity of the Loans has been accelerated (but subject to the consent of Revolving Credit Lenders holding participations in outstanding Letters of Credit representing greater than 50% of the aggregate undrawn amount of all outstanding Letters of Credit), be applied to satisfy the Obligations. If any Borrower is required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount (to the extent not applied as aforesaid) shall be returned to such Borrower within three Business Days after all Events of Default have been cured or waived. If any Borrower is required to provide an amount of cash collateral pursuant to clause (ii) of the first sentence of this paragraph (j), such amount shall be returned to such Borrower from time to time to the extent that the amount of such cash collateral held by the Collateral Agent exceeds the excess, if any, of the L/C Exposure over the Total Revolving Credit Commitment so long as no Event of Default shall have occurred and be continuing.

SECTION 2.24. A/C Fronted Loans. (a) Subject to the terms and conditions and relying upon the representations and warranties herein set forth,
(i) the Australian Fronting Lender agrees to make loans to the Australian Borrower in Australian Dollars and (ii) the Italian Fronting Lender agrees to make loans to the Italian Borrower in Lire, in each case, at any time and from


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time to time on and after the Closing Date and until the earlier of the Revolving Credit Maturity Date and the termination of the A/C Fronting Commitment of such A/C Fronting Lender in accordance with the terms hereof, in an aggregate principal amount at any time outstanding that will not result in
(i) the Dollar Equivalent of the aggregate principal amount of such A/C Fronting Lender's A/C Fronting Loans exceeding its A/C Fronting Commitment or (ii) the Aggregate Revolving Credit Exposure, after giving effect to any A/C Fronted Loan, exceeding the Total Revolving Credit Commitment; provided however that the Italian Borrower shall not be entitled to make any Borrowings hereunder until all amounts under the Italian Facilities shall have been paid in full and the commitments thereunder terminated. Each A/C Fronted Loan shall be in a principal amount that is an integral multiple of the Alternative Currency Equivalent of $100,000 and not less than $2,500,000. The A/C Fronting Commitments may be terminated or reduced from time to time as provided herein. Within the foregoing limits, the applicable Borrower may borrow, pay or prepay and reborrow A/C Fronted Loans hereunder, subject to the terms, conditions and limitations set forth herein.

(b) A/C Fronted Loans. The Australian Borrower or the Italian Borrower, as applicable, shall notify the applicable A/C Fronting Lender, with a copy to the Administrative Agent, by telecopy, or by telephone (confirmed by telecopy)
(i) in the case of the Australian Borrower, not later than 10:00 a.m., Sydney time, on the day of a proposed A/C Fronted Loan or (ii) in the case of the Italian Borrower, not later than 10:00 a.m., Boston time, three Business Days before the date of a proposed A/C Fronted Loan. Such notice shall be delivered on a Business Day, shall be irrevocable and shall refer to this Agreement, shall specify the requested date (which shall be a Business Day) and amount of such A/C Fronted Loan (which shall be expressed in dollars), shall specify whether such A/C Fronted Loan is to be an A/C Fronted Base Rate Loan or an AC/ Fronted Fixed Rate Loan and, if such Loan is to be an A/C Fronted Fixed Rate Loan, the Interest Period therefor (which shall comply with the definition of the term "Bank Bill Rate" or "Italian Fixed Rate", as applicable. If no Rate is selected with respect to any A/C Fronted Loan, the applicable Borrower shall be deemed to have selected an A/C Fronted Base Rate Loan.

(c) Prepayment. The applicable Borrower shall have the right at any time from time to time to prepay any A/C Fronted Loan, in whole or in part, upon giving written or telecopy notice (or telephone notice promptly confirmed by written, or telecopy notice) to the applicable A/C Fronting Lender and to the Administrative Agent before 12:00 (noon), local time on the date of prepayment at the applicable A/C Fronting Lender's address for notices specified on Schedule 2.01(a). All principal payments of A/C Fronted Loans shall be accompanied by accrued interest on the principal amount being repaid to the date of payment. All prepayments of A/C Fronted Loans shall be subject to Section 2.16 but otherwise without premium or penalty.

(d) Interest. Subject to the provisions of Section 2.07, each A/C Fronted Base Rate Loan shall bear interest (computed on the basis of the actual number of days elapsed over a year of 360 days) at a rate per annum equal to the A/C Fronted Base Rate with respect to such A/C Fronted Loan plus the Applicable Percentage with respect to such Loan. Subject to the provisions of Section 2.07, each A/C Fronted Fixed Rate Loan shall bear interest (computed on the basis of the actual number of days elapsed over a year of 360 days) at a rate per annum equal to the A/C Fronted Fixed Rate for the Interest Period in effect for such Loan plus the Applicable Percentage with respect to such Loan. Interest on each A/C Fronted Loan shall be payable on the Interest Payment Date with respect thereto. Each A/C Fronting Lender shall notify the applicable Borrower and the


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Administrative Agent of the A/C Fronting Base Rate or the A/C Fronted Fixed Rate applicable to such A/C Fronting Lender's A/C Fronted Loans promptly following each determination thereof.

(e) Participations. If the applicable Borrower shall default in the payment of principal of or interest on any A/C Fronted Loan when and as the same shall become due and payable, whether at the due date thereof or by acceleration or otherwise, then the applicable A/C Fronting Lender shall promptly notify the Administrative Agent thereof and, upon notice from the Administrative Agent or the applicable A/C Fronting Lender to the applicable Borrower, the principal amount of all A/C Fronted Loans to such Borrower, together with all accrued and unpaid interest thereon, shall be converted to Dollar Loans and obligations to pay interest in dollars, respectively, at the Exchange Rate prevailing on the date of such default, and the Administrative Agent shall promptly notify each Revolving Credit Lender of such default (by telecopy or by telephone, confirmed in writing) and of its Pro Rata Percentage in dollars of such A/C Fronted Loan. Upon such notice but without any further action, the applicable A/C Fronting Lender hereby agrees to grant to each Revolving Credit Lender, and each Revolving Credit Lender hereby agrees to acquire from the applicable A/C Fronting Lender, a participation in such defaulted A/C Fronted Loan equal to such Lender's Pro Rata Percentage in dollars of the aggregate principal amount of such defaulted A/C Fronting Loan. In furtherance of the foregoing, each Revolving Credit Lender hereby absolutely and unconditionally agrees, upon receipt of notice as provided above, to pay to the Administrative Agent, for the account of the applicable A/C Fronting Lender, such Lender's Pro Rata Percentage of each such defaulted A/C Fronted Loan. Each Lender acknowledges and agrees that its obligation to acquire participations in A/C Fronted Loans pursuant to this paragraph is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or an Event of Default, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. Each Lender shall comply with its obligation under this paragraph by wire transfer of immediately available funds in the same manner as provided in Section 2.02(c) with respect to Loans made by such Lender (and Section 2.02(c) shall apply, mutatis mutandis, to the payment obligations of the Lenders) and the Administrative Agent shall promptly pay to the applicable A/C Fronting Lender the amounts so received by it from the Lenders. The Administrative Agent shall notify the applicable Borrower of any participations in any A/C Fronted Loan acquired pursuant to this paragraph and thereafter payments in respect of such A/C Fronted Loan shall be made in dollars and to the Administrative Agent and not to the applicable A/C Fronting Lender. Any amounts received by an A/C Fronting Lender from any Borrower (or other party on behalf of such Borrower) in respect of an A/C Fronted Loan after receipt by such A/C Fronting Lender of the proceeds of a sale of participations therein shall be promptly remitted to the Administrative Agent; any such amounts received by the Administrative Agent shall be promptly remitted by the Administrative Agent to the Lenders that shall have made their payments pursuant to this paragraph and to the applicable A/C Fronting Lender, as their interests may appear. The purchase of participations in an A/C Fronted Loan pursuant to this paragraph shall not relieve any Borrower (or other party liable for obligations of such Borrower) of any default in the payment thereof.

(f) Termination and Reduction of A/C Fronting Commitments. Upon written or telecopy notice to the applicable A/C Fronting Lender and to the Administrative Agent, Terex may at any time permanently terminate, or from time to time in part permanently reduce, the A/C Fronting Commitment of any A/C Fronting Lender; provided, however, that the A/C Fronting Commitment of such


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A/C Fronting Lender shall not be reduced to an amount that is less than the A/C Fronting Loans of such A/C Fronting Lender at such time.

SECTION 2.25. Reporting Requirements of A/C Fronting Lenders and Issuing Banks. (a) Within two Business Days following the last day of each calendar month, each A/C Fronting Lender shall deliver to the Administrative Agent a statement showing the average daily principal amount of the A/C Fronted Loans outstanding in each currency during the calendar quarter most recently ended.

(b) Within two Business Days following the last day of each calendar month, each Issuing Bank shall deliver to the Administrative Agent a report detailing all activity during the preceding month with respect to any Letters of Credit issued by such Issuing Bank, including the face amount, the account party, the beneficiary and the expiration date of such Letters of Credit and any other information with respect thereto as may be requested by the Administrative Agent.

SECTION 2.26. Additional Issuing Banks. The Borrowers may, at any time and from time to time with the consent of the Administrative Agent (which consent shall not be unreasonably withheld) and such Lender, designate one or more additional Lenders to act as an issuing bank under the terms of this Agreement solely for the purpose of issuing Letters of Credit denominated in Alternative Currencies other than Marks, Pounds, Francs, Australian Dollars and Lire. Any Lender designated as an issuing bank pursuant to this Section 2.26 shall be deemed to be an "Issuing Bank" (in addition to being a Lender) in respect of Letters of Credit issued or to be issued by such Lender and, with respect to such Letters of Credit, such term shall thereafter apply to the Issuing Bank and such Lender.

ARTICLE III

Representations and Warranties

Each Borrower represents and warrants to the Administrative Agent, the Collateral Agent, each of the Issuing Banks and each of the Lenders that:

SECTION 3.01. Organization; Powers. Terex and each of the Subsidiaries (including each Borrower) (a) is a corporation or partnership duly incorporated or formed, as the case may be, validly existing and in good standing under the laws of the jurisdiction of its incorporation, (b) has all requisite corporate power and authority to own its property and assets and to carry on its business as now conducted and as proposed to be conducted, (c) is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required, except where the failure so to qualify could not reasonably be expected to result in a Material Adverse Effect, and (d) has the corporate power and authority to execute, deliver and perform its obligations under each of the Loan Documents and each other agreement or instrument contemplated hereby to which it is or will be a party and, in the case of each Borrower, to borrow hereunder. Each Borrower (other than Terex) is a wholly owned Subsidiary.

SECTION 3.02. Authorization. The execution, delivery and performance by each Loan Party of each of the Loan Documents and the borrowings hereunder (collectively, the "Transactions") (a) have been duly authorized by all requisite corporate and, if required, stockholder action and (b) will not


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(i) violate (A) any provision of law, statute, rule or regulation, (B) the certificate or articles of incorporation or other constitutive documents or By-laws of Terex or any Subsidiary, (C) any order of any Governmental Authority applicable to Terex or such Subsidiary or (D) any provision of any indenture, agreement or other instrument to which Terex or any Subsidiary is a party or by which any of them or any of their property is or may be bound, (ii) result in a breach of or constitute (alone or with notice or lapse of time or both) a default under, or give rise to any right to accelerate or to require the prepayment, repurchase or redemption of any obligation under any such indenture, agreement or other instrument, except, in the case of each of clause (i)(A),
(i)(D) and (ii), where such violation, breach or default could not reasonably be expected to result in a Material Adverse Effect or (iii) result in the creation or imposition of any Lien upon or with respect to any property or assets now owned or hereafter acquired by Terex or any Subsidiary (other than any Lien created hereunder or under the Security Documents).

SECTION 3.03. Enforceability. This Agreement has been duly executed and delivered by each Borrower and constitutes, and each other Loan Document when executed and delivered by each Loan Party thereto will constitute, a legal, valid and binding obligation of such Loan Party enforceable against such Loan Party in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

SECTION 3.04. Governmental Approvals. No action, consent or approval of, registration or filing with or any other action by any Governmental Authority is or will be required in connection with the Transactions, except for
(a) the filing of Uniform Commercial Code financing statements and filings with the United States Patent and Trademark Office and the United States Copyright Office, (b) recordation of the Mortgages and (c) such as have been made or obtained and are in full force and effect, except where the failure to obtain the same could not reasonably be expected to result in a Material Adverse Effect.

SECTION 3.05. Financial Statements. (a) Terex has heretofore furnished to the Lenders its consolidated and consolidating balance sheets and statements of income and changes in financial condition as of and for each of the fiscal years ended December 31, 1994, December 31, 1995 and December 31, 1996, audited by and accompanied by the opinion of Price Waterhouse L.L.P., independent public accountants, and as of and for the fiscal quarter and the portion of the fiscal year ended September 30, 1997, certified by a Financial Officer. Such financial statements present fairly in all material respects the financial condition and results of operations and cash flows of Terex and its consolidated Subsidiaries as of such dates and for such periods. Such balance sheets and the notes thereto disclose all material liabilities, direct or contingent, of Terex and its consolidated Subsidiaries as of the dates thereof required to be reflected in accordance with GAAP. Such financial statements were prepared in accordance with GAAP applied on a consistent basis.

(b) Terex has heretofore delivered to the Lenders its unaudited pro forma consolidated balance sheet as of December 31, 1997, prepared giving effect to the Refinancing and the Debt Tender Offer as if they had occurred on such date. Such pro forma balance sheet has been prepared in good faith by Terex, based on the assumptions used to prepare the pro forma financial information contained in the Confidential Information Memorandum (which assumptions are believed by Terex on the date hereof and on the Closing Date to be reasonable),


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is based on the best information available to Terex as of the date of delivery thereof, accurately reflects all adjustments required to be made to give effect to the Refinancing and the Debt Tender Offer and presents fairly on a pro forma basis the estimated consolidated financial position of Terex and its consolidated Subsidiaries as of such date, assuming that the Refinancing and the Debt Tender Offer had actually occurred at such date.

SECTION 3.06. No Material Adverse Change. There has been no material adverse change in the business, assets, operations, prospects, condition, financial or otherwise, or material agreements of Terex and its Subsidiaries, taken as a whole, since December 31, 1996.

SECTION 3.07. Title to Properties; Possession Under Leases. (a) Each of Terex and its Subsidiaries has fee title to, or valid leasehold interests in, all its material properties and assets (including all Mortgaged Property), except for defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties and assets for their intended purposes. All such material properties and assets are free and clear of Liens, other than Liens expressly permitted by Section 6.02.

(b) Each of Terex and its Subsidiaries has complied in all material respects with all obligations under all material leases to which it is a party and all such leases are in full force and effect. Each of Terex and its Subsidiaries enjoys peaceful and undisturbed possession under all such material leases.

(c) No Borrower has received any written notice of, nor has any knowledge of, any pending or contemplated condemnation proceeding affecting the Mortgaged Properties or any sale or disposition thereof in lieu of condemnation.

(d) Neither Terex nor any of its Subsidiaries is obligated under any right of first refusal, option or other contractual right to sell, assign or otherwise dispose of any Mortgaged Property or any interest therein.

SECTION 3.08. Subsidiaries. Schedule 3.08 sets forth as of the Closing Date a list of all Subsidiaries and the percentage ownership interest of Terex therein. The shares of capital stock or other ownership interests so indicated on Schedule 3.08 are fully paid and non assessable and are owned by Terex, directly or indirectly through its Subsidiaries, free and clear of all Liens, except for Liens created under the Security Documents. Each Subsidiary identified on Schedule 1.01(f) as an Inactive Subsidiary (a) owns assets having a fair market value not in excess of $50,000 in the aggregate, (b) does not conduct any business activity and (c) is not an obligor with respect to any Indebtedness.

SECTION 3.09. Litigation; Compliance with Laws. (a) Except as set forth on Schedule 3.09, there are not any actions, suits or proceedings at law or in equity or by or before any Governmental Authority now pending or, to the knowledge of any Borrower, threatened against or affecting Terex or any of its Subsidiaries or any business, property or rights of any such person (i) that involve any Loan Document or the Transactions or (ii) as to which there is a reasonable possibility of an adverse determination and that, if adversely determined in the ordinary course of such action, suit or proceeding, at the time of such determination, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.


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(b) None of Terex or any of its Subsidiaries or any of their respective material properties or assets is in violation of, nor will the continued operation of their material properties and assets as currently conducted violate, any law, rule or regulation (including any zoning, building, Environmental Law, ordinance, code or approval or any building permits) or any restrictions of record or agreements affecting the Mortgaged Property, or is in default with respect to any judgment, writ, injunction, decree or order of any Governmental Authority, where such violation or default could reasonably be expected to result in a Material Adverse Effect.

(c) Certificates of occupancy and permits are in effect for each Mortgaged Property as currently constructed, except where the failure to have the same could not reasonably be expected to result in a Material Adverse Effect.

(d) No exchange control law or regulation materially restricts any Borrower from complying with its obligations in respect of any Alternative Currency Loan or Letter of Credit or any other Loan Party with respect to its obligations under any Loan Document.

SECTION 3.10. Agreements. (a) Neither Terex nor any of the Subsidiaries is a party to any agreement or instrument or subject to any corporate restriction that has resulted or could reasonably be expected to result in a Material Adverse Effect.

(b) Neither Terex nor any of its Subsidiaries is in default in any manner under any provision of any indenture or other agreement or instrument evidencing Indebtedness, or any other material agreement or instrument to which it is a party or by which it or any of its properties or assets are or may be bound, where such default could reasonably be expected to result in a Material Adverse Effect.

SECTION 3.11. Federal Reserve Regulations. (a) Neither Terex nor any of its Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of buying or carrying Margin Stock.

(b) No part of the proceeds of any Loan or any Letter of Credit will be used, whether directly or indirectly, and whether immediately, incidentally or ultimately, for any purpose that entails a violation of, or that is inconsistent with, the provisions of the Regulations of the Board, including Regulation G, U or X.

SECTION 3.12. Investment Company Act; Public Utility Holding Company Act. Neither Terex nor any of its Subsidiaries is (a) an "investment company" as defined in, or subject to regulation under, the Investment Company Act of 1940 or (b) a "holding company" as defined in, or subject to regulation under, the Public Utility Holding Company Act of 1935.

SECTION 3.13. Use of Proceeds. Each Borrower will use the proceeds of the Loans and will request the issuance of Letters of Credit only for the purposes specified in the preamble to this Agreement.

SECTION 3.14. Tax Returns. Each of Terex and its Subsidiaries has filed or caused to be filed all Federal, state, local and foreign tax returns or materials required to have been filed by it and has paid or caused to be paid all taxes due and payable by it and all assessments received by it (in each case giving effect to applicable extensions), except taxes that are being contested


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in good faith by appropriate proceedings and for which Terex or such Subsidiary, as applicable, shall have set aside on its books reserves in accordance with GAAP.

SECTION 3.15. No Material Misstatements. None of (a) the Confidential Information Memorandum or (b) any other information, report, financial statement, exhibit or schedule furnished by or on behalf of any Borrower in writing to the Administrative Agent or any Lender in connection with the negotiation of any Loan Document or included therein or delivered pursuant thereto contained, contains or will contain any material misstatement of fact or omitted, omits or will omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were, are or will be made, not misleading; provided that to the extent any such information, report, financial statement, exhibit or schedule was based upon or constitutes a forecast or projection, such Borrower represents only that it acted in good faith and utilized assumptions believed by it to be reasonable and due care in the preparation of such information, report, financial statement, exhibit or schedule.

SECTION 3.16. Employee Benefit Plans. (a) Each of Terex and its respective ERISA Affiliates is in compliance in all material respects with the applicable provisions of ERISA and the Code and the regulations and published interpretations thereunder. No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events, could reasonably be expected to result in a Material Adverse Effect. The present value of all benefit liabilities under each Plan (based on those assumptions used to fund such Plan) did not, as of December 31, 1997, exceed by more than $3,200,000 the fair market value of the assets of such Plan, and the present value of all benefit liabilities of all underfunded Plans (based on those assumptions used to fund each such Plan) did not, as of December 31, 1997, exceed by more than $2,700,000 the fair market value of the assets of all such underfunded Plans.

(b) Each Foreign Pension Plan is in compliance in all material respects with all requirements of law applicable thereto and the respective requirements of the governing documents for such plan except to the extent such non-compliance could not reasonably be expected to result in a Material Adverse Effect. With respect to each Foreign Pension Plan, none of Terex, its Affiliates or any of its directors, officers, employees or agents has engaged in a transaction which would subject Terex or any of its Subsidiaries, directly or indirectly, to a material tax or civil penalty. With respect to each Foreign Pension Plan, reserves have been established in the financial statements furnished to Lenders in respect of any unfunded liabilities in accordance with applicable law and prudent business practice or, where required, in accordance with ordinary accounting practices in the jurisdiction in which such Foreign Pension Plan is maintained. The aggregate unfunded liabilities, with respect to such Foreign Pension Plans could not reasonably be expected to result in a Material Adverse Effect. There are no actions, suits or claims (other than routine claims for benefits) pending or threatened against Terex or any of its Affiliates with respect to any Foreign Pension Plan which could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.


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SECTION 3.17. Environmental Matters. Except as set forth in Schedule 3.17:

(a) The properties owned, leased or operated by each of Terex and its Subsidiaries (the "Properties") do not contain any Hazardous Materials in amounts or concentrations which (i) constitute, or constituted a violation of,
(ii) require Remedial Action under, or (iii) could give rise to liability under, Environmental Laws, which violations, Remedial Actions and liabilities, in the aggregate, could reasonably be expected to result in a Material Adverse Effect;

(b) The Properties and all operations of each of Terex and its Subsidiaries are in compliance in all material respects, and in the last five years have been in compliance, with all Environmental Laws, and all necessary Environmental Permits have been obtained and are in effect, except to the extent that such non-compliance or failure to obtain any necessary permits, in the aggregate, could reasonably be expected to not result in a Material Adverse Effect;

(c) There have been no Releases or threatened Releases at, from, under or proximate to the Properties or otherwise in connection with the current or former operations of Terex or its Subsidiaries, which Releases or threatened Releases, in the aggregate, could reasonably be expected to result in a Material Adverse Effect;

(d) Neither Terex nor any of its Subsidiaries has received any notice of an Environmental Claim in connection with the Properties or the current or former operations of Terex or such Subsidiaries or with regard to any person whose liabilities for environmental matters Terex or such Subsidiaries has retained or assumed, in whole or in part, contractually, by operation of law or otherwise, which, in the aggregate, could reasonably be expected to result in a Material Adverse Effect, nor do Terex or its Subsidiaries have reason to believe that any such notice will be received or is being threatened; and

(e) Hazardous Materials have not been transported from the Properties, nor have Hazardous Materials been generated, treated, stored or disposed of at, on or under any of the Properties in a manner that could give rise to liability under any Environmental Law, nor have Terex or its Subsidiaries retained or assumed any liability, contractually, by operation of law or otherwise, with respect to the generation, treatment, storage or disposal of Hazardous Materials, which liabilities, in the aggregate, could reasonably be expected to result in a Material Adverse Effect.

SECTION 3.18. Insurance. Schedule 3.18 sets forth a true, complete and correct description of all insurance maintained by Terex or any of its Subsidiaries as of the date hereof and the Closing Date. As of each such date, such insurance is in full force and effect and all premiums have been duly paid. Each of Terex and its Subsidiaries has insurance in such amounts and covering such risks and liabilities as are in accordance with normal industry practice.

SECTION 3.19. Security Documents. (a) The Pledge Agreement is effective to create in favor of the Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid and enforceable security interest in the Collateral (as defined in the Pledge Agreement) and, when the Collateral is delivered to the Collateral Agent, the Pledge Agreement shall constitute a fully perfected first priority Lien on, and security interest in, all right, title and


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interest of the pledgors thereunder in such Collateral, in each case prior and superior in right to any other person.

(b) The Security Agreement is effective to create in favor of the Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid and enforceable security interest in the Collateral (as defined in the Security Agreement) and, when financing statements in appropriate form are filed in the appropriate filing offices relating to the locations specified on Schedule 2 to the Perfection Certificate, the Security Agreement shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the grantors thereunder in such Collateral (other than the Intellectual Property, as defined in the Security Agreement), in each case prior and superior in right to any other person, other than with respect to Liens expressly permitted by Section 6.02.

(c) When the Security Agreement is filed in the United States Patent and Trademark Office and the United States Copyright Office, the Security Agreement shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the grantors thereunder in the Intellectual Property (as defined in the Security Agreement), in each case prior and superior in right to any other person (it being understood that subsequent recordings in the United States Patent and Trademark Office and the United States Copyright Office may be necessary to perfect a lien on registered trademarks, trademark applications and copyrights acquired by the grantors after the date hereof).

(d) The Mortgages are effective to create in favor of the Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid and enforceable Lien on all of the Loan Parties' right, title and interest in and to the Mortgaged Property thereunder and the proceeds thereof, and when the Mortgages are filed in the offices specified on Schedule 3.19(d), the Mortgages shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in such Mortgaged Property and the proceeds thereof, in each case prior and superior in right to any other person, other than with respect to the rights of persons pursuant to Liens expressly permitted by Section 6.02.

SECTION 3.20. Location of Real Property and Leased Premises.
(a) Schedule 3.20(a) lists completely and correctly as of the Closing Date all real property owned by Terex and the Subsidiaries and the addresses thereof. Terex and the Subsidiaries own in fee all the real property set forth on Schedule 3.20(a).

(b) Schedule 3.20(b) lists completely and correctly as of the Closing Date all real property leased by Terex and the Subsidiaries and the addresses thereof. Terex and the Subsidiaries have valid leases in all the real property set forth on Schedule 3.20(b).

SECTION 3.21. Labor Matters As of the date hereof and the Closing Date, there are no strikes, lockouts or slowdowns against Terex or any of its Subsidiaries pending or, to the knowledge of any Borrower, threatened. The hours worked by and payments made to employees of Terex and its Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable Federal, state, local or foreign law dealing with such matters. All payments due from Terex or any of its Subsidiaries, or for which any claim may be made against Terex or any such Subsidiary, on account of wages and employee health and welfare insurance and other benefits, have been paid or accrued as a liability on the books of Terex or such Subsidiary. The consummation of the Transactions will not give rise to any right of termination or right of


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renegotiation on the part of any union under any collective bargaining agreement to which Terex or any of its Subsidiaries is bound.

SECTION 3.22. Solvency. Immediately after the consummation of the Transactions to occur on the Closing Date and immediately following the making of each Loan and after giving effect to the application of the proceeds of such Loans, (a) the fair value of the assets of the Loan Parties, at a fair valuation, will exceed their debts and liabilities, subordinated, contingent or otherwise; (b) the present fair saleable value of the property of the Loan Parties will be greater than the amount that will be required to pay the probable liability of their debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (c) each Loan Party will be able to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (d) each Loan Party will not have unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted following the Closing Date.

ARTICLE IV

Conditions of Lending

The obligations of the Lenders to make Loans and of the Issuing Banks to issue Letters of Credit hereunder are subject to the satisfaction of the following conditions:

SECTION 4.01. All Credit Events. On the date of each Borrowing, including each Borrowing of a Swingline Loan or an A/C Fronted Loan, and on the date of each issuance, amendment or renewal of a Letter of Credit (each such event being called a "Credit Event"):

(a) The Administrative Agent shall have received a notice of such Borrowing as required by Section 2.03 (or such notice shall have been deemed given in accordance with Section 2.03) or, in the case of the issuance, amendment or renewal of a Letter of Credit, the applicable Issuing Bank and the Administrative Agent shall have received a notice requesting the issuance of such Letter of Credit as required by Section 2.23(b) or, in the case of the Borrowing of a Swingline Loan, the Swingline Lender and the Administrative Agent shall have received a notice requesting such Swingline Loan as required by
Section 2.22(b) or, in the case of a Borrowing of an A/C Fronted Loan, the applicable A/C Fronting Lender and the Administrative Agent shall have received a notice requesting such A/C Fronted Loan as required by Section 2.24(b).

(b) The representations and warranties set forth in Article III hereof shall be true and correct in all material respects on and as of the date of such Credit Event with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date.

(c) Each Borrower and each other Loan Party shall be in compliance with all the terms and provisions set forth herein and in each other Loan Document on its part to be observed or performed, and at the time of and immediately after such Credit Event, no Event of Default or Default shall have occurred and be continuing.


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Each Credit Event shall be deemed to constitute a representation and warranty by each Borrower on the date of such Credit Event as to the matters specified in paragraphs (b) (except as aforesaid) and (c) of this Section 4.01.

SECTION 4.02. First Credit Event. On the Closing Date:

(a) The Administrative Agent shall have received, on behalf of itself, the Lenders and the Issuing Banks, a favorable written opinion of (i) Eric Cohen, General Counsel of Terex, and counsel for the other Borrowers, substantially to the effect set forth in Exhibit L-1, and
(ii) each local counsel listed on Schedule 4.02(a), substantially to the effect set forth in Exhibit L-2, in each case (A) dated the Closing Date, (B) addressed to the Issuing Banks, the Administrative Agent and the Lenders, and (C) covering such other matters relating to the Loan Documents and the Transactions as the Administrative Agent shall reasonably request, and each Borrower hereby requests such counsel to deliver such opinions.

(b) All legal matters incident to this Agreement, the Borrowings and extensions of credit hereunder and the other Loan Documents shall be reasonably satisfactory to the Lenders, to the Issuing Banks and to the Administrative Agent.

(c) The Administrative Agent shall have received (i) a copy of the certificate or articles of incorporation or other organizational documents, including all amendments thereto, of each Loan Party, certified as of a recent date by the Secretary of State or other Governmental Authority of the state or other jurisdiction of its organization, and a certificate as to the good standing of each Loan Party as of a recent date, from such Secretary of State or other Governmental Authority; (ii) a certificate of the Secretary or Assistant Secretary of each Loan Party dated the Closing Date and certifying (A) that attached thereto is a true and complete copy of the By-laws or other organizational documents of such Loan Party as in effect on the Closing Date and at all times since a date prior to the date of the resolutions described in clause (B) below, (B) that attached thereto is a true and complete copy of resolutions duly adopted by the Board of Directors of such Loan Party authorizing the execution, delivery and performance of the Loan Documents to which such person is a party and, in the case of each Borrower, the borrowings hereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect, (C) that the certificate or articles of incorporation of such Loan Party have not been amended since the date of the last amendment thereto shown on the certificate of good standing furnished pursuant to clause (i) above, and (D) as to the incumbency and specimen signature of each officer executing any Loan Document or any other document delivered in connection herewith on behalf of such Loan Party; (iii) a certificate of another officer as to the incumbency and specimen signature of the Secretary or Assistant Secretary executing the certificate pursuant to (ii) above; and (iv) such other documents as the Lenders, the Issuing Banks or the Administrative Agent may reasonably request.

(d) The Administrative Agent shall have received a certificate, dated the Closing Date and signed by a Financial Officer of Terex, confirming compliance with the conditions precedent set forth in paragraphs (b) and (c) of Section 4.01.


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(e) The Administrative Agent shall have received all Fees and other amounts due and payable on or prior to the Closing Date, including, to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by any Borrower hereunder or under any other Loan Document.

(f) The Pledge Agreement shall have been duly executed by the parties thereto and delivered to the Collateral Agent and shall be in full force and effect, and all the outstanding capital stock of the Subsidiaries shall have been duly and validly pledged thereunder to the Collateral Agent for the ratable benefit of the Secured Parties and certificates representing such shares, accompanied by instruments of transfer and stock powers endorsed in blank, shall be in the actual possession of the Collateral Agent; provided that to the extent to do so would cause adverse tax consequences to Terex, (i) neither Terex nor any Domestic Subsidiary of Terex shall be required to pledge more than 65% of the capital stock of any Foreign Subsidiary and (ii) no Foreign Subsidiary shall be required to pledge the capital stock of any of its Foreign Subsidiaries.

(g) The Security Agreement shall have been duly executed by the Loan Parties party thereto and shall have been delivered to the Collateral Agent and shall be in full force and effect on such date and each document (including each Uniform Commercial Code financing statement) required by law or reasonably requested by the Administrative Agent to be filed, registered or recorded in order to create in favor of the Collateral Agent for the benefit of the Secured Parties a valid, legal and perfected first-priority security interest in and lien on the Collateral (subject to any Lien expressly permitted by Section 6.02) described in such agreement shall have been delivered to the Collateral Agent.

(h) The Collateral Agent shall have received and shall be reasonably satisfied with the results of a search of the Uniform Commercial Code (or equivalent filings) filings made with respect to the Loan Parties in the states (or other jurisdictions) in which the chief executive office of each such person is located, any offices of such persons in which records have been kept relating to Accounts (as defined in the Security Agreement) and the other jurisdictions in which Uniform Commercial Code filings (or equivalent filings) are to be made pursuant to the preceding paragraph, together with copies of the financing statements (or similar documents) disclosed by such search.

(i) The Collateral Agent shall have received a Perfection Certificate with respect to the Loan Parties dated the Closing Date and duly executed by a Responsible Officer of Terex.

(j)(i) Each of the Security Documents, in form and substance reasonably satisfactory to the Lenders, relating to each of the Mortgaged Properties shall have been duly executed by the parties thereto and delivered to the Collateral Agent and shall be in full force and effect, (ii) each of such Mortgaged Properties shall not be subject to any Lien other than those permitted under Section 6.02,
(iii) each of such Security Documents shall have been filed and recorded in the recording office as specified on Schedule 3.19(d) (or a lender's title insurance policy, in form and substance acceptable to the Collateral Agent, insuring such Security Document as a first lien on such Mortgaged Property (subject to any Lien permitted by Section 6.02) shall have been received by the Collateral Agent) and, in


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connection therewith, the Collateral Agent shall have received evidence reasonably satisfactory to it of each such filing and recordation and
(iv) the Collateral Agent shall have received such other documents, including a policy or policies of title insurance issued by a nationally recognized title insurance company, together with such endorsements, coinsurance and reinsurance as may be reasonably requested by the Collateral Agent and the Lenders, insuring the Mortgages as valid first liens on the Mortgaged Properties, free of Liens other than those permitted under Section 6.02, together with such surveys, abstracts and appraisals reasonably available and legal opinions required to be furnished pursuant to the terms of the Mortgages or as reasonably requested by the Collateral Agent or the Lenders.

(k) The Guarantee Agreements shall have been duly executed by the parties thereto, shall have been delivered to the Collateral Agent and shall be in full force and effect.

(l) The Indemnity, Subrogation and Contribution Agreement shall have been duly executed by the parties thereto, shall have been delivered to the Collateral Agent and shall be in full force and effect.

(m) The Administrative Agent shall have received a copy of, or a certificate as to coverage under, the insurance policies required by
Section 5.02 and the applicable provisions of the Security Documents, each of which with respect to Terex or any Domestic Subsidiary shall be endorsed or otherwise amended to include a "standard" or "New York" lender's loss payable endorsement and to name the Collateral Agent as additional insured, in form and substance reasonably satisfactory to the Administrative Agent.

(n) The Lenders shall be reasonably satisfied as to the amount and nature of any environmental and employee health and safety exposures to which any of Terex and its Subsidiaries may be subject and the plans of Terex with respect thereto.

(o) The Lenders shall have received evidence satisfactory to them that (i) Terex shall have purchased, or with the proceeds of the first Credit Event will purchase, at least 75% of the Existing Notes for a purchase price per Existing Note not to exceed the amount provided therefor in the Debt Tender Offer by any material amount on the date hereof and (ii) if less than all the Existing Notes are purchased in the Debt Tender Offer, the Existing Note Indenture shall have been modified as provided in the Consent Solicitation to eliminate all of the significant negative covenants contained therein and to either (A) release all collateral securing the Existing Notes or (B) permit junior liens in favor of the Collateral Agent on the collateral securing the Existing Notes and make cash collateral or other arrangements reasonably satisfactory to the Administrative Agent with respect thereto and to eliminate any limitation contained therein on the Borrowers' ability to consummate the Transactions and the Debt Tender Offer.

(p)(i) After giving effect to the Refinancing and the other transactions contemplated hereby, the Borrowers and their respective Subsidiaries shall have outstanding no Indebtedness or preferred stock other than (A) the extensions of credit under this Agreement, (B) the Existing Notes in an aggregate principal amount not to exceed $100,000


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and (C) the Indebtedness listed on Schedule 6.01 and (ii) the Administrative Agent shall have received evidence satisfactory to it that all Indebtedness under the Existing Credit Agreement and the other Indebtedness to be refinanced pursuant to the Refinancing shall have been repaid in full or are being repaid in full with the proceeds of the first Credit Event and any commitments thereunder shall have been terminated and all Liens with respect thereto shall have been released.

(q) All requisite Governmental Authorities and third parties, if any, shall have approved or consented to the Debt Tender Offer, the Refinancing, the Transactions and the other transactions contemplated hereby to the extent required, all applicable appeal periods shall have expired and there shall be no governmental or judicial action, actual or threatened, that has or could have a reasonable likelihood of restraining, preventing or imposing materially burdensome conditions on the Debt Tender Offer, the Refinancing, the Transactions or the other transactions contemplated hereby.

ARTICLE V

Affirmative Covenants

Each Borrower covenants and agrees with each Lender that so long as this Agreement shall remain in effect and until the Commitments have been terminated and the principal of and interest on each Loan, all Fees and all other expenses or amounts payable under any Loan Document shall have been paid in full and all Letters of Credit have been canceled or have expired and all amounts drawn thereunder have been reimbursed in full, unless the Required Lenders shall otherwise consent in writing, each Borrower will, and will cause each of its Subsidiaries to:

SECTION 5.01. Existence; Businesses and Properties. (a) Do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence, except as otherwise expressly permitted under
Section 6.05.

(b) Do or cause to be done all things necessary to obtain, preserve, renew, extend and keep in full force and effect the rights, licenses, permits, franchises, authorizations, patents, copyrights, trademarks and trade names material to the conduct of its business; maintain and operate such business in substantially the manner in which it is presently conducted and operated or in an otherwise prudent manner; comply in all material respects with all applicable laws, rules, regulations (including any zoning, building, Environmental Law, ordinance, code or approval or any building permits or any restrictions of record or agreements affecting the Mortgaged Properties) and decrees and orders of any Governmental Authority, whether now in effect or hereafter enacted unless failure to comply could not reasonably be expected to result in a Material Adverse Effect; and at all times maintain and preserve all property material to the conduct of such business and keep such property in working order and condition and from time to time make, or cause to be made, all needful and proper repairs, renewals, additions, improvements and replacements thereto necessary in order that the business carried on in connection therewith may be conducted at all times in a commercially reasonably manner.


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SECTION 5.02. Insurance. (a) Keep its insurable properties adequately insured at all times by financially sound and reputable insurers; maintain such other insurance (including self insurance), to such extent and against such risks, including fire and other risks insured against by extended coverage, as is customary with companies in the same or similar businesses operating in the same or similar locations and of same or similar size, including public liability insurance against claims for personal injury or death or property damage occurring upon, in, about or in connection with the use of any properties owned, occupied or controlled by it; and maintain such other insurance as may be required by law.

(b) Cause all such policies of Terex or any Domestic Subsidiary to be endorsed or otherwise amended to include a "standard" or "New York" lender's loss payable endorsement, in form and substance reasonably satisfactory to the Administrative Agent and the Collateral Agent, which endorsement shall provide that, from and after the Closing Date, if the insurance carrier shall have received written notice from the Administrative Agent or the Collateral Agent of the occurrence of an Event of Default, the insurance carrier shall pay all proceeds otherwise payable to Terex or any such Loan Parties under such policies directly to the Collateral Agent; cause all such policies to provide that no Borrower, the Administrative Agent, the Collateral Agent nor any other party shall be a coinsurer thereunder and to contain a "Replacement Cost Endorsement", without any deduction for depreciation, and such other provisions as the Administrative Agent or the Collateral Agent may reasonably require from time to time to protect their interests; deliver original or certified copies of all such policies to the Collateral Agent; cause each such policy to provide that it shall not be canceled, modified or not renewed for any other reason upon not less than 30 days' prior written notice thereof by the insurer to the Administrative Agent and the Collateral Agent; deliver to the Administrative Agent and the Collateral Agent, prior to the cancelation, modification or nonrenewal of any such policy of insurance, a copy of a renewal or replacement policy (or other evidence of renewal of a policy previously delivered to the Administrative Agent and the Collateral Agent) together with evidence satisfactory to the Administrative Agent and the Collateral Agent of payment of the premium therefor.

(c) If at any time the area in which the Premises (as defined in the Mortgages) are located is designated (i) a "flood hazard area" in any Flood Insurance Rate Map published by the Federal Emergency Management Agency (or any successor agency), obtain flood insurance in such total amount as the Administrative Agent, the Collateral Agent or the Required Lenders may from time to time require, and otherwise comply with the National Flood Insurance Program as set forth in the Flood Disaster Protection Act of 1973, as it may be amended from time to time, or (ii) a "Zone 1" area, obtain earthquake insurance in such total amount as the Administrative Agent, the Collateral Agent or the Required Lenders may from time to time require.

(d) With respect to any Mortgaged Property, carry and maintain comprehensive general liability insurance including the "broad form CGL endorsement" and coverage on an occurrence basis against claims made for personal injury (including bodily injury, death and property damage) and umbrella liability insurance against any and all claims, in no event for a combined single limit of less than that in effect on the Closing Date, naming the Collateral Agent as an additional insured, on forms reasonably satisfactory to the Collateral Agent.

(e) Notify the Administrative Agent and the Collateral Agent immediately whenever any separate insurance concurrent in form or contributing in the event of loss with that required to be maintained under this Section 5.02


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is taken out by any Borrower; and promptly deliver to the Administrative Agent and the Collateral Agent a duplicate original copy of such policy or policies.

(f) In connection with the covenants set forth in this Section 5.02, it is understood and agreed that:

(i) none of the Administrative Agent, the Lenders, the Issuing Banks, or their respective agents or employees shall be liable for any loss or damage insured by the insurance policies required to be maintained under this Section 5.02, it being understood that (A) each Borrower and the other Loan Parties shall look solely to their insurance companies or any other parties other than the aforesaid parties for the recovery of such loss or damage and (B) such insurance companies shall have no rights of subrogation against the Administrative Agent, the Collateral Agent, the Lenders, the Issuing Banks or their agents or employees. If, however, the insurance policies do not provide waiver of subrogation rights against such parties, as required above, then each Borrower hereby agrees, to the extent permitted by law, to waive its right of recovery, if any, against the Administrative Agent, the Collateral Agent, the Lenders, the Issuing Banks and their agents and employees; and

(ii) the designation of any form, type or amount of insurance coverage by the Administrative Agent, the Collateral Agent or the Required Lenders under this Section 5.02 shall in no event be deemed a representation, warranty or advice by the Administrative Agent, the Collateral Agent or the Lenders that such insurance is adequate for the purposes of the business of any Borrower and its Subsidiaries or the protection of their properties and the Administrative Agent, the Collateral Agent and the Required Lenders shall have the right from time to time to require the Borrowers and the other Loan Parties to keep other insurance in such form and amount as the Administrative Agent, the Collateral Agent or the Required Lenders may reasonably request; provided that such insurance shall be obtainable on commercially reasonable terms.

SECTION 5.03. Obligations and Taxes. Pay its Indebtedness and other obligations promptly and in accordance with their terms and pay and discharge promptly when due all taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits or in respect of its property, before the same shall become delinquent or in default, as well as all lawful claims for labor, materials and supplies or otherwise that, if unpaid, could reasonably be expected to give rise to a Lien upon such properties or any part thereof; provided, however, that such payment and discharge shall not be required with respect to any such obligation, tax, assessment, charge, levy or claim so long as the validity or amount thereof shall be contested in good faith by appropriate proceedings and the applicable Borrower shall have set aside on its books reserves with respect thereto in accordance with GAAP and such contest operates to suspend collection of the contested obligation, tax, assessment or charge and enforcement of a Lien and, in the case of a Mortgaged Property, there is no risk of forfeiture of such property.


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SECTION 5.04. Financial Statements, Reports, etc. In the case of Terex, furnish to the Administrative Agent for distribution by the Administrative Agent to each Lender:

(a) within 90 days after the end of each fiscal year, its consolidated and consolidating balance sheets and related statements of operations, stockholders' equity and cash flows showing the financial condition of Terex and its consolidated Subsidiaries as of the close of such fiscal year and the results of its operations and the operations of such Subsidiaries during such year, all audited by Price Waterhouse L.L.P. or other independent public accountants of recognized national standing or otherwise reasonably acceptable to the Required Lenders and accompanied by an opinion of such accountants (which shall not be qualified in any material respect) to the effect that such consolidated financial statements fairly present the financial condition and results of operations of Terex and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied;

(b) within 45 days after the end of each of the first three fiscal quarters of each fiscal year, its consolidated and consolidating balance sheets and related statements of operations, stockholders' equity and cash flows showing the financial condition of Terex and its consolidated Subsidiaries as of the close of such fiscal quarter and the results of its operations and the operations of such Subsidiaries during such fiscal quarter and the then elapsed portion of the fiscal year, all certified by one of its Financial Officers as fairly presenting in all material respects the financial condition and results of operations of Terex and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments;

(c) concurrently with any delivery of financial statements under sub- paragraph (a) or (b) above, a certificate of the accounting firm (unless at such time it is the practice and policy of such accounting firm not to deliver such certificates) or Financial Officer opining on or certifying such statements (which certificate, when furnished by an accounting firm, may be limited to accounting matters and disclaim responsibility for legal interpretations) (i) certifying that no Event of Default or Default has occurred or, if such an Event of Default or Default has occurred, specifying the nature and extent thereof and any corrective action taken or proposed to be taken with respect thereto; and (ii) in the case of any such letter from such Financial Officer, setting forth reasonably detailed calculations demonstrating compliance with Sections 6.10, 6.11, 6.12 and 6.13;

(d) promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials filed by Terex or any Subsidiary with the Securities and Exchange Commission, or any Governmental Authority succeeding to any or all of the functions of said Commission, or with any national securities exchange, or distributed to its shareholders, as the case may be;

(e) as promptly as practicable, but in no event later than 10 Business Days after the last day of each fiscal year of Terex, a copy of the budget for its consolidated balance sheet and related statements of income and selected working capital and capital expenditure analyses for each quarter of the following fiscal year; and


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(f) promptly, from time to time, such other information regarding the operations, business affairs and financial condition of Terex or any Subsidiary, or compliance with the terms of any Loan Document, as the Administrative Agent or any Lender may reasonably request.

SECTION 5.05. Litigation and Other Notices. Furnish to the Administrative Agent, the Issuing Banks and each Lender, promptly after obtaining knowledge thereof, written notice of the following:

(a) any Event of Default or Default, specifying the nature and extent thereof and the corrective action (if any) taken or proposed to be taken with respect thereto;

(b) the filing or commencement of, or any threat or notice of intention of any person to file or commence, any action, suit or proceeding, whether at law or in equity or by or before any Governmental Authority, against any Borrower or any Affiliate thereof that could reasonably be expected to result in a Material Adverse Effect; and

(c) any development with respect to Terex or any Subsidiary that has resulted in, or could reasonably be expected to result in, a Material Adverse Effect.

SECTION 5.06. Employee Benefits. (a) Comply in all material respects with the applicable provisions of ERISA and the Code and the laws applicable to any Foreign Benefit Plan and (b) furnish to the Administrative Agent (i) as soon as possible after, and in any event within 10 days after any Responsible Officer of any Borrower or any Affiliate knows that any ERISA Event has occurred that, alone or together with any other ERISA Event could reasonably be expected to result in liability of any Borrower in an aggregate amount exceeding $5,000,000 (or the Dollar Equivalent thereof in another currency), a statement of a Financial Officer of such Borrower setting forth details as to such ERISA Event and the action, if any, that such Borrower proposes to take with respect thereto.

SECTION 5.07. Maintaining Records; Access to Properties and Inspections. Keep proper books of record and account in which full, true and correct entries in conformity in all material respects with GAAP and all requirements of law are made of all dealings and transactions in relation to its business and activities. Each Loan Party will, and will cause each of its Subsidiaries to, permit any representatives designated by the Administrative Agent or any Lender to visit and inspect the financial records and the properties of any Borrower or any Subsidiary at reasonable times and as often as reasonably requested (but in no event more than twice annually unless an Event of Default shall have occurred and be continuing) and to make extracts from and copies of such financial records, and permit any representatives designated by the Administrative Agent or any Lender to discuss the affairs, finances and condition of any Borrower or any Subsidiary with the officers thereof and independent accountants therefor.

SECTION 5.08. Use of Proceeds. Use the proceeds of the Loans and request the issuance of Letters of Credit only for the purposes set forth in the preamble to this Agreement.

SECTION 5.09. Compliance with Environmental Laws. Comply, and cause all lessees and other persons occupying its Properties to comply, in all material respects with all Environmental Laws and Environmental Permits applicable to its


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operations and Properties; obtain and renew all Environmental Permits necessary for its operations and Properties; and conduct any Remedial Action in accordance with Environmental Laws; provided, however, that no Borrower nor any of the Subsidiaries shall be required to undertake any Remedial Action to the extent that its obligation to do so is being contested in good faith and by proper proceedings and appropriate reserves are being maintained with respect to such circumstances in accordance with GAAP.

SECTION 5.10. Preparation of Environmental Reports. If an Event of Default caused by reason of a breach of Section 3.17 or 5.09 shall have occurred and be continuing, at the request of the Required Lenders through the Administrative Agent, provide to the Lenders within 45 days after such request, at the expense of the applicable Borrower, an environmental site assessment report for the Properties which are the subject of such default, prepared by an environmental consulting firm reasonably acceptable to the Administrative Agent and indicating the presence or absence of Hazardous Materials and the estimated cost of any Remedial Action or any other activity required to bring the Properties into compliance with Environmental Laws in connection with such Properties.

SECTION 5.11. Further Assurances. (a) Execute any and all further documents, financing statements, agreements and instruments, and take all further action (including filing Uniform Commercial Code and other financing statements, mortgages and deeds of trust) that may be required under applicable law, or that the Required Lenders, the Administrative Agent or the Collateral Agent may reasonably request, in order to effectuate the transactions contemplated by the Loan Documents and in order to grant, preserve, protect and perfect the validity and first priority of the security interests created or intended to be created by the Security Documents. Terex will cause any subsequently acquired or organized Domestic Subsidiary (other than an Inactive Subsidiary) to execute a Subsidiary Guarantee Agreement, Indemnity Subrogation and Contribution Agreement and each applicable Security Document in favor of the Collateral Agent. In addition, from time to time, Terex will, at its cost and expense, promptly secure the Obligations by pledging or creating, or causing to be pledged or created, perfected security interests with respect to such of its assets and properties as the Administrative Agent or the Required Lenders shall reasonably designate (it being understood that it is the intent of the parties that the Obligations shall be secured by, among other things, substantially all the assets of Terex (including real and other properties acquired subsequent to the Closing Date)). Such security interests and Liens will be created under the Security Documents and other security agreements, mortgages, deeds of trust and other instruments and documents in form and substance reasonably satisfactory to the Collateral Agent, and Terex shall deliver or cause to be delivered to the Lenders all such instruments and documents (including legal opinions, title insurance policies and lien searches) as the Collateral Agent shall reasonably request to evidence compliance with this Section.

(b) In the case of Terex and the Subsidiary Guarantors, promptly to notify the Collateral Agent in writing of any change (i) in its corporate name or in any trade name used to identify it in the conduct of its business or in the ownership of its properties, (ii) in the location of its chief executive office, its principal place of business, any office in which it maintains books or records relating to Collateral owned by it or any office or facility at which Collateral owned by it is located (including the establishment of any such new office or facility), (iii) in its identity or corporate structure or (iv) in its Federal Taxpayer Identification Number. Terex and each Subsidiary Guarantor agrees not to effect or permit


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any change referred to in the preceding sentence unless all filings have been made under the Uniform Commercial Code or otherwise that are required in order for the Collateral Agent to continue at all times following such change to have a valid, legal and perfected first priority security interest in all the Collateral. Terex and each Subsidiary Guarantor agrees promptly to notify the Collateral Agent if any material portion of the Collateral owned or held by such Borrower is damaged or destroyed.

(c) On or before the date that is 90 days after the date of this Agreement, the Borrowers shall cause all Indebtedness with respect to the Fiat Collateral to be repaid in full and the financing arrangements existing on the date hereof with respect to such Fiat Collateral to be terminated.

(d) On or before the date that is 180 days after the date of this Agreement, Terex will either (i) if the Acquisition is consummated, cause its wholly owned Subsidiary Unit Rig (S.A.) Pty. Ltd. to be merged with and into the German Borrower with the German Borrower as the surviving entity or (ii) pledge 65% of the capital stock of Unit Rig (S.A.) Pty. Ltd. to the Secured Parties.

SECTION 5.12. Interest Rate Protection Agreements. In the case of Terex, within 90 days following the Closing Date, enter into Interest Rate Protection Agreements, with counterparties and on terms and conditions reasonably satisfactory to the Administrative Agent, pursuant to which the interest rate with respect to a notional amount equal to at least 50% of the sum of (a) the Term Loans and (b) the Senior Subordinated Notes, if any, is fixed.

ARTICLE VI

Negative Covenants

Each Borrower covenants and agrees with each Lender that, so long as this Agreement shall remain in effect and until the Commitments have been terminated and the principal of and interest on each Loan, all Fees and all other expenses or amounts payable under any Loan Document have been paid in full and all Letters of Credit have been cancelled or have expired and all amounts drawn thereunder have been reimbursed in full, unless the Required Lenders shall otherwise consent in writing, such Borrower will not, and will not cause or permit any of the Subsidiaries to:

SECTION 6.01. Indebtedness. Incur, create, assume or permit to exist any Indebtedness, except that the Borrower and any Subsidiary (other than an Inactive Subsidiary) may incur, create, assume or permit to exist:

(a) Indebtedness for borrowed money existing on the date hereof and set forth in Schedule 6.01;

(b) Indebtedness created hereunder and under the other Loan Documents;

(c) in the case of Terex, the Senior Subordinated Notes and Additional Subordinated Notes; provided that the proceeds thereof are used to prepay the Term Loans pursuant to Section 2.13(e) or to finance


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the Acquisition or other Permitted Acquisitions;

(d) Indebtedness pursuant to Hedging Agreements;

(e) Indebtedness of Terex or any wholly owned Subsidiary (other than an Inactive Subsidiary) to any other wholly owned Subsidiary (other than an Inactive Subsidiary), or of any wholly owned Subsidiary (other than an Inactive Subsidiary) to Terex; provided that any such Indebtedness of a Loan Party shall be subordinated to the prior payment in full of the Obligations;

(f) Indebtedness resulting from endorsement of negotiable instruments for collection in the ordinary course of business;

(g) Indebtedness arising under indemnity agreements to title insurers to cause such title insurers to issue to the Collateral Agent mortgagee title insurance policies;

(h) Indebtedness arising with respect to customary indemnification and purchase price adjustment obligations incurred in connection with Asset Sales and Permitted Acquisitions permitted hereunder;

(i) Indebtedness incurred in the ordinary course of business with respect to surety and appeal bonds, performance, insurance and return-of-money bonds and other similar obligations;

(j) Indebtedness consisting of (i) Acquired Indebtedness or
(ii) Purchase Money Indebtedness or Capital Lease Obligations incurred in the ordinary course of business after the Closing Date; provided that the aggregate principal amount of any such Indebtedness pursuant to this paragraph (j) shall not exceed $30,000,000;

(k) Indebtedness of O&K Mining existing on the date the Acquisition is consummated; provided that the aggregate principal amount of any such Indebtedness pursuant to this paragraph (k) shall not exceed DM17,500,000;

(l) Floor Plan Guarantees;

(m) Indebtedness incurred under the Italian Facilities in an amount not exceeding Lit12,850,000,000 in the aggregate at any time outstanding;

(n) Indebtedness incurred to extend, renew or refinance Indebtedness described in paragraph (a), (c), (j), (k) or (l) above ("Refinancing Indebtedness") so long as (i) such Refinancing Indebtedness is in an aggregate principal amount not greater than the aggregate principal amount of the Indebtedness being extended, renewed or refinanced, plus the amount of any interest or premiums required to be paid thereon plus fees and expenses associated therewith, (ii) such Refinancing Indebtedness has a later or equal final maturity and a longer or equal weighted average life than the Indebtedness being extended, renewed or refinanced, (iii) if the Indebtedness being extended, renewed or refinanced is subordinated to the Obligations, the Refinancing Indebtedness is subordinated to the Obligations to the extent of the Indebtedness being extended, renewed or refinanced and
(iv) the covenants, events of default and other non-pricing provisions


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of the Refinancing Indebtedness shall be no less favorable to the Lenders than those contained in the Indebtedness being extended, renewed or refinanced;

(o) Indebtedness classified as Capital Lease Obligations incurred in connection with the purchase of inventory to be sold in the ordinary course of business;

(p) Indebtedness related to the Fiat Collateral; and

(q) other unsecured Indebtedness in an aggregate principal amount not exceeding $5,000,000 at any time outstanding.

SECTION 6.02. Liens. Create, incur, assume or permit to exist any Lien on any property or assets (including stock or other securities of any person, including any Subsidiary) now owned or hereafter acquired by it or on any income or revenues or rights in respect of any thereof, except:

(a) Liens on property or assets of any Borrower and its Subsidiaries existing on the date hereof and set forth in Schedule 6.02; provided that such Liens shall secure only those obligations which they secure on the date hereof;

(b) any Lien created under the Loan Documents;

(c) any Lien existing on any property or asset prior to the acquisition thereof by any Borrower or any Subsidiary; provided that
(i) such Lien is not created in contemplation of or in connection with such acquisition, (ii) such Lien does not apply to any other property or assets of any Borrower or any Subsidiary and (iii) such Lien does not (A) materially interfere with the use, occupancy and operation of any Mortgaged Property, (B) materially reduce the fair market value of such Mortgaged Property but for such Lien or (C) result in any material increase in the cost of operating, occupying or owning or leasing such Mortgaged Property;

(d) Liens for taxes not yet due or which are being contested in compliance with Section 5.03;

(e) carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens arising in the ordinary course of business and securing obligations that are not due and payable or which are being contested in compliance with Section 5.03;

(f) pledges and deposits made in the ordinary course of business in compliance with workmen's compensation, unemployment insurance and other social security laws or regulations;

(g) (i) deposits to secure the performance of bids, trade contracts (other than for Indebtedness), leases (other than Capital Lease Obligations), statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business and (ii) Liens on the receivables of the Scottish Borrower to secure Indebtedness of the Scottish Borrower


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in respect of performance bonds and similar obligations in an aggregate principal amount not to exceed (pound)3,000,000;

(h) zoning restrictions, easements, rights-of-way, restrictions on use of real property and other similar encumbrances incurred in the ordinary course of business which, in the aggregate, are not substantial in amount and do not materially detract from the value of the property subject thereto or interfere with the ordinary conduct of the business of any Borrower or any of its Subsidiaries;

(i) purchase money security interests in real property, improvements thereto or equipment hereafter acquired (or, in the case of improvements, constructed) by any Borrower or any Subsidiary (other than an Inactive Subsidiary) or in respect of Capital Lease Obligations; provided that (i) such security interests secure Indebtedness permitted by Section 6.01(j), (ii) such security interests are incurred, and the Indebtedness secured thereby is created, within 90 days after such acquisition (or construction), (iii) the Indebtedness secured thereby does not exceed 100% of the lesser of the cost or the fair market value of such real property, improvements or equipment at the time of such acquisition (or construction) and (iv) such security interests do not apply to any other property or assets of any Borrower or any Subsidiary;

(j) Liens arising from the rendering of a final judgment or order that does not give rise to an Event of Default;

(k) Liens securing Acquired Indebtedness; provided that (i) such Acquired Indebtedness was secured by such Liens at the time of the relevant Permitted Acquisition and such Liens were not incurred in contemplation thereof and (ii) such Liens do not extend to (x) any property of Terex or the Subsidiaries (other than the Acquired Person) or (y) to any property of the Acquired Person other than the property securing such Liens on the date of the relevant Permitted Acquisition;

(l) Liens securing Refinancing Indebtedness, to the extent that the Indebtedness being refinanced was originally secured in accordance with this Section 6.02; provided that such Lien does not apply to any additional property or assets of Terex or any Subsidiary;

(m) Liens in favor of Terex; and

(n) Liens relating to the Fiat Collateral.

SECTION 6.03. Sale and Lease-Back Transactions. Enter into any arrangement, directly or indirectly, with any person whereby it shall sell or transfer any property, real or personal, used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property which it intends to use for substantially the same purpose or purposes as the property being sold or transferred (a "Sale and Leaseback"); provided that any Borrower or any Subsidiary may enter into any such transaction to the extent that the Capital Lease Obligations and Liens associated therewith would be permitted under this Agreement.


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SECTION 6.04. Investments, Loans and Advances. Purchase, hold or acquire any capital stock, evidences of indebtedness or other securities of, make or permit to exist any loans or advances to, or make or permit to exist any investment or any other interest in, any other person, except:

(a) investments by Terex and its Subsidiaries existing on the date hereof in the capital stock of the Subsidiaries and other investments by Terex and its Subsidiaries existing on the date hereof and set forth in Schedule 6.04;

(b) Permitted Investments;

(c) Terex may make the Acquisition; provided that Terex complies and causes O&K Mining to comply, with the applicable provisions of Section 5.11;

(d) Terex may make any Permitted Acquisition; provided that Terex complies, and causes any acquired entity to comply, with the applicable provisions of Section 5.11 and the Security Documents with respect to the person or assets so acquired;

(e) the Borrowers and their respective Subsidiaries (other than Inactive Subsidiaries) may make loans and advances to employees for moving, entertainment, travel and other similar expenses in the ordinary course of business not to exceed $1,000,000 in the aggregate at any time outstanding;

(f) Capital Expenditures permitted pursuant to Section 6.10;

(g) cash collateral provided to the Collateral Agent pursuant to the Loan Documents;

(h) promissory notes issued by any purchaser in connection with any Asset Sale permitted pursuant to Section 6.05(b);

(i) provided that no Default or Event of Default shall have occurred and be continuing at the time of such payment or after giving effect thereto, (A) the purchase by Terex of shares of its common stock (for not more than fair market value) in connection with the delivery of such stock to grantees under any stock option plan (upon the exercise by such grantees of their stock options) or any other deferred compensation plan of Terex approved by the Board of Directors and (B) the repurchase of shares of, or options to purchase shares of, common stock of Terex or any of its Subsidiaries from employees, former employees, directors or former directors of Terex or any of its Subsidiaries (or permitted transferees of such employees, former employees, directors or former directors) pursuant to the terms of the agreements (including employment agreements) or plans (or amendments thereto) approved by the Board of Directors under which such individuals purchase or sell or are granted the option to purchase or sell, such common stock; provided that the aggregate amount of all such purchases and repurchases permitted under this paragraph (i) shall not exceed $1,200,000 per year or $8,400,000 in the aggregate during the term of this Agreement;


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(j) accounts receivable arising in the ordinary course of business from the sale of inventory;

(k) Guarantees constituting Indebtedness permitted by Section 6.01;

(l) investments in joint ventures in Related Businesses in an aggregate amount not exceeding $15,000,000 at any time outstanding;

(m) intercompany loans and advances constituting Indebtedness permitted by Section 6.01(e); and

(n) other investments in an aggregate amount not exceeding $10,000,000 at any time outstanding.

SECTION 6.05. Mergers, Consolidations, Sales of Assets and Acquisitions. (a) Merge into or consolidate with any other person, or permit any other person to merge into or consolidate with it, or sell, transfer, lease or otherwise dispose of (in one transaction or in a series of transactions) all or any substantial part of its assets (whether now owned or hereafter acquired) or any capital stock of any Subsidiary, or purchase, lease or otherwise acquire (in one transaction or a series of transactions) all or substantially all of the assets of any other person, except that (i) any Borrower and any Subsidiary (other than an Inactive Subsidiary) may purchase and sell inventory in the ordinary course of business and (ii) if at the time thereof and immediately after giving effect thereto no Event of Default or Default shall have occurred and be continuing (A) any wholly owned Subsidiary may merge into Terex in a transaction in which Terex is the surviving corporation, (B) any wholly owned Subsidiary may merge into or consolidate with any other wholly owned Subsidiary that is a Guarantor in a transaction in which the surviving entity is a wholly owned Subsidiary that is a Guarantor and no person other than Terex or a wholly owned Subsidiary that is a Guarantor receives any consideration and (C) in connection with any Permitted Acquisition pursuant to Section 6.04(d), Terex or any wholly owned Subsidiary that is a Guarantor may acquire or merge into or consolidate with any entity acquired pursuant to such Permitted Acquisition in a transaction in which the surviving entity is Terex or a wholly owned Subsidiary that is a Guarantor.

(b) Engage in any Asset Sale not otherwise prohibited by Section 6.05(a) unless all of the following conditions are met: (i) the consideration received is at least equal to the fair market value of such assets; (ii) at least 80% of the consideration received is cash; (iii) the Net Cash Proceeds of such Asset Sale are applied as required by Section 2.13(b); (iv) after giving effect to the sale or other disposition of the assets included within the Asset Sale and the repayment of Indebtedness with the proceeds thereof, Terex is in compliance on a pro forma basis with the covenants set forth in Sections 6.11, 6.12 and 6.13 recomputed for the most recently ended fiscal quarter for which information is available and is in compliance with all other terms and conditions contained in this Agreement; and (v) no Default or Event of Default shall result from such Asset Sale.

SECTION 6.06. Dividends and Distributions; Restrictions on Ability of Subsidiaries to Pay Dividends. (a) Declare or pay, directly or indirectly, any dividend or make any other distribution (by reduction of capital or otherwise), whether in cash, property, securities or a combination thereof, with respect to any shares of its capital stock or directly or indirectly redeem, purchase, retire or otherwise acquire for value (or permit any Subsidiary to purchase


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or acquire) any shares of any class of its capital stock or set aside any amount for any such purpose; provided, however, that (i) any Subsidiary may declare and pay dividends or make other distributions to the Borrower of which it is a Subsidiary and (ii) Terex may pay dividends on, and redeem and repurchase its capital stock, provided that all of the following conditions are satisfied: (A) at the time of such dividend, redemption or purchase and after giving effect thereto, no Default or Event of Default has occurred and is continuing or would arise as a result thereof; (B) the amount of all dividends, redemptions and purchases made pursuant to this clause (ii) together with all distributions and payments made pursuant to Section 6.09(b)(i), during the term of this Agreement shall not exceed $25,000,000, and (c) on a pro forma basis and after giving effect to such payment and all other payments pursuant to this clause (a) and
Section 6.09(b)(i) made after the last day of the most recent fiscal quarter for which financial statements have been delivered pursuant to Section 5.04(a) or
(b), as applicable, as if such payments were made in the four-fiscal-quarter period ending on such last day of such fiscal quarter, the Consolidated Leverage Ratio as of the end of such four- fiscal-quarter period shall be less than 3.85 to 1.00 and provided further that Terex may at any time pay dividends with respect to its capital stock solely in additional shares of its capital stock.

(b) Permit its Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any such Subsidiary to (i) pay any dividends or make any other distributions on its capital stock or any other interest or (ii) make or repay any loans or advances to Terex or the parent of such Subsidiary.

SECTION 6.07. Transactions with Affiliates. Sell or transfer any property or assets to, or purchase or acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except that any Borrower or any Subsidiary may engage in any of the foregoing transactions in the ordinary course of business at prices and on terms and conditions not less favorable to such Borrower or such Subsidiary than could be obtained on an arm's-length basis from unrelated third parties, and except that this Section shall not apply to any transaction between or among Borrowers and Guarantors.

SECTION 6.08. Business of Borrowers and Subsidiaries. Engage at any time in any business or business activity other than the Related Business.

SECTION 6.09. Other Indebtedness and Agreements. (a) Permit any waiver, supplement, modification, amendment, termination or release of any indenture, instrument or agreement pursuant to which any Indebtedness of any Borrower or any Subsidiary in an aggregate principal amount in excess of $5,000,000 is outstanding if the effect of such waiver, supplement, modification, amendment, termination or release is to (i) increase the interest rate on such Indebtedness; (ii) accelerate the dates upon which payments of principal or interest are due on such Indebtedness; (iii) add or change any event of default or add any material covenant with respect to such Indebtedness; (iv) change the prepayment provisions of such Indebtedness in any manner adverse to the Lenders;
(v) change the subordination provisions thereof (or the subordination terms of any Guarantee thereof); or (vi) change or amend any other term if such change or amendment would materially increase the obligations of the obligor or confer additional material rights on the holder of such Indebtedness in a manner adverse to any Borrower, any Subsidiary, the Administrative Agent or the Lenders.


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(b)(i) Make any distribution, whether in cash, property, securities or a combination thereof, other than regular scheduled payments of principal and interest as and when due (to the extent not prohibited by applicable subordination provisions), in respect of, or pay, or offer or commit to pay, or directly or indirectly redeem, repurchase, retire or otherwise acquire for consideration, or set apart any sum for the aforesaid purposes, any Indebtedness for borrowed money (other than the Loans) of any Borrower or any Subsidiary except that (A) subject to Section 2.13(c), Terex shall be permitted to use the Net Cash Proceeds of any Equity Issuance to prepay not more than one-third of the Senior Subordinated Notes or any other Indebtedness, (B) Terex and its Subsidiaries shall be permitted to make any such distribution or payment if all of the following conditions are satisfied: (1) at the time of such distribution or payment and after giving effect thereto, no Default or Event of Default has occurred and is continuing or would arise as a result thereof; (2) the amount of all such distributions and payments made pursuant to this clause (i), together with all dividends, redemptions and purchases made pursuant to Section 6.06(a)(ii), during the term of this Agreement shall not exceed $25,000,000; and
(3) on a pro forma basis and after giving effect to such distribution or payment and all other distributions or payments pursuant to this clause (i) and Section 6.06(a) made after the last day of the most recent fiscal quarter for which financial statements have been delivered pursuant to Section 5.04(a) or (b), as applicable, as if such payments or distributions were made in the four-fiscal-quarter period ending on such last day of such fiscal quarter, the Consolidated Leverage Ratio as of the end of such four-fiscal-quarter period shall be less than 3.85 to 1.00, or (ii) pay in cash any amount in respect of such Indebtedness that may at the obligor's option be paid in kind or in other securities and (C) Terex may at any time repay Indebtedness of any Borrower or any Subsidiary solely in shares of its capital stock.

SECTION 6.10. Capital Expenditures. Permit the aggregate amount of Consolidated Capital Expenditures made by Terex and its Subsidiaries, taken as a whole, in any fiscal year of Terex to exceed $17,500,000. The amount of permitted Capital Expenditures set forth in the immediately preceding sentence in respect of any fiscal year shall be increased by (a) the amount of unused permitted Capital Expenditures for the immediately preceding fiscal year less
(b) an amount equal to unused Capital Expenditures carried forward to such preceding fiscal year.

SECTION 6.11. Consolidated Leverage Ratio. Permit the Consolidated Leverage Ratio on the last day of any fiscal quarter of Terex ending during any period set forth below to be in excess of the ratio set forth below for such period:

          Period                                                Ratio

Effective Date - March 31, 1999                              5.75 to 1.0
April 1, 1999 - March 31, 2000                               5.00 to 1.0
April 1, 2000 - March 31, 2001                               4.50 to 1.0
April 1, 2001 - March 31, 2002                               3.75 to 1.0
Thereafter                                                   3.50 to 1.0


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SECTION 6.12. Consolidated Interest Coverage Ratio. Permit the Consolidated Interest Coverage Ratio for any period of four consecutive fiscal quarters of Terex ending during any period set forth below to be less than the ratio set forth below for such period:

          Period                                                Ratio

Effective Date - March 31, 1999                              2.00 to 1.0
April 1, 1999 - March 31, 2000                               2.10 to 1.0
April 1, 2000 - March 31, 2001                               2.25 to 1.0
April 1, 2001 - March 31, 2002                               2.35 to 1.0
April 1, 2002 - March 31, 2004                               2.50 to 1.0
Thereafter                                                   2.75 to 1.0

SECTION 6.13. Consolidated Fixed Charge Coverage Ratio. Permit the Consolidated Fixed Charge Coverage Ratio for any period of four consecutive fiscal quarters of Terex ending during any period set forth below to be less than the ratio set forth below for such period:

          Period                                                Ratio

Effective Date - March 31, 2001                              1.15 to 1.0
April 1, 2001 - March 31, 2003                               1.20 to 1.0
April 1, 2003 - March 31, 2004                               1.25 to 1.0
Thereafter                                                   1.50 to 1.0

SECTION 6.14. Fiscal Year. Permit the fiscal year of Terex to end on a day other than December 31.

ARTICLE VII

Events of Default

In case of the happening of any of the following events ("Events of Default"):

(a) any representation or warranty made or deemed made in or in connection with any Loan Document or the borrowings or issuances of Letters of Credit hereunder, or any representation, warranty, statement or information contained in any report, certificate, financial statement or other instrument furnished in connection with or pursuant to any Loan Document, shall prove to have been false or misleading in any material respect when so made, deemed made or furnished;

(b) default shall be made in the payment of any principal of any Loan or the reimbursement with respect to any L/C Disbursement when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or by acceleration thereof or otherwise;


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(c) default shall be made in the payment of any interest on any Loan or any Fee or L/C Disbursement or any other amount (other than an amount referred to in (b) above) due under any Loan Document, when and as the same shall become due and payable, and such default shall continue unremedied for a period of three Business Days after notice;

(d) default shall be made in the due observance or performance by any Borrower or any Subsidiary of any covenant, condition or agreement contained in Section 5.01(a), 5.05 or 5.07 or in Article VI;

(e) default shall be made in the due observance or performance by any Borrower or any Subsidiary of any covenant, condition or agreement contained in any Loan Document (other than those specified in
(b), (c) or (d) above) and such default shall continue unremedied for a period of 15 days after notice thereof from the Administrative Agent or any Lender to Terex;

(f) any Borrower or any Subsidiary shall (i) fail to pay any principal or interest, regardless of amount, due in respect of any Indebtedness in a principal amount in excess of $5,000,000, when and as the same shall become due and payable, or (ii) fail to observe or perform any other term, covenant, condition or agreement contained in any agreement or instrument evidencing or governing any such Indebtedness if the effect of any failure referred to in this clause
(ii) is to cause, or to permit the holder or holders of such Indebtedness or a trustee on its or their behalf (with or without the giving of notice, the lapse of time or both) to cause, such Indebtedness to become due prior to its stated maturity;

(g) an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of any Borrower or any Subsidiary, or of a substantial part of the property or assets of any Borrower or a Subsidiary, under Title 11 of the United States Code, as now constituted or hereafter amended, or any other Federal, state or foreign bankruptcy, insolvency, receivership or similar law, (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any Borrower or any Subsidiary or for a substantial part of the property or assets of any Borrower or any Subsidiary or (iii) the winding-up or liquidation of any Borrower or any Subsidiary; and such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered;

(h) any Borrower or any Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other Federal, state or foreign bankruptcy, insolvency, receivership or similar law, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or the filing of any petition described in (g) above, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any Borrower or any Subsidiary or for a substantial part of the property or assets of any Borrower or any Subsidiary, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors, (vi) become unable, admit in writing its inability or fail generally to pay its


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debts as they become due or (vii) take any action for the purpose of effecting any of the foregoing;

(i) one or more judgments for the payment of money the aggregate amount which is not covered by insurance is in excess of $5,000,000 shall be rendered against any Borrower, any Subsidiary or any combination thereof and the same shall remain undischarged for a period of 45 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to levy upon assets or properties of any Borrower or any Subsidiary to enforce any such judgment;

(j) an ERISA Event shall have occurred that, in the opinion of the Required Lenders, when taken together with all other such ERISA Events, could reasonably be expected to result in liability of any Borrower and its ERISA Affiliates in an aggregate amount exceeding $5,000,000;

(k) any security interest purported to be created by any Security Document shall cease to be, or shall be asserted by any Borrower or any other Loan Party not to be, a valid, perfected, first priority (except as otherwise expressly provided in this Agreement or such Security Document) security interest in the securities, assets or properties covered thereby, except to the extent that any such loss of perfection or priority results from the failure of the Collateral Agent to maintain possession of certificates representing securities pledged under the Pledge Agreement and except to the extent that such loss is covered by a lender's title insurance policy and the related insurer promptly after such loss shall have acknowledged in writing that such loss is covered by such title insurance policy; or

(l) there shall have occurred a Change in Control;

then, and in every such event (other than an event with respect to any Borrower described in paragraph (g) or (h) above), and at any time thereafter during the continuance of such event, the Administrative Agent, with the consent of the Required Lenders, may, and at the request of the Required Lenders shall, by notice to Terex, take either or both of the following actions, at the same or different times: (i) terminate forthwith the Commitments and (ii) declare the Loans then outstanding to be forthwith due and payable in whole or in part, whereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and any unpaid accrued Fees and all other liabilities of the Borrowers accrued hereunder and under any other Loan Document, shall become forthwith due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Borrowers, anything contained herein or in any other Loan Document to the contrary notwithstanding; and in any event with respect to any Borrower described in paragraph (g) or (h) above, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and any unpaid accrued Fees and all other liabilities of the Borrowers accrued hereunder and under any other Loan Document, shall automatically become due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Borrowers, anything contained herein or in any other Loan Document to the contrary notwithstanding.


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ARTICLE VIII

The Administrative Agent and the Collateral Agent

In order to expedite the transactions contemplated by this Agreement, CSFB is hereby appointed to act as Administrative Agent and Collateral Agent on behalf of the Lenders and the Issuing Banks (for purposes of this Article VIII, the Administrative Agent and the Collateral Agent are referred to collectively as the "Agents"). Each of the Lenders, the Issuing Banks, and each assignee of any such Lender or Issuing Bank, hereby irrevocably authorizes the Agents to take such actions on behalf of such Lender, Issuing Bank or assignee and to exercise such powers as are specifically delegated to the Agents by the terms and provisions hereof and of the other Loan Documents, together with such actions and powers as are reasonably incidental thereto. The Administrative Agent is hereby expressly authorized by the Lenders and the Issuing Banks, without hereby limiting any implied authority, (a) to receive on behalf of the Lenders and the Issuing Banks all payments of principal of and interest on the Loans, all payments in respect of L/C Disbursements and all other amounts due to the Lenders hereunder, and promptly to distribute to each Lender or each Issuing Bank its proper share of each payment so received; (b) to give notice on behalf of each of the Lenders to the Borrowers of any Event of Default specified in this Agreement of which the Administrative Agent has actual knowledge acquired in connection with its agency hereunder; and (c) to distribute to each Lender copies of all notices, financial statements and other materials delivered by any Borrower or any other Loan Party pursuant to this Agreement or the other Loan Documents as received by the Administrative Agent. Without limiting the generality of the foregoing, the Agents are hereby expressly authorized to execute any and all documents (including releases) with respect to the Collateral and the rights of the Secured Parties with respect thereto, as contemplated by and in accordance with the provisions of this Agreement and the Security Documents.

Neither the Agents nor any of their respective directors, officers, employees or agents shall be liable as such for any action taken or omitted by any of them except for its or his own gross negligence or wilful misconduct, or be responsible for any statement, warranty or representation herein or the contents of any document delivered in connection herewith, or be required to ascertain or to make any inquiry concerning the performance or observance by any Borrower or any other Loan Party of any of the terms, conditions, covenants or agreements contained in any Loan Document. The Agents shall not be responsible to the Lenders for the due execution, genuineness, validity, enforceability or effectiveness of this Agreement or any other Loan Documents, instruments or agreements. The Agents shall in all cases be fully protected in acting, or refraining from acting, in accordance with written instructions signed by the Required Lenders and, except as otherwise specifically provided herein, such instructions and any action or inaction pursuant thereto shall be binding on all the Lenders. Each Agent shall, in the absence of knowledge to the contrary, be entitled to rely on any instrument or document believed by it in good faith to be genuine and correct and to have been signed or sent by the proper person or persons. Neither the Agents nor any of their respective directors, officers, employees or agents shall have any responsibility to any Borrower or any other Loan Party on account of the failure of or delay in performance or breach by any Lender or an Issuing Bank of any of its obligations hereunder or to any Lender or an Issuing Bank on account of the failure of or delay in performance or breach by any other Lender or an Issuing Bank or any Borrower or any other Loan Party of any of their respective obligations hereunder or under any other Loan Document or in connection herewith or therewith. Each of the Agents may execute any and all duties hereunder by or through agents or employees and shall be


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entitled to rely upon the advice of legal counsel selected by it with respect to all matters arising hereunder and shall not be liable for any action taken or suffered in good faith by it in accordance with the advice of such counsel.

The Lenders hereby acknowledge that neither Agent shall be under any duty to take any discretionary action permitted to be taken by it pursuant to the provisions of this Agree ment unless it shall be requested in writing to do so by the Required Lenders.

Subject to the appointment and acceptance of a successor Agent as provided below, either Agent may resign at any time by notifying the Lenders and Terex. Upon any such resignation, the Required Lenders shall have the right to appoint a successor. If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Agent gives notice of its resignation, then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent which shall be a bank with an office in New York, New York, having a combined capital and surplus of at least $500,000,000 or an Affiliate of any such bank. Upon the acceptance of any appointment as Agent hereunder by a successor bank, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent and the retiring Agent shall be discharged from its duties and obligations hereunder. After the Agent's resignation hereunder, the provisions of this Article and Section 9.05 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as Agent.

With respect to the Loans made by it hereunder, each Agent in its individual capacity and not as Agent shall have the same rights and powers as any other Lender and may exercise the same as though it were not an Agent, and the Agents and their Affiliates may accept deposits from, lend money to and generally engage in any kind of business with any Borrower or any Subsidiary or other Affiliate thereof as if it were not an Agent.

Each Lender agrees (a) to reimburse the Agents, on demand, in the amount of its pro rata share (based on its aggregate Commitments hereunder) of any expenses incurred for the benefit of the Lenders by the Agents, including counsel fees and compensation of agents and employees paid for services rendered on behalf of the Lenders, that shall not have been reimbursed by any Borrower and (b) to indemnify and hold harmless each Agent and any of its directors, officers, employees or agents, on demand, in the amount of such pro rata share, from and against any and all liabilities, taxes, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by or asserted against it in its capacity as Agent or any of them in any way relating to or arising out of this Agreement or any other Loan Document or any action taken or omitted by it or any of them under this Agreement or any other Loan Document, to the extent the same shall not have been reimbursed by any Borrower or any other Loan Party; provided that no Lender shall be liable to an Agent or any such other indemnified person for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or wilful misconduct of such Agent or any of its directors, officers, employees or agents. Each Revolving Credit Lender agrees to reimburse each of the Issuing Banks and their directors, employees and agents, in each case, to the same extent and subject to the same limitations as provided above for the Agents.


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Each Lender acknowledges that it has, independently and without reliance upon the Agents or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Agents or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement or any other Loan Document, any related agreement or any document furnished hereunder or thereunder.

ARTICLE IX

Miscellaneous

SECTION 9.01. Notices. Notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows:

(a) if to any Borrower, to it in care of Terex at 500 Post Road East, Westport, CT 06880, Attention of General Counsel (Telecopy No. (203) 227-1647);

(b) if to the Administrative Agent, to Credit Suisse First Boston, 11 Madison Avenue, New York, New York 10010, Attention of Joe Barone (Telecopy No. (212) 325-8304, and with respect to Alternative Currencies in Marks, Pounds, Francs or Lire, Credit Suisse First Boston, One Cabot Square, London E14 4QJ, England, Attention of Steve Martin (Telecopy No. 44-171-888-8398), and with respect to Alternative Currencies in Australian Dollars, Credit Suisse First Boston, Level 14, 101 Collins Street, Melbourne VIC 3001, Australia, Attention of Malcolm White (Telecopy No. 613-9653-3450); and

(c) if to a Lender, to it at its address (or telecopy number) set forth on Schedule 2.01(a) or in the Assignment and Acceptance pursuant to which such Lender shall have become a party hereto.

All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt if delivered by hand or overnight courier service or sent by telecopy or on the date five Business Days after dispatch by certified or registered mail if mailed, in each case delivered, sent or mailed (properly addressed) to such party as provided in this Section 9.01 or in accordance with the latest unrevoked direction from such party given in accordance with this
Section 9.01.

SECTION 9.02. Survival of Agreement. All covenants, agreements, representations and warranties made by any Borrower herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the Lenders and the Issuing Banks and shall survive the making by the Lenders of the Loans and the issuance of Letters of Credit by the Issuing Banks, regardless of any investigation made by the Lenders or the Issuing Banks or on their behalf, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any Fee or any other amount payable


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under this Agreement or any other Loan Document is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not been terminated. The provisions of Sections 2.14, 2.16, 2.20 and 9.05 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the transactions contemplated hereby, the repayment of any of the Loans, the expiration of the Commitments, the expiration of any Letter of Credit, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of the Administrative Agent, the Collateral Agent, any Lender or any Issuing Bank.

SECTION 9.03. Binding Effect. This Agreement shall become effective when it shall have been executed by the Borrowers and the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns.

SECTION 9.04. Successors and Assigns. (a) Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the permitted successors and assigns of such party; and all covenants, promises and agreements by or on behalf of the Borrowers, the Administrative Agent, the Issuing Banks or the Lenders that are contained in this Agreement shall bind and inure to the benefit of their respective successors and assigns.

(b) Each Lender may assign to one or more assignees all or a portion of its interests, rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided, however, that (i) except in the case of an assignment to a Lender or an Affiliate of such Lender or an Approved Fund, (x) Terex and the Administrative Agent (and, in the case of any assignment of a Revolving Credit Commitment, the Issuing Banks and the Swingline Lender) must give their prior written consent to such assignment (which consent shall not be unreasonably withheld) and (y) the amount of the Commitment or Loans, as applicable, of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall not be less than $5,000,000 (or, if less, the entire remaining amount of such Lender's Commitment or Loans, as applicable), (ii) the parties to each such assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance, together with a processing and recordation fee of $3,500, (iii) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire and (iv) prior to the end of the Term Loan Availability Period, any such assignment of Tranche A Commitments or Revolving Credit Commitments shall be made so that, after giving effect thereto, each of the assignee and the assignor, if such assignor retains any such Commitments, shall have the same percentage of the Tranche A Commitments as such person has of the Revolving Credit Commitments. For purposes of this Section 9.04(b), "Approved Fund" shall mean, with respect to any Lender that is a fund that invests in bank loans, any other fund that invests in bank loans which is managed or advised by the same investment advisor as such Lender or by an affiliate of such investment advisor. Upon acceptance and recording pursuant to paragraph (e) of this Section 9.04, from and after the effective date specified in each Assignment and Acceptance, which effective date shall be at least five Business Days after the execution thereof, (A) the assignee thereunder shall be a party hereto and, to the extent of the interest assigned


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by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement and (B) the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.14, 2.16, 2.20 and 9.05, as well as to any Fees accrued for its account and not yet paid).

(c) By executing and delivering an Assignment and Acceptance, the assigning Lender thereunder and the assignee thereunder shall be deemed to confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of the interest being assigned thereby free and clear of any adverse claim and that its Term Loan Commitments and Revolving Credit Commitment, and the outstanding balances of its Term Loans and Revolving Loans, in each case without giving effect to assignments thereof which have not become effective, are as set forth in such Assignment and Acceptance, (ii) except as set forth in (i) above, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement, or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement, any other Loan Document or any other instrument or document furnished pursuant hereto, or the financial condition of any Borrower or any Subsidiary or the performance or observance by any Borrower or any Subsidiary of any of its obligations under this Agreement, any other Loan Document or any other instrument or document furnished pursuant hereto; (iii) such assignee represents and warrants that it is legally authorized to enter into such Assignment and Acceptance; (iv) such assignee confirms that it has received a copy of this Agreement, together with copies of the most recent financial statements referred to in Section 3.05(a) or delivered pursuant to Section 5.04 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (v) such assignee will independently and without reliance upon the Administrative Agent, the Collateral Agent, such assigning Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (vi) such assignee appoints and authorizes the Administrative Agent and the Collateral Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Administrative Agent and the Collateral Agent, respectively, by the terms hereof, together with such powers as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all the obligations which by the terms of this Agreement are required to be performed by it as a Lender.

(d) The Administrative Agent, acting for this purpose as an agent of the Borrowers, shall maintain at one of its offices in The City of New York a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the "Register"). The entries in the Register shall be conclusive and the Borrowers, the Administrative Agent, the Issuing Banks, the Collateral Agent and the Lenders may treat each person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for


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inspection by the Borrowers, any Issuing Bank, the Collateral Agent and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

(e) Upon its receipt of a duly completed Assignment and Acceptance executed by an assigning Lender and an assignee, an Administrative Questionnaire completed in respect of the assignee (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph
(b) above and, if required, the written consent of Terex, the Swingline Lender, the Issuing Banks and the Administrative Agent to such assignment, the Administrative Agent shall (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Lenders, the Issuing Banks and the Swingline Lender. No assignment shall be effective unless it has been recorded in the Register as provided in this paragraph (e).

(f) Each Lender may without the consent of any Borrower, the Swingline Lender, the Issuing Banks or the Administrative Agent sell participations to one or more banks or other entities in all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided, however, that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) the participating banks or other entities shall be entitled to the benefit of the cost protection provisions contained in Sections 2.14, 2.16 and 2.20 to the same extent as if they were Lenders and (iv) the Borrowers, the Administrative Agent, the Issuing Banks and the Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement, and such Lender shall retain the sole right to enforce the obligations of the Borrowers relating to the Loans or L/C Disbursements and to approve any amendment, modification or waiver of any provision of this Agreement (other than amendments, modifications or waivers decreasing any fees payable hereunder or the amount of principal of or the rate at which interest is payable on the Loans, extending any scheduled principal payment date or date fixed for the payment of interest on the Loans or increasing or extending the Commitments).

(g) Any Lender or participant may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 9.04, disclose to the assignee or participant or proposed assignee or participant any information relating to any Borrower furnished to such Lender by or on behalf of any Borrower; provided that, prior to any such disclosure of information designated by any Borrower as confidential, each such assignee or participant or proposed assignee or participant shall execute an agreement whereby such assignee or participant shall agree (subject to customary exceptions) to preserve the confidentiality of such confidential information on terms no less restrictive than those applicable to the Lenders pursuant to
Section 9.17.

(h) Any Lender may at any time assign all or any portion of its rights under this Agreement to a Federal Reserve Bank to secure extensions of credit by such Federal Reserve Bank to such Lender; provided that no such assignment shall release a Lender from any of its obligations hereunder or substitute any such Bank for such Lender as a party hereto. In order to facilitate such an assignment to a Federal Reserve Bank, each Borrower shall, at the request of the assigning Lender, duly execute and deliver to the assigning Lender a promissory note or notes evidencing the Loans made to such Borrower by the assigning Lender hereunder.


94

(i) No Borrower shall assign or delegate any of its rights or duties hereunder without the prior written consent of the Administrative Agent, each Issuing Bank and each Lender, and any attempted assignment without such consent shall be null and void.

(j) In the event that Standard & Poor's Ratings Group, Moody's Investors Service, Inc., and Thompson's BankWatch (or Insurance Watch Ratings Service, in the case of Lenders that are insurance companies (or Best's Insurance Reports, if such insurance company is not rated by Insurance Watch Ratings Service)) shall, after the date that any Lender becomes a Revolving Credit Lender, downgrade the long-term certificate deposit ratings of such Lender, and the resulting ratings shall be below BBB-, Baa3 and C (or BB, in the case of a Lender that is an insurance company (or B, in the case of an insurance company not rated by Insurance Watch Ratings Service)), then each Issuing Bank shall have the right, but not the obligation, at its own expense, upon notice to such Lender and the Administrative Agent, to replace (or to request Terex to use its reasonable efforts to replace) such Lender with an assignee (in accordance with and subject to the restrictions contained in paragraph (b) above), and such Lender hereby agrees to transfer and assign without recourse (in accordance with and subject to the restrictions contained in paragraph (b) above) all its interests, rights and obligations in respect of its Revolving Credit Commitment to such assignee; provided, however, that (i) no such assignment shall conflict with any law, rule and regulation or order of any Governmental Authority and
(ii) the applicable Issuing Bank or such assignee, as the case may be, shall pay to such Lender in immediately available funds on the date of such assignment the principal of and interest accrued to the date of payment on the Loans made by such Lender hereunder and all other amounts accrued for such Lender's account or owed to it hereunder.

SECTION 9.05. Expenses; Indemnity. (a) Each Borrower agrees to pay all reasonable out-of-pocket expenses incurred by the Administrative Agent, the Collateral Agent, the Issuing Banks and the Swingline Lender in connection with the syndication of the credit facilities provided for herein and the preparation and administration of this Agreement and the other Loan Documents or in connection with any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions hereby or thereby contemplated shall be consummated) or incurred by the Administrative Agent, the Collateral Agent or any Lender in connection with the enforcement or protection of its rights in connection with this Agreement and the other Loan Documents or in connection with the Loans made or Letters of Credit issued hereunder, as applicable, including the reasonable fees, charges and disbursements of Cravath, Swaine & Moore, counsel for the Administrative Agent and the Collateral Agent, and, in connection with any such enforcement or protection, the fees, charges and disbursements of any other counsel for the Administrative Agent, the Collateral Agent or any Lender.

(b) Each Borrower agrees to indemnify the Administrative Agent, the Collateral Agent, each Lender and each Issuing Bank, each Affiliate of any of the foregoing persons and each of their respective directors, officers, employees and agents (each such person being called an "Indemnitee") against, and to hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including reasonable counsel fees, charges and disbursements, incurred by or asserted against any Indemnitee arising out of, in any way connected with, or as a result of (i) the execution or delivery of this Agreement or any other Loan Document or any agreement or instrument contemplated thereby, the performance by the parties thereto of their respective obligations thereunder or the consummation of the Transactions and the other transactions contemplated thereby, (ii) the use of the proceeds of the Loans or issuance of


95

Letters of Credit, (iii) any claim, litigation, investigation or proceeding relating to any of the foregoing, whether or not any Indemnitee is a party thereto, or (iv) any actual or alleged presence, Release or threat of Release of Hazardous Materials on any Properties, or any Environmental Claim related in any way to any Borrower or the Subsidiaries; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or wilful misconduct of such Indemnitee.

(c) The provisions of this Section 9.05 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the transactions contemplated hereby, the repayment of any of the Loans, the expiration of the Commitments, the expiration of any Letter of Credit, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of the Administrative Agent, the Collateral Agent, any Lender or an Issuing Bank. All amounts due under this Section 9.05 shall be payable on written demand therefor.

SECTION 9.06. Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender is hereby authorized at any time and from time to time, except to the extent prohibited by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender to or for the credit or the account of any Borrower against any of and all the obligations of such Borrower now or hereafter existing under this Agreement and other Loan Documents held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement or such other Loan Document and although such obligations may be unmatured. The rights of each Lender under this Section 9.06 are in addition to other rights and remedies (including other rights of setoff) which such Lender may have.

SECTION 9.07. Applicable Law. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN AS EXPRESSLY SET FORTH IN OTHER LOAN DOCUMENTS) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. EACH LETTER OF CREDIT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE WITH, THE LAWS OR RULES DESIGNATED IN SUCH LETTER OF CREDIT, OR IF NO SUCH LAWS OR RULES ARE DESIGNATED, THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS (1993 REVISION), INTERNATIONAL CHAMBER OF COMMERCE, PUBLICATION NO. 500 (THE "UNIFORM CUSTOMS") AND, AS TO MATTERS NOT GOVERNED BY THE UNIFORM CUSTOMS, THE LAWS OF THE STATE OF NEW YORK.

SECTION 9.08. Waivers; Amendment. (a) No failure or delay of the Administrative Agent, the Collateral Agent, any Lender or an Issuing Bank in exercising any power or right hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent, the Collateral Agent, the Issuing Banks and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver


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of any provision of this Agreement or any other Loan Document or consent to any departure by any Borrower or any other Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) below, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice or demand on any Borrower in any case shall entitle such Borrower to any other or further notice or demand in similar or other circumstances.

(b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrowers and the Required Lenders; provided, however, that no such agreement shall (i) decrease the principal amount of, or extend the maturity of or any scheduled principal payment date or date for the payment of any interest on any Loan or any date for reimbursement of an L/C Disbursement, or waive or excuse any such payment or any part thereof, or decrease the rate of interest on any Loan or L/C Disbursement, without the prior written consent of each Lender affected thereby, (ii) change or extend the Commitment or decrease or extend the date for payment of the Facility Fees of any Lender without the prior written consent of such Lender, (iii) amend or modify the provisions of
Section 2.17 or 9.04(i), the provisions of this Section, the definition of the term "Required Lenders", increase the total Commitments or release any Guarantor or all or any substantial part of the Collateral, without the prior written consent of each Lender, (iv) change the allocation between Tranche A Term Loans and Tranche B Term Loans of any prepayment pursuant to Section 2.12 or 2.13 without the prior written consent of (A) Lenders holding a majority of the aggregate outstanding principal amount of the Tranche A Term Loans and (B) Lenders holding a majority of the aggregate outstanding principal amount of the Tranche B Term Loans or (v) amend Section 2.13(j) without the prior written consent of the Lenders holding a majority of the aggregate outstanding principal amount of the Tranche B Term Loans; provided further that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent, the Collateral Agent, any Issuing Bank, any A/C Fronting Lender or the Swingline Lender hereunder or under any other Loan Document without the prior written consent of the Administrative Agent, the Collateral Agent, such Issuing Bank, such A/C Fronting Lender or the Swingline Lender.

SECTION 9.09. Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan or participation in any L/C Disbursement, together with all fees, charges and other amounts which are treated as interest on such Loan or participation in such L/C Disbursement under applicable law (collectively the "Charges"), shall exceed the maximum lawful rate (the "Maximum Rate") which may be contracted for, charged, taken, received or reserved by the Lender holding such Loan or participation in accordance with applicable law, the rate of interest payable in respect of such Loan or participation hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan or participation but were not payable as a result of the operation of this Section 9.09 shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or participations or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender.

SECTION 9.10. Entire Agreement. This Agreement, the Fee Letter and the other Loan Documents constitute the entire contract between the parties relative to the subject matter hereof. Any other previous agreement among the parties


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with respect to the subject matter hereof is superseded by this Agreement and the other Loan Documents. Nothing in this Agreement or in the other Loan Documents, expressed or implied, is intended to confer upon any party other than the parties hereto and thereto any rights, remedies, obligations or liabilities under or by reason of this Agreement or the other Loan Documents.

SECTION 9.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11.

SECTION 9.12. Severability. In the event any one or more of the provisions contained in this Agreement or in any other Loan Document should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforce able provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

SECTION 9.13. Counterparts. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original but all of which when taken together shall constitute a single contract, and shall become effective as provided in Section
9.03. Delivery of an executed signature page to this Agreement by facsimile transmission shall be as effective as delivery of a manually signed counterpart of this Agreement.

SECTION 9.14. Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.

SECTION 9.15. Jurisdiction; Consent to Service of Process. (a) Each Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the other Loan Documents, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or preceeding shall be conclusive and may be


98

enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that the Administrative Agent, the Collateral Agent, any Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or the other Loan Documents against any Borrower or its properties in the courts of any jurisdiction.

(b) Each Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the other Loan Documents in any New York State or Federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(c) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01; provided, however, that each Subsidiary Borrower hereby appoints Stuart A. Gordon, Esq., Robinson Silverman Pearce Aronsohn & Berman LLP, 1290 Avenue of the Americas, New York, NY 10104, as its agent for service of process. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

SECTION 9.16. Conversion of Currencies. (a) If, for the purpose of obtaining judgment in any court, it is necessary to convert a sum owing hereunder in one currency into another currency, each party hereto agrees, to the fullest extent that it may effectively do so, that the rate of exchange used shall be that at which in accordance with normal banking procedures in the relevant jurisdiction the first currency could be purchased with such other currency on the Business Day immediately preceding the day on which final judgment is given.

(b) The obligations of each party in respect of any sum due to any other party hereto or any holder of the obligations owing hereunder (the "Applicable Creditor") shall, notwithstanding any judgment in a currency (the "Judgment Currency") other than the currency in which such sum is stated to be due hereunder (the "Agreement Currency"), be discharged only to the extent that, on the Business Day following receipt by the Applicable Creditor of any sum adjudged to be so due in the Judgment Currency, the Applicable Creditor may in accordance with normal banking procedures in the relevant jurisdiction purchase the Agreement Currency with the Judgment Currency; if the amount of the Agreement Currency so purchased is less than the sum originally due to the Applicable Creditor in the Agreement Currency, such party agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Applicable Creditor against such loss. The obligations of the Loan Parties contained in this Section 9.16 shall survive the termination of this Agreement and the payment of all other amounts owing hereunder.

SECTION 9.17. Confidentiality. The Administrative Agent, the Collateral Agent, each Issuing Bank and each of the Lenders agrees to keep confidential (and to use its best efforts to cause its respective agents and representatives to keep confidential) the Information (as defined below) and all copies thereof, extracts therefrom and analyses or other materials based thereon, except that the Administrative Agent, the Collateral Agent, any Issuing Bank or any Lender shall be permitted to disclose Information (a) to such of its respective officers,


99

directors, employees, agents, affiliates and representatives as need to know such Information, (b) to the extent requested by any regulatory authority (provided such authority shall be advised of the confidential nature of the Information), (c) to the extent otherwise required by applicable laws and regulations or by any subpoena or similar legal process, (d) in connection with any suit, action or proceeding relating to the enforcement of its rights hereunder or under the other Loan Documents, (e) to any direct or indirect contractual counterparty in swap agreements or such contractual counterparty's professional advisor (so long as such contractual counterparty (or its affiliates) is not a competitor of Terex or any of its Subsidiaries and agrees to be bound by the provisions of this Section 9.17) or (f) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section 9.17 or (ii) becomes available to the Administrative Agent, any Issuing Bank, any Lender or the Collateral Agent on a nonconfidential basis from a source other than any Borrower. For the purposes of this Section, "Information" shall mean all financial statements, certificates, reports, agreements and information (including all analyses, compilations and studies prepared by the Administrative Agent, the Collateral Agent, any Issuing Bank or any Lender based on any of the foregoing) that are received from any Borrower and related to any Borrower, any shareholder of any Borrower or any employee, customer or supplier of any Borrower, other than any of the foregoing that were available to the Administrative Agent, the Collateral Agent, any Issuing Bank or any Lender on a nonconfidential basis prior to its disclosure thereto by any Borrower, and which are in the case of Information provided after the date hereof, clearly identified at the time of delivery as confidential. The provisions of this Section 9.17 shall remain operative and in full force and effect regardless of the expiration and term of this Agreement.

SECTION 9.18. European Monetary Union. If, as a result of the implementation of European monetary union, (a) any currency ceases to be lawful currency of the nation issuing the same and is replaced by a European common currency, then any amount payable hereunder by any party hereto in such currency shall instead be payable in the European common currency and the amount so payable shall be determined by translating the amount payable in such currency to such European common currency at the exchange rate recognized by the European Central Bank for the purpose of implementing European monetary union, or (b) any currency and a European common currency are at the same time recognized by the central bank or comparable authority of the nation issuing such currency as lawful currency of such nation, then (i) any Loan made at such time shall be made in such European common currency and (ii) any other amount payable by any party hereto in such currency shall be payable in such currency or in such European common currency (in an amount determined as set forth in clause (a)), at the election of the obligor. Prior to the occurrence of the event or events described in clause (a) or (b) of the preceding sentence, each amount payable hereunder in any currency will continue to be payable only in that currency. Each Borrower agrees, at the request of the Required Lenders, at the time of or at any time following the implementation of European monetary union, to enter into an agreement amending this Agreement in such manner as the Required Lenders shall reasonably request in order to avoid any unfair burden or disadvantage resulting from the implementation of such monetary union and to place the parties hereto in the position they would have been in had such monetary union not been implemented, the intent being that neither party will be adversely affected economically as a result of such implementation and


100

that reasonable provisions may be adopted to govern the borrowing, maintenance and repayment of Loans denominated in any Alternative Currency or a European common currency after the occurrence of the event or events described in clause
(a) or (b) of the preceding sentence.

SECTION 9.19. German Borrower. Terex may designate the German Borrower to be a Subsidiary Borrower under this Agreement on or after the consummation of the Acquisition by delivering a written notice to the Administrative Agent together with (i) an accession agreement satisfactory to the Administrative Agent and duly executed by Terex and the German Borrower, (ii) an opinion of counsel reasonably satisfactory to the Administrative Agent and (iii) a pledge by Terex of 65% of the capital stock of the German Borrower for the benefit of the Secured Parties. Upon the execution of such accession agreement by the Administrative Agent, the German Borrower shall become a Borrower under this Agreement with all of the rights and obligations of a Borrower.


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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

TEREX CORPORATION,

by
   Eric I. Cohen
   Name:     Eric I. Cohen
   Title:    Senior Vice President

TEREX EQUIPMENT LIMITED,

   by
      Eric I. Cohen
      Name:     Eric I. Cohen
      Title:    Director


P.P.M. S.A.,

  by
     Fil Filipov

Name: Fil Filipov Title: President & Director

UNIT RIG (AUSTRALIA) PTY. LTD.,

  by
     Gary Nicholas
     Name:     Gary Nicholas
     Title:    Secretary


P.P.M. S.p.A,

  by
     Fil Filipov
     Name:     Fil Filipov
     Title:    President


102

CREDIT SUISSE FIRST BOSTON,

individually and as Administrative Agent,
Collateral Agent and Swingline Lender,

     by
        Kristin Lepri
        Name:     Kristin Lepri
        Title:    Associate

     by
        Heather Suggit
        Name:     Heather Suggitt
        Title:    Vice President

ABN AMRO BANK N.V.,

by
   Andrew Dry
   Name:     Andrew Dry
   Title:    Group Vice President

by
   Michael A. Kowalczuk
   Name:      Michael A. Kowalczuk
   Title:     Corporate Banking Officer

BANK OF TOKYO-MITSUBISHI TRUST
COMPANY,

    by
       Paul P. Malecki
       Name:     Paul P. Malecki
       Title:    Vice President


BANKBOSTON N.A., as Revolver and Term
A Lender,

    by
       Brent E. Shay
       Name:     Brent E. Shay
       Title:    Managing Director


103

BANKBOSTON, N.A.,

by
   Renee A. Ross
   Name:     Renee A. Ross
   Title:    Managing Director

CIBC INC.,

by
   William J. Koslo, Jr.
   Name:     William J. Koslo, Jr.
   Title:    Executive Director

CREDIT LYONNAIS, NEW YORK BRANCH,

by
   Vladimir Labun
   Name:     Vladimir Labun
   Title:    First Vice President-Manager

DRESDNER BANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES,

by
   Beverly G. Cason
   Name:     Beverly G. Cason
   Title:    Vice President

by
   Colleen A. Madden
   Name:     Colleen A. Madden
   Title:    Vice President

FIRST UNION NATIONAL BANK,

by
   Hank Biedrzycki
   Name:     Hank Biedrzycki
   Title:    Vice President-Director


104

GENERAL ELECTRIC CAPITAL CORPORATION,

by
   Janet K. Williams
   Name:     Janet K. Williams
   Title:    Duly Authorized Signatory

MARINE MIDLAND BANK,

by
   Randolph H. Ross
   Name:     Randolph H. Ross
   Title:    Authorized Signatory

NATIONAL CITY BANK,

by
   Joseph D. Robison
   Name:     Joseph D. Robison
   Title:    Vice President

KZH HOLDING CORPORATION III,

by
   Andrew J. Taylor
   Name:     Andrew J. Taylor
   Title:    Authorized Agent

SKANDINAVISKA ENSKILDA BANKEN
AB (publ), NEW YORK BRANCH,

by
   Sverker Johansson
   Name:     Sverker Johansson
   Title:    Vice President

by
   Philip Montemurro
   Name:     Philip Montemurro
   Title:    Vice President


105

KZH-CRESCENT-2 CORPORATION,

by
   Andrew J. Taylor
   Name:     Andrew J. Taylor
   Title:    Authorized Agent

TORONTO DOMINION (TEXAS), INC.,

by
    David G. Parker
    Name:     David G. Parker
    Title:    Vice President


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GUARANTEE AGREEMENT dated as of March 6, 1998, between TEREX CORPORATION, a Delaware corporation ("Terex"), and CREDIT SUISSE FIRST BOSTON, a bank organized under the laws of Switzerland, acting through its New York branch ("CSFB"), as collateral agent (the "Collateral Agent") for the Secured Parties (as defined in the Credit Agreement referred to below).

Reference is made to (a) the Credit Agreement dated as of March 6, 1998 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among Terex, Terex Equipment Limited, a company organized under the laws of Scotland, P.P.M. S.A., a company organized under the laws of the Republic of France, Unit Rig (Australia) Pty. Ltd., a company organized under the laws of New South Wales, and P.P.M. S.p.A., a company organized under the laws of the Republic of Italy, the Lenders (as defined in Article I thereto), the Issuing Banks (as defined in Article I thereto) and CSFB, as administrative agent and as collateral agent for the Lenders and (b) the Guarantee Agreement dated as of March 6, 1998 (as amended, supplemented or otherwise modified from time to time, the "Subsidiary Guarantee Agreement") among the subsidiaries of Terex listed on Schedule I thereto (the "Subsidiary Guarantors") and the Collateral Agent. Capitalized terms used herein and not defined herein shall have the meanings assigned to such terms in the Credit Agreement.

The Lenders have agreed to make Loans to the Borrowers, and the Issuing Banks have agreed to issue Letters of Credit for the account of the Borrowers, pursuant to, and upon the terms and subject to the conditions specified in, the Credit Agreement. Each of the Subsidiary Borrowers is a wholly owned Subsidiary of Terex and Terex acknowledges that it will derive substantial benefit from the making of the Loans by the Lenders to the Subsidiary Borrowers, and the issuance of the Letters of Credit for the account of the Subsidiary Borrowers by the Issuing Banks. The obligations of the Lenders to make Loans to the Subsidiary Borrowers and of the Issuing Banks to issue Letters of Credit for the account of the Subsidiary Borrowers are conditioned on, among other things, the execution and delivery by Terex of a Guarantee Agreement in the form hereof. As consideration therefor and in order to induce the Lenders to make Loans to the Subsidiary Borrowers and the Issuing Banks to issue Letters of Credit for the account of the Subsidiary Borrowers, Terex is willing to execute this Agreement.

Accordingly, the parties hereto agree as follows:

SECTION 1. Guarantee. Terex unconditionally guarantees, as a primary obligor and not merely as a surety, (a) the due and punctual payment of (i) the principal of and premium, if any, and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Loans, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, (ii) each payment required to be made by any Borrower under the Credit Agreement in respect of any Letter of Credit, when and as due, including payments in respect of reimbursement of disbursements, interest thereon and obligations to provide cash collateral and
(iii) all other monetary obligations, including fees, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), of the Loan Parties to the Secured Parties under the Credit Agreement and the other Loan Documents, (b) the due and punctual performance of all covenants, agreements, obligations and liabilities of the Loan Parties under or pursuant to the Credit Agreement and the other Loan Documents and (c) all obligations of any Borrower, monetary or otherwise, under each Hedging Agreement entered into with a counterparty that was a Lender (or an Affiliate thereof) at the time such Hedging Agreement was entered into (all the monetary and other obligations referred to in the preceding clauses (a) through
(c) being collectively called the "Obligations"). Terex further agrees that the Obligations may be extended or renewed, in whole or in part, without notice to or further assent from it, and that it will remain bound upon its guarantee notwithstanding any extension or renewal of any Obligation.


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SECTION 2. Obligations Not Waived. To the fullest extent permitted by applicable law, Terex waives presentment to, demand of payment from and protest to the Subsidiary Borrowers of any of the Obligations, and also waives notice of acceptance of its guarantee and notice of protest for nonpayment. To the fullest extent permitted by applicable law, the obligations of Terex hereunder shall not be affected by (a) the failure of the Collateral Agent or any other Secured Party to assert any claim or demand or to enforce or exercise any right or remedy against any Subsidiary Borrower or any Subsidiary Guarantor under the provisions of the Credit Agreement, the Subsidiary Guarantee Agreement, any other Loan Document or otherwise, (b) any rescission, waiver, amendment or modification of, or any release from any of the terms or provisions of this Agreement, any other Loan Document, any Guarantee or any other agreement, including with respect to any Subsidiary Guarantor under the Subsidiary Guarantee Agreement or (c) the failure to perfect any security interest in, or the release of, any of the security held by or on behalf of the Collateral Agent or any other Secured Party.

SECTION 3. Security. Terex authorizes the Collateral Agent and each of the other Secured Parties, to (a) take and hold security for the payment of this Guarantee and the Obligations and exchange, enforce, waive and release any such security, (b) apply such security and direct the order or manner of sale thereof, in accordance with the terms of the Loan Documents, as they in their sole discretion may determine and (c) release or substitute any one or more endorsees, other guarantors of other obligors.

SECTION 4. Guarantee of Payment. Terex further agrees that its guarantee constitutes a guarantee of payment when due and not of collection, and waives any right to require that any resort be had by the Collateral Agent or any other Secured Party to any of the security held for payment of the Obligations or to any balance of any deposit account or credit on the books of the Collateral Agent or any other Secured Party in favor of any Subsidiary Borrower or any other person.

SECTION 5. No Discharge or Diminishment of Guarantee. The obligations of Terex hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason (other than the indefeasible payment in full in cash of the Obligations), including any claim of waiver, release, surrender, alteration or compromise of any of the Obligations, and shall not be subject to any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of the Obligations or otherwise. Without limiting the generality of the foregoing, the obligations of Terex hereunder shall not be discharged or impaired or otherwise affected by the failure of the Collateral Agent or any other Secured Party to assert any claim or demand or to enforce any remedy under the Credit Agreement, any other Loan Document or any other agreement, by any waiver or modification of any provision of any thereof, by any default, failure or delay, wilful or otherwise, in the performance of the Obligations, or by any other act or omission that may or might in any manner or to any extent vary the risk of Terex or that would otherwise operate as a discharge of Terex as a matter of law or equity (other than the indefeasible payment in full in cash of all the Obligations).

SECTION 6. Defenses of Subsidiary Borrowers Waived. To the fullest extent permitted by applicable law, Terex waives any defense based on or arising out of any defense of the Subsidiary Borrowers or the unenforceability of the Obligations or any part thereof from any cause, or the cessation from any cause of the liability of any Subsidiary Borrower, other than the final payment in full in cash of the Obligations. The Collateral Agent and the other Secured Parties may, at their election, foreclose on any security held by one or more of them by one or more judicial or nonjudicial sales, accept an assignment of any such security in lieu of foreclosure, compromise or adjust any part of the Obligations, make any other accommodation with any Subsidiary Borrower, any Subsidiary Guarantor or any other guarantor or exercise any other right or remedy available to them against any Subsidiary Borrower, any Subsidiary Guarantor or any other guarantor, without affecting or impairing in any way the liability of Terex hereunder except to the extent the Obligations have been fully and finally paid in cash or otherwise satisfied pursuant to the terms of the Loan Documents. Pursuant to applicable law, Terex waives any defense arising out of any such election even though such election operates, pursuant to applicable law, to impair or to extinguish any right of reimbursement or


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other right or remedy of Terex against any Subsidiary Borrower, any Subsidiary Guarantor or any other guarantor, as the case may be, or any security.

SECTION 7. Agreement to Pay; Subordination. In furtherance of the foregoing and not in limitation of any other right that the Collateral Agent or any other Secured Party has at law or in equity against Terex by virtue hereof, upon the failure of any Subsidiary Borrower or any other Loan Party to pay any Obligation when and as the same shall become due, whether at maturity, by acceleration, after notice of prepayment or otherwise, Terex hereby promises to and will forthwith pay, or cause to be paid, to the Collateral Agent or such other Secured Party as designated thereby in cash the amount of such unpaid Obligations. Upon payment by Terex of any sums to the Collateral Agent or any Secured Party as provided above, all rights of Terex against any Subsidiary Borrower arising as a result thereof by way of right of subrogation, contribution, reimbursement, indemnity or otherwise shall in all respects be subordinate and junior in right of payment to the prior payment in full in cash of all the Obligations. In addition, any indebtedness of any Subsidiary Borrower now or hereafter held by Terex is hereby subordinated in right of payment to the prior payment in full of the Obligations. If any amount shall erroneously be paid to Terex on account of (i) such subrogation, contribution, reimbursement, indemnity or similar right or (ii) any such indebtedness of any Subsidiary Borrower, and if an Event of Default shall have occurred and be continuing, such amount shall be held in trust for the benefit of the Secured Parties and shall forthwith be paid to the Collateral Agent to be credited against the payment of the Obligations, whether matured or unmatured, in accordance with the terms of the Loan Documents.

SECTION 8. Information. Terex assumes all responsibility for being and keeping itself informed of the Subsidiary Borrowers' financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Obligations and the nature, scope and extent of the risks that Terex assumes and incurs hereunder, and agrees that none of the Collateral Agent or the other Secured Parties will have any duty to advise Terex of information known to it or any of them regarding such circumstances or risks.

SECTION 9. Representations and Warranties. INTENTIONALLY OMITTED

SECTION 10. Termination. The Guarantee made hereunder (a) shall terminate when all the Obligations have been paid in full and the Lenders have no further commitment to lend to any Subsidiary Borrowers under the Credit Agreement, the L/C Exposure with respect to all Letters of Credit issued for the account of any Subsidiary Borrower has been reduced to zero and the Issuing Banks have no further obligation to issue Letters of Credit to any Subsidiary Borrower under the Credit Agreement and (b) shall be reinstated if, at any time after the Guarantee has terminated, payment, or any part thereof, of any Obligation is rescinded or must otherwise be restored by any Secured Party or any Subsidiary Guarantor upon the bankruptcy or reorganization of any Subsidiary Borrower, any Subsidiary Guarantor, Terex or otherwise.

SECTION 11. Binding Effect; Several Agreement; Assignments. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party; and all covenants, promises and agreements by or on behalf of Terex that are contained in this Agreement shall bind and inure to the benefit of each party hereto and their respective successors and assigns. This Agreement shall become effective as to Terex when a counterpart hereof executed on behalf of Terex shall have been delivered to the Collateral Agent, and a counterpart hereof shall have been executed on behalf of the Collateral Agent, and thereafter shall be binding upon Terex and the Collateral Agent and their respective successors and assigns, and shall inure to the benefit of Terex, the Collateral Agent and the other Secured Parties, and their respective successors and assigns, except Terex shall not have the right to assign its rights or obligations hereunder or any interest herein (and any such attempted assignment shall be void).

SECTION 12. Waivers; Amendment. (a) No failure or delay of the Collateral Agent in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or


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power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Collateral Agent hereunder and of the other Secured Parties under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by Terex therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) below, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice or demand on Terex in any case shall entitle Terex to any other or further notice or demand in similar or other circumstances.

(b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to a written agreement entered into between Terex and the Collateral Agent, with the prior written consent of the Required Lenders (except as otherwise provided in the Credit Agreement).

SECTION 13. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

SECTION 14. Notices. All communications and notices hereunder shall be in writing and given as provided in Section 9.01 of the Credit Agreement.

SECTION 15. Survival of Agreement; Severability. (a) All covenants, agreements, representations and warranties made by Terex herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the Collateral Agent and the other Secured Parties and shall survive the making by the Lenders of the Loans to the Subsidiary Borrowers and the issuance of the Letters of Credit for the account of the Subsidiary Borrowers by the Issuing Banks regardless of any investigation made by the Secured Parties or on their behalf, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan to the Subsidiary Borrowers or any other fee or amount payable under this Agreement or any other Loan Document by the Subsidiary Borrowers is outstanding and unpaid or the L/C Exposure with respect to Letters of Credit issued for the account of all Subsidiary Borrowers does not equal zero and as long as the Commitments and the L/C Commitments have not been terminated.

(b) In the event any one or more of the provisions contained in this Agreement or in any other Loan Document should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

SECTION 16. Counterparts. This Agreement may be executed in counterparts, each of which shall constitute an original, but all of which when taken together shall constitute a single contract, and shall become effective as provided in Section 11. Delivery of an executed signature page to this Agreement by facsimile transmission shall be as effective as delivery of a manually executed counterpart of this Agreement.

SECTION 17. Rules of Interpretation. The rules of interpretation specified in Section 1.02 of the Credit Agreement shall be applicable to this Agreement.

SECTION 18. Jurisdiction; Consent to Service of Process. (a) Terex hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this


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Agreement or the other Loan Documents, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that the Collateral Agent or any other Secured Party may otherwise have to bring any action or proceeding relating to this Agreement or the other Loan Documents against Terex or its properties in the courts of any jurisdiction.

(b) Terex hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the other Loan Documents in any New York State or Federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(c) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 14. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

SECTION 19. Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 19.

SECTION 20. Right of Setoff. If an Event of Default shall have occurred and be continuing, each Secured Party is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other Indebtedness at any time owing by such Secured Party to or for the credit or the account of Terex against any or all the obligations of Terex now or hereafter existing under this Agreement and the other Loan Documents held by such Secured Party, irrespective of whether or not such Secured Party shall have made any demand under this Agreement or any other Loan Document and although such obligations may be unmatured. The rights of each Secured Party under this Section 20 are in addition to other rights and remedies (including other rights of setoff) which such Secured Party may have.

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.

TEREX CORPORATION,

by
Name:
Title: Authorized Officer


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CREDIT SUISSE FIRST BOSTON, as
Collateral Agent,

by
Name:
Title:

by
Name:
Title:


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GUARANTEE AGREEMENT dated as of March 6, 1998, among each of the subsidiaries listed on Schedule I hereto (each such subsidiary individually, a "Subsidiary Guarantor" and collectively, the "Subsidiary Guarantors") of TEREX CORPORATION, a Delaware corporation ("Terex"), and CREDIT SUISSE FIRST BOSTON, a bank organized under the laws of Switzerland, acting through its New York branch ("CSFB"), as collateral agent (the "Collateral Agent") for the Secured Parties (as defined in the Credit Agreement referred to below).

Reference is made to (a) the Credit Agreement dated as of March 6, 1998 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among Terex, Terex Equipment Limited, a company organized under the laws of Scotland, P.P.M. S.A., a company organized under the laws of the Republic of France, Unit Rig (Australia) Pty. Ltd., a company organized under the laws of New South Wales, and P.P.M. Sp.A., a company organized under the laws of the Republic of Italy, the Lenders (as defined in Article I thereto), the Issuing Banks (as defined in Article I thereto) and CSFB, as administrative agent and as collateral agent for the Lenders ) and (b) the Guarantee Agreement dated as of March 6, 1998 (as amended, supplemented or otherwise modified from time to time, the "Terex Guarantee Agreement") between Terex and the Collateral Agent. Capitalized terms used herein and not defined herein shall have the meanings assigned to such terms in the Credit Agreement.

The Lenders have agreed to make Loans to the Borrowers, and the Issuing Banks have agreed to issue Letters of Credit for the account of the Borrowers, pursuant to, and upon the terms and subject to the conditions specified in, the Credit Agreement. Each of the Subsidiary Guarantors is a wholly owned Subsidiary of Terex and acknowledges that it will derive substantial benefit from the making of the Loans by the Lenders and the issuance of the Letters of Credit by the Issuing Banks. The obligations of the Lenders to make Loans and of the Issuing Banks to issue Letters of Credit are conditioned on, among other things, the execution and delivery by the Subsidiary Guarantors of a Guarantee Agreement in the form hereof. As consideration therefor and in order to induce the Lenders to make Loans and the Issuing Banks to issue Letters of Credit, the Subsidiary Guarantors are willing to execute this Agreement.

Accordingly, the parties hereto agree as follows:

SECTION 1. Guarantee. Each Subsidiary Guarantor unconditionally guarantees, jointly with the other Subsidiary Guarantors and severally, as a primary obligor and not merely as a surety, (a) the due and punctual payment of
(i) the principal of and premium, if any, and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Loans, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, (ii) each payment required to be made by any Borrower under the Credit Agreement in respect of any Letter of Credit, when and as due, including payments in respect of reimbursement of disbursements, interest thereon and obligations to provide cash collateral and (iii) all other monetary obligations, including fees, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), of the Loan Parties to the Secured Parties under the Credit Agreement and the other Loan Documents, (b) the due and punctual performance of all covenants, agreements, obligations and liabilities of the Loan Parties under or pursuant to the Credit Agreement and the other Loan Documents and (c) all obligations of any Borrower, monetary or otherwise, under each Hedging Agreement entered into with a counterparty that was a Lender (or an Affiliate thereof) at the time such Hedging Agreement was entered into (all the monetary and other obligations referred to in the preceding clauses (a) through (c) being collectively called the "Obligations"). Each Subsidiary Guarantor further agrees that the Obligations may be extended or renewed, in whole or in part, without notice to or further assent from it, and that it will remain bound upon its guarantee notwithstanding any extension or renewal of any Obligation.


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Anything contained in this Agreement to the contrary notwithstanding, the obligations of each Subsidiary Guarantor hereunder shall be limited to a maximum aggregate amount equal to the greatest amount that would not render such Subsidiary Guarantor's obligations hereunder subject to avoidance as a fraudulent transfer or conveyance under Section 548 of Title 11 of the United States Code or any provisions of applicable state law (collectively, the "Fraudulent Transfer Laws"), in each case after giving effect to all other liabilities of such Subsidiary Guarantor, contingent or otherwise, that are relevant under the Fraudulent Transfer Laws (specifically excluding, however, any liabilities of such Subsidiary Guarantor (a) in respect of intercompany indebtedness to Terex or Affiliates of Terex to the extent that such indebtedness would be discharged in an amount equal to the amount paid by such Subsidiary Guarantor hereunder and (b) under any Guarantee of senior unsecured indebtedness or Indebtedness subordinated in right of payment to the Obligations which Guarantee contains a limitation as to maximum amount similar to that set forth in this paragraph, pursuant to which the liability of such Subsidiary Guarantor hereunder is included in the liabilities taken into account in determining such maximum amount) and after giving effect as assets to the value
(as determined under the applicable provisions of the Fraudulent Transfer Laws)
of any rights to subrogation, contribution, reimbursement, indemnity or similar rights of such Subsidiary Guarantor pursuant to (i) applicable law or (ii) any agreement providing for an equitable allocation among such Subsidiary Guarantor and other Affiliates of Terex of obligations arising under Guarantees by such parties (including the Indemnity, Subrogation and Contribution Agreement).

SECTION 2. Obligations Not Waived. To the fullest extent permitted by applicable law, each Subsidiary Guarantor waives presentment to, demand of payment from and protest to the Borrowers of any of the Obligations, and also waives notice of acceptance of its guarantee and notice of protest for nonpayment. To the fullest extent permitted by applicable law, the obligations of each Subsidiary Guarantor hereunder shall not be affected by (a) the failure of the Collateral Agent or any other Secured Party to assert any claim or demand or to enforce or exercise any right or remedy against Terex, any Subsidiary Borrower or any other Subsidiary Guarantor under the provisions of the Credit Agreement, any other Loan Document or otherwise, (b) any rescission, waiver, amendment or modification of, or any release from any of the terms or provisions of this Agreement, any other Loan Document, any Guarantee or any other agreement, including with respect to any other Subsidiary Guarantor under this Agreement or, with respect to Terex, under the Terex Guarantee Agreement or (c) the failure to perfect any security interest in, or the release of, any of the security held by or on behalf of the Collateral Agent or any other Secured Party.

SECTION 3. Security. Each of the Subsidiary Guarantors authorizes the Collateral Agent and each of the other Secured Parties, to (a) take and hold security for the payment of this Guarantee and the Obligations and exchange, enforce, waive and release any such security, (b) apply such security and direct the order or manner of sale thereof, in accordance with the terms of the Loan Documents, as they in their sole discretion may determine and (c) release or substitute any one or more endorsees, other guarantors or other obligors.

SECTION 4. Guarantee of Payment. Each Subsidiary Guarantor further agrees that its guarantee constitutes a guarantee of payment when due and not of collection, and waives any right to require that any resort be had by the Collateral Agent or any other Secured Party to any of the security held for payment of the Obligations or to any balance of any deposit account or credit on the books of the Collateral Agent or any other Secured Party in favor of any Borrower or any other person.

SECTION 5. No Discharge or Diminishment of Guarantee. The obligations of each Subsidiary Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason (other than the indefeasible payment in full in cash of the Obligations), including any claim of waiver, release, surrender, alteration or compromise of any of the Obligations, and shall not be subject to any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of the Obligations or otherwise. Without limiting the generality of the foregoing, the obligations of each Subsidiary Guarantor hereunder shall not be discharged or impaired or otherwise affected by the failure of the Collateral Agent or any other Secured Party to assert any claim


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or demand or to enforce any remedy under the Credit Agreement, any other Loan Document or any other agreement, by any waiver or modification of any provision of any thereof, by any default, failure or delay, wilful or otherwise, in the performance of the Obligations, or by any other act or omission that may or might in any manner or to any extent vary the risk of any Subsidiary Guarantor or that would otherwise operate as a discharge of each Subsidiary Guarantor as a matter of law or equity (other than the indefeasible payment in full in cash of all the Obligations).

SECTION 6. Defenses of Borrowers Waived. To the fullest extent permitted by applicable law, each of the Subsidiary Guarantors waives any defense based on or arising out of any defense of any Borrower or the unenforceability of the Obligations or any part thereof from any cause, or the cessation from any cause of the liability of any Borrower other than the final payment in full in cash of the Obligations. The Collateral Agent and the other Secured Parties may, at their election, foreclose on any security held by one or more of them by one or more judicial or nonjudicial sales, accept an assignment of any such security in lieu of foreclosure, compromise or adjust any part of the Obligations, make any other accommodation with any Borrower or any other guarantor (including Terex under the Terex Guarantee Agreement), or exercise any other right or remedy available to them against any Borrower or any other guarantor (including Terex under the Terex Guarantee Agreement), without affecting or impairing in any way the liability of any Subsidiary Guarantor hereunder except to the extent the Obligations have been fully and finally paid in cash or otherwise satisfied pursuant to the terms of the Loan Documents. Pursuant to applicable law, each of the Subsidiary Guarantors waives any defense arising out of any such election even though such election operates, pursuant to applicable law, to impair or to extinguish any right of reimbursement or subrogation or other right or remedy of such Subsidiary Guarantor against Terex or any other Subsidiary Guarantor or guarantor, as the case may be, or any security.

SECTION 7. Agreement to Pay; Subordination. In furtherance of the foregoing and not in limitation of any other right that the Collateral Agent or any other Secured Party has at law or in equity against any Subsidiary Guarantor by virtue hereof, upon the failure of any Borrower or any other Loan Party to pay any Obligation when and as the same shall become due, whether at maturity, by acceleration, after notice of prepayment or otherwise, each Subsidiary Guarantor hereby promises to and will forthwith pay, or cause to be paid, to the Collateral Agent or such other Secured Party as designated thereby in cash the amount of such unpaid Obligations. Upon payment by any Subsidiary Guarantor of any sums to the Collateral Agent or any Secured Party as provided above, all rights of such Subsidiary Guarantor against the applicable Borrower arising as a result thereof by way of right of subrogation, contribution, reimbursement, indemnity or otherwise shall in all respects be subordinate and junior in right of payment to the prior payment in full in cash of all the Obligations. In addition, any indebtedness of any Borrower now or hereafter held by any Subsidiary Guarantor is hereby subordinated in right of payment to the prior payment in full of the Obligations. If any amount shall erroneously be paid to any Subsidiary Guarantor on account of (i) such subrogation, contribution, reimbursement, indemnity or similar right or (ii) any such indebtedness of any Borrower, and if an Event of Default shall have occurred and be continuing, such amount shall be held in trust for the benefit of the Secured Parties and shall forthwith be paid to the Collateral Agent to be credited against the payment of the Obligations, whether matured or unmatured, in accordance with the terms of the Loan Documents.

SECTION 8. Information. Each of the Subsidiary Guarantors assumes all responsibility for being and keeping itself informed of the Borrowers' financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Obligations and the nature, scope and extent of the risks that such Subsidiary Guarantor assumes and incurs hereunder, and agrees that none of the Collateral Agent or the other Secured Parties will have any duty to advise any of the Subsidiary Guarantors of information known to it or any of them regarding such circumstances or risks.


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SECTION 9. Representations and Warranties. Each of the Subsidiary Guarantors represents and warrants as to itself that all representations and warranties relating to it contained in the Credit Agreement are true and correct.

SECTION 10. Termination. The Guarantees made hereunder (a) shall terminate when all the Obligations have been paid in full and the Lenders have no further commitment to lend under the Credit Agreement, the L/C Exposure has been reduced to zero and the Issuing Banks have no further obligation to issue Letters of Credit under the Credit Agreement and (b) shall be reinstated if, at any time after the Guarantee has terminated, payment, or any part thereof, of any Obligation is rescinded or must otherwise be restored by any Secured Party or any Subsidiary Guarantor upon the bankruptcy or reorganization of Terex, any Subsidiary Borrower, any Subsidiary Guarantor or otherwise.

SECTION 11. Binding Effect; Several Agreement; Assignments. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party; and all covenants, promises and agreements by or on behalf of the Subsidiary Guarantors that are contained in this Agreement shall bind and inure to the benefit of each party hereto and their respective successors and assigns. This Agreement shall become effective as to any Subsidiary Guarantor when a counterpart hereof executed on behalf of such Subsidiary Guarantor shall have been delivered to the Collateral Agent, and a counterpart hereof shall have been executed on behalf of the Collateral Agent, and thereafter shall be binding upon such Subsidiary Guarantor and the Collateral Agent and their respective successors and assigns, and shall inure to the benefit of such Subsidiary Guarantor, the Collateral Agent and the other Secured Parties, and their respective successors and assigns, except that no Subsidiary Guarantor shall have the right to assign its rights or obligations hereunder or any interest herein (and any such attempted assignment shall be void). If all of the capital stock of a Subsidiary Guarantor is sold, transferred or otherwise disposed of pursuant to a transaction permitted by
Section 6.05 of the Credit Agreement, such Subsidiary Guarantor shall be released from its obligations under this Agreement without further action. This Agreement shall be construed as a separate agreement with respect to each Subsidiary Guarantor and may be amended, modified, supplemented, waived or released with respect to any Subsidiary Guarantor without the approval of any other Subsidiary Guarantor and without affecting the obligations of any other Subsidiary Guarantor hereunder.

SECTION 12. Waivers; Amendment. (a) No failure or delay of the Collateral Agent in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Collateral Agent hereunder and of the other Secured Parties under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by any Subsidiary Guarantor therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) below, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice or demand on any Subsidiary Guarantor in any case shall entitle such Subsidiary Guarantor or any other Subsidiary Guarantor to any other or further notice or demand in similar or other circumstances.

(b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to a written agreement entered into between the Subsidiary Guarantors with respect to which such waiver, amendment or modification relates and the Collateral Agent, with the prior written consent of the Required Lenders (except as otherwise provided in the Credit Agreement).

SECTION 13. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.


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SECTION 14. Notices. All communications and notices hereunder shall be in writing and given as provided in Section 9.01 of the Credit Agreement. All communications and notices hereunder to each Subsidiary Guarantor shall be given to it in care of Terex.

SECTION 15. Survival of Agreement; Severability. (a) All covenants, agreements, representations and warranties made by the Subsidiary Guarantors herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the Collateral Agent and the other Secured Parties and shall survive the making by the Lenders of the Loans and the issuance of the Letters of Credit by the Issuing Banks regardless of any investigation made by the Secured Parties or on their behalf, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any other fee or amount payable under this Agreement or any other Loan Document is outstanding and unpaid or the L/C Exposure does not equal zero and as long as the Commitments and the L/C Commitments have not been terminated.

(b) In the event any one or more of the provisions contained in this Agreement or in any other Loan Document should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

SECTION 16. Counterparts. This Agreement may be executed in counterparts, each of which shall constitute an original, but all of which when taken together shall constitute a single contract, and shall become effective as provided in Section 11. Delivery of an executed signature page to this Agreement by facsimile transmission shall be as effective as delivery of a manually executed counterpart of this Agreement.

SECTION 17. Rules of Interpretation. The rules of interpretation specified in Section 1.02 of the Credit Agreement shall be applicable to this Agreement.

SECTION 18. Jurisdiction; Consent to Service of Process. (a) Each Subsidiary Guarantor hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the other Loan Documents, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that the Collateral Agent or any other Secured Party may otherwise have to bring any action or proceeding relating to this Agreement or the other Loan Documents against any Subsidiary Guarantor or its properties in the courts of any jurisdiction.

(b) Each Subsidiary Guarantor hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the other Loan Documents in any New York State or Federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.


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(c) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 14. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

SECTION 19. Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 19.

SECTION 20. Additional Subsidiary Guarantors. Pursuant to Section 5.11 of the Credit Agreement, each Domestic Subsidiary that was not in existence or was not a Domestic Subsidiary on the date of the Credit Agreement is required to enter into this Agreement as a Subsidiary Guarantor upon becoming a Domestic Subsidiary. Upon execution and delivery after the date hereof by the Collateral Agent and such a Subsidiary of an instrument in the form of Annex 1, such Subsidiary shall become a Subsidiary Guarantor hereunder with the same force and effect as if originally named as a Subsidiary Guarantor herein. The execution and delivery of any instrument adding an additional Subsidiary Guarantor as a party to this Agreement shall not require the consent of any other Subsidiary Guarantor hereunder. The rights and obligations of each Subsidiary Guarantor hereunder shall remain in full force and effect notwithstanding the addition of any new Subsidiary Guarantor as a party to this Agreement.

SECTION 21. Right of Setoff. If an Event of Default shall have occurred and be continuing, each Secured Party is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other Indebtedness at any time owing by such Secured Party to or for the credit or the account of any Subsidiary Guarantor against any or all the obligations of such Subsidiary Guarantor now or hereafter existing under this Agreement and the other Loan Documents held by such Secured Party, irrespective of whether or not such Secured Party shall have made any demand under this Agreement or any other Loan Document and although such obligations may be unmatured. The rights of each Secured Party under this Section 21 are in addition to other rights and remedies (including other rights of setoff) which such Secured Party may have.

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.

EACH OF THE SUBSIDIARIES
LISTED ON SCHEDULE I HERETO,

by

Name:


Title: Authorized Officer


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CREDIT SUISSE FIRST BOSTON, as
Collateral Agent,

by

Name:


Title:

by

Name:


Title:


8

Schedule I to the
Guarantee Agreement

Subsidiary Guarantor


1

Annex 1 to the
Subsidiary Guarantee Agreement

SUPPLEMENT NO. dated as of , to the Subsidiary Guarantee Agreement dated as of March 6, 1998 (the "Subsidiary Guarantee Agreement"), among each of the subsidiaries listed on Schedule I thereto (each such subsidiary individually, a "Subsidiary Guarantor" and collectively, the "Subsidiary Guarantors") of TEREX CORPORATION, a Delaware corporation ("Terex"), and CREDIT SUISSE FIRST BOSTON, a bank organized under the laws of Switzerland, operating through its New York branch ("CSFB"), as collateral agent (the "Collateral Agent") for the Secured Parties (as defined in the Credit Agreement referred to below).

A. Reference is made to the Credit Agreement dated as of March 6, 1998 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among Terex, Terex Equipment Limited, a company organized under the laws of Scotland, P.P.M. S.A., a company organized under the laws of the Republic of France, Unit Rig (Australia) Pty. Ltd., a company organized under the laws of New South Wales, and P.P.M. Sp.A., a company organized under the laws of the Republic of Italy, the Lenders (as defined in Article I thereto), the Issuing Banks (as defined in Article I thereto) and CSFB, as administrative agent and as collateral agent for the Lenders.

B. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Subsidiary Guarantee Agreement.

C. The Subsidiary Guarantors have entered into the Subsidiary Guarantee Agreement in order to induce the Lenders to make Loans and the Issuing Banks to issue Letters of Credit. Pursuant to Section 5.11 of the Credit Agreement, each Domestic Subsidiary that was not in existence or not a Domestic Subsidiary on the date of the Credit Agreement is required to enter into the Subsidiary Guarantee Agreement as a Subsidiary Guarantor upon becoming a Domestic Subsidiary. Section 20 of the Subsidiary Guarantee Agreement provides that additional Subsidiaries may become Subsidiary Guarantors under the Subsidiary Guarantee Agreement by execution and delivery of an instrument in the form of this Supplement. The undersigned Subsidiary (the "New Subsidiary Guarantor") is executing this Supplement in accordance with the requirements of the Credit Agreement to become a Subsidiary Guarantor under the Subsidiary Guarantee Agreement in order to induce the Lenders to make additional Loans and the Issuing Bank to issue additional Letters of Credit and as consideration for Loans previously made and Letters of Credit previously issued.

Accordingly, the Collateral Agent and the New Subsidiary Guarantor agree as follows:

SECTION 1. In accordance with Section 20 of the Subsidiary Guarantee Agreement, the New Subsidiary Guarantor by its signature below becomes a Subsidiary Guarantor under the Subsidiary Guarantee Agreement with the same force and effect as if originally named therein as a Subsidiary Guarantor and the New Subsidiary Guarantor hereby (a) agrees to all the terms and provisions of the Subsidiary Guarantee Agreement applicable to it as a Subsidiary Guarantor thereunder and (b) represents and warrants that the representations and warranties made by it as a Subsidiary Guarantor thereunder are true and correct on and as of the date hereof. Each reference to a "Subsidiary Guarantor" in the Subsidiary Guarantee Agreement shall be deemed to include the New Subsidiary Guarantor. The Subsidiary Guarantee Agreement is hereby incorporated herein by reference.

SECTION 2. The New Subsidiary Guarantor represents and warrants to the Collateral Agent and the other Secured Parties that this Supplement has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms.


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SECTION 3. This Supplement may be executed in counterparts, each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Supplement shall become effective when the Collateral Agent shall have received counterparts of this Supplement that, when taken together, bear the signatures of the New Subsidiary Guarantor and the Collateral Agent. Delivery of an executed signature page to this Supplement by facsimile transmission shall be as effective as delivery of a manually executed counterpart of this Supplement.

SECTION 4. Except as expressly supplemented hereby, the Subsidiary Guarantee Agreement shall remain in full force and effect.

SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

SECTION 6. In case any one or more of the provisions contained in this Supplement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and in the Subsidiary Guarantee Agreement shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision hereof in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties hereto shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

SECTION 7. All communications and notices hereunder shall be in writing and given as provided in Section 14 of the Subsidiary Guarantee Agreement.

SECTION 8. The Collateral Agent shall be reimbursed, in accordance with
Section 9.05(a) of the Credit Agreement, for its out-of-pocket expenses in connection with this Supplement, including the fees, disbursements and other charges of counsel for the Collateral Agent.

IN WITNESS WHEREOF, the New Subsidiary Guarantor and the Collateral Agent have duly executed this Supplement to the Subsidiary Guarantee Agreement as of the day and year first above written.

[Name of New Subsidiary Guarantor],

by
Name:


Title:
Address:


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CREDIT SUISSE FIRST BOSTON,
as Collateral Agent,

by

Name:

Title:

by

Name:

Title:


1

SECURITY AGREEMENT dated as of March 6, 1998, among TEREX CORPORATION, a Delaware corporation ("Terex"), each subsidiary of Terex listed on Schedule I hereto (each such subsidiary individually a "Subsidiary Guarantor" and collectively, the "Subsidiary Guarantors"; the Subsidiary Guarantors and Terex are referred to collectively herein as the "Grantors") and CREDIT SUISSE FIRST BOSTON, a bank organized under the laws of Switzerland, acting through its New York branch, ("CSFB"), as collateral agent (in such capacity, the "Collateral Agent") for the Secured Parties (as defined herein).

Reference is made to (a) the Credit Agreement dated as of March 6, 1998 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among Terex, Terex Equipment Limited, a company organized under the laws of Scotland, P.P.M. S.A., a company organized under the laws of the Republic of France, Unit Rig (Australia) Pty. Ltd., a company organized under the laws of New South Wales, and P.P.M. Sp.A., a company organized under the laws of the Republic of Italy, the Lenders (as defined in Article I thereto), the Issuing Banks (as defined in Article I thereto) and CSFB, as administrative agent and as collateral agent for the Lenders, (b) the Guarantee Agreement dated as of March 6, 1998 (as amended, supplemented or otherwise modified from time to time, the "Subsidiary Guarantee Agreement") among the Subsidiary Guarantors and the Collateral Agent and (c) the Guarantee Agreement dated as of March 6, 1998 (as amended, supplemented or otherwise modified from time to time, the "Terex Guarantee Agreement") between Terex and the Collateral Agent. Capitalized terms used herein and not defined herein shall have meanings assigned to such terms in the Credit Agreement.

The Lenders have agreed to make Loans to the Borrowers and the Issuing Banks have agreed to issue Letters of Credit for the account of the Borrowers, pursuant to, and upon the terms and subject to the conditions specified in, the Credit Agreement. The Subsidiary Guarantors have agreed to guarantee, among other things, all the obligations of the Borrowers under the Credit Agreement in accordance with the terms of the Subsidiary Guarantee Agreement. Terex has agreed to guarantee, among other things, all the obligations of the Subsidiary Borrowers under the Credit Agreement in accordance with the terms of the Terex Guarantee Agreement. The obligations of the Lenders to make Loans and of the Issuing Banks to issue Letters of Credit are conditioned upon, among other things, the execution and delivery by the Grantors of an agreement in the form hereof to secure (a) the due and punctual payment by the Borrowers of (i) the principal of and premium, if any, and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Loans, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, (ii) each payment required to be made by any Borrower under the Credit Agreement in respect of any Letter of Credit, when and as due, including payments in respect of reimbursement of disbursements, interest thereon and obligations to provide cash collateral and
(iii) all other monetary obligations, including fees, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), of the Borrowers to the Secured Parties under the Credit Agreement and the other Loan Documents, (b) the due and punctual performance of all covenants, agreements, obligations and liabilities of the Borrowers under or pursuant to the Credit Agreement and the other Loan Documents, (c) the due and punctual payment and performance of all the covenants, agreements, obligations and liabilities of each other Loan Party under or pursuant to this Agreement and the other Loan Documents and (d) the due and punctual payment and performance of all obligations of the Borrowers under each Hedging Agreement entered into with any counterparty that was a Lender (or an Affiliate thereof) at the time such Hedging Agreement was entered into (all


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the monetary and other obligations referred to in the preceding clauses (a) through (d) being referred to collectively as the "Obligations").

Accordingly, the Grantors and the Collateral Agent, on behalf of itself and each Secured Party (and each of their respective successors or assigns), hereby agree as follows:

ARTICLE I

Definitions

SECTION 1.01. Definition of Terms Used Herein. Unless the context otherwise requires, all capitalized terms used but not defined herein shall have the meanings set forth in the Credit Agreement.

SECTION 1.02. Definition of Certain Terms Used Herein. As used herein, the following terms shall have the following meanings:

"Account Debtor" shall mean any person who is or who may become obligated to any Grantor under, with respect to or on account of an Account.

"Accounts" shall mean any and all right, title and interest of any Grantor to payment for goods and services sold or leased, including any such right evidenced by chattel paper, whether due or to become due, whether or not it has been earned by performance, and whether now or hereafter acquired or arising in the future, including accounts receivable from Affiliates of the Grantors.

"Accounts Receivable" shall mean all Accounts and all right, title and interest in any returned goods, together with all rights, titles, securities and guarantees with respect thereto, including any rights to stoppage in transit, replevin, reclamation and resales, and all related security interests, liens and pledges, whether voluntary or involuntary, in each case whether now existing or owned or hereafter arising or acquired.

"Collateral" shall mean all (a) Accounts Receivable, (b) Documents, (c) Equipment, (d) General Intangibles, (e) Inventory, (f) cash and cash accounts,
(g) Investment Property and (h) Proceeds; provided that the Collateral shall not include more than 65% of the issued and outstanding shares of stock of any Foreign Subsidiary.

"Commodity Account" shall mean an account maintained by a Commodity Intermediary in which a Commodity Contract is carried out for a Commodity Customer.

"Commodity Contract" shall mean a commodity futures contract, an option on a commodity futures contract, a commodity option or any other contract that, in each case, is (a) traded on or subject to the rules of a board of trade that has been designated as a contract market for such a contract pursuant to the federal commodities laws or (b) traded on a foreign commodity board of trade, exchange or market, and is carried on the books of a Commodity Intermediary for a Commodity Customer.

"Commodity Customer" shall mean a person for whom a Commodity Intermediary carries a Commodity Contract on its books.

"Commodity Intermediary" shall mean (a) a person who is registered as a futures commission merchant under the federal commodities laws or (b) a person who in the ordinary course of its business provides clearance or settlement services for a board of trade that has been designated as a contract market pursuant to federal commodities laws.


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"Copyright License" shall mean any written agreement, now or hereafter in effect, granting any right to any third party under any Copyright now or hereafter owned by any Grantor or which such Grantor otherwise has the right to license, or granting any right to such Grantor under any Copyright now or hereafter owned by any third party, and all rights of such Grantor under any such agreement.

"Copyrights" shall mean all of the following now owned or hereafter acquired by any Grantor: (a) all copyright rights in any work subject to the copyright laws of the United States or any other country, whether as author, assignee, transferee or otherwise, and (b) all registrations and applications for registration of any such copyright in the United States or any other country, including registrations, recordings, supplemental registrations and pending applications for registration in the United States Copyright Office, including those listed on Schedule II.

"Credit Agreement" shall have the meaning assigned to such term in the preliminary statement of this Agreement.

"Documents" shall mean all instruments, files, records, ledger sheets and documents covering or relating to any of the Collateral.

"Entitlement Holder" shall mean a person identified in the records of a Securities Intermediary as the person having a Security Entitlement against the Securities Intermediary. If a person acquires a Security Entitlement by virtue of Section 8-501(b)(2) or (3) of the Uniform Commercial Code as in effect in the relevant jurisdiction, such person is the Entitlement Holder.

"Equipment" shall mean all equipment, furniture and furnishings, and all tangible personal property similar to any of the foregoing, including tools, parts and supplies of every kind and description, and all improvements, accessions or appurtenances thereto, that are now or hereafter owned by any Grantor. The term Equipment shall include Fixtures.

"Financial Asset" shall mean (a) a Security, (b) an obligation of a person or a share, participation or other interest in a person or in property or an enterprise of a person, which is, or is of a type, dealt with in or traded on financial markets, or which is recognized in any area in which it is issued or dealt in as a medium for investment or (c) any property that is held by a Securities Intermediary for another person in a Securities Account if the Securities Intermediary has expressly agreed with the other person that the property is to be treated as a Financial Asset under Article 8 of the Uniform Commercial Code as in effect in the relevant jurisdiction. As the context requires, the term Financial Asset shall mean either the interest itself or the means by which a person's claim to it is evidenced, including a certificated or uncertificated Security, a certificate representing a Security or a Security Entitlement.

"Fixtures" shall mean all items of Equipment, whether now owned or hereafter acquired, of any Grantor that become so related to particular real estate that an interest in them arises under any real estate law applicable thereto.

"General Intangibles" shall mean all choses in action and causes of action and all other assignable intangible personal property of any Grantor of every kind and nature (other than Accounts Receivable) now owned or hereafter acquired by any Grantor, including Indebtedness of Terex or any Subsidiary whether evidenced by a promissory note or not, but excluding the intercompany demand notes listed on Schedule VI, corporate or other business records, indemnification claims, contract rights (including rights under leases, whether entered into as lessor or lessee, Hedging Agreements and other agreements), Intellectual Property, goodwill, registrations, franchises, tax refund claims and any letter of credit, guarantee, claim, security interest or other security held by or granted to any Grantor to secure payment by an Account Debtor of any of the Accounts Receivable.


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"Intellectual Property" shall mean all intellectual and similar property of any Grantor of every kind and nature now owned or hereafter acquired by any Grantor, including inventions, designs, Patents, Copyrights, Licenses, Trademarks, trade secrets, confidential or proprietary technical and business information, know-how, show-how or other data or information, software and databases and all embodiments or fixations thereof and related documentation, registrations and franchises, and all additions, improvements and accessions to, and books and records describing or used in connection with, any of the foregoing.

"Inventory" shall mean all goods of any Grantor, whether now owned or hereafter acquired, held for sale or lease, or furnished or to be furnished by any Grantor under contracts of service, or consumed in any Grantor's business, including raw materials, intermediates, work in process, packaging materials, finished goods, semi-finished inventory, scrap inventory, manufacturing supplies and spare parts, and all such goods that have been returned to or repossessed by or on behalf of any Grantor.

"Investment Property" shall mean all Securities (whether certificated or uncertificated), Security Entitlements, Securities Accounts, Commodity Contracts and Commodity Accounts of any Grantor, whether now owned or hereafter acquired by any Grantor.

"License" shall mean any Patent License, Trademark License, Copyright License or other license or sublicense to which any Grantor is a party, including those listed on Schedule III (other than those license agreements in existence on the date hereof and listed on Schedule III and those license agreements entered into after the date hereof, which by their terms prohibit assignment or a grant of a security interest by such Grantor as licensee thereunder).

"Lockbox System" shall have the meaning assigned to such term in
Section 5.01.

"Obligations" shall have the meaning assigned to such term in the preliminary statement of this Agreement.

"Patent License" shall mean any written agreement, now or hereafter in effect, granting to any third party any right to make, use or sell any invention on which a Patent, now or hereafter owned by any Grantor or which any Grantor otherwise has the right to license, is in existence, or granting to any Grantor any right to make, use or sell any invention on which a Patent, now or hereafter owned by any third party, is in existence, and all rights of any Grantor under any such agreement.

"Patents" shall mean all of the following now owned or hereafter acquired by any Grantor: (a) all letters patent of the United States or any other country, all registrations and recordings thereof, and all applications for letters patent of the United States or any other country, including registrations, recordings and pending applications in the United States Patent and Trademark Office or any similar offices in any other country, including those listed on Schedule IV, and (b) all reissues, continuations, divisions, continuations-in-part, renewals or extensions thereof, and the inventions disclosed or claimed therein, including the right to make, use and/or sell the inventions disclosed or claimed therein.

"Perfection Certificate" shall mean a certificate in a form previously approved by the Collateral Agent, completed and supplemented with the schedules and attachments contemplated thereby, and duly executed by a Financial Officer and the chief legal officer of Terex.

"Proceeds" shall mean any consideration received from the sale, exchange, license, lease or other disposition of any asset or property that constitutes Collateral, any value received as a consequence of the possession of any Collateral and any payment received from any insurer or other person or entity as a result of the destruction, loss, theft, damage or other involuntary


5

conversion of whatever nature of any asset or property which constitutes Collateral, and shall include (a) all cash and negotiable instruments received by or held on behalf of the Collateral Agent pursuant to the Lockbox System, (b) any claim of any Grantor against any third party for (and the right to sue and recover for and the rights to damages or profits due or accrued arising out of or in connection with) (i) past, present or future infringement of any Patent now or hereafter owned by any Grantor, or licensed under a Patent License, (ii) past, present or future infringement or dilution of any Trademark now or hereafter owned by any Grantor or licensed under a Trademark License or injury to the goodwill associated with or symbolized by any Trademark now or hereafter owned by any Grantor, (iii) past, present or future breach of any License and
(iv) past, present or future infringement of any Copyright now or hereafter owned by any Grantor or licensed under a Copyright License and (c) any and all other amounts from time to time paid or payable under or in connection with any of the Collateral.

"Secured Parties" shall mean (a) the Lenders, (b) the Administrative Agent, (c) the Collateral Agent, (d) the Issuing Banks, (e) each counterparty to an Interest Rate Protection Agreement entered into with any Borrower if such counterparty was a Lender at the time the Hedging Agreement was entered into,
(f) the beneficiaries of each indemnification obligation undertaken by any Grantor under any Loan Document and (g) the successors and assigns of each of the foregoing.

"Securities" shall mean any obligations of an issuer or any shares, participations or other interests in an issuer or in property or an enterprise of an issuer which (a) are represented by a certificate representing a security in bearer or registered form, or the transfer of which may be registered upon books maintained for that purpose by or on behalf of the issuer, (b) are one of a class or series or by its terms is divisible into a class or series of shares, participations, interests or obligations and (c)(i) are, or are of a type, dealt with or traded on securities exchanges or securities markets or (ii) are a medium for investment and by their terms expressly provide that they are a security governed by Article 8 of the Uniform Commercial Code as in effect in the relevant jurisdiction.

"Securities Account" shall mean an account to which a Financial Asset is or may be credited in accordance with an agreement under which the person maintaining the account undertakes to treat the person for whom the account is maintained as entitled to exercise rights that comprise the Financial Asset.

"Security Entitlements" shall mean the rights and property interests of an Entitlement Holder with respect to a Financial Asset.

"Security Interest" shall have the meaning assigned to such term in
Section 2.01.

"Securities Intermediary" shall mean (a) a clearing corporation or (b) a person, including a bank or broker, that in the ordinary course of its business maintains securities accounts for others and is acting in that capacity.

"Sub-Agent" shall mean a financial institution which shall have delivered to the Collateral Agent an executed Lockbox and Depository Agreement.

"Trademark License" shall mean any written agreement, now or hereafter in effect, granting to any third party any right to use any Trademark now or hereafter owned by any Grantor or which any Grantor otherwise has the right to license, or granting to any Grantor any right to use any Trademark now or hereafter owned by any third party, and all rights of any Grantor under any such agreement.

"Trademarks" shall mean all of the following now owned or hereafter acquired by any Grantor: (a) all trademarks, service marks, trade names, corporate names, company names, business names, fictitious business names,


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trade styles, trade dress, logos, other source or business identifiers, designs and general intangibles of like nature, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all registration and recording applications filed in connection therewith, including registrations and registration applications in the United States Patent and Trademark Office, any State of the United States or any similar offices in any other country or any political subdivision thereof, and all extensions or renewals thereof, including those listed on Schedule V, (b) all goodwill associated therewith or symbolized thereby and (c) all other assets, rights and interests that uniquely reflect or embody such goodwill.

SECTION 1.03. Rules of Interpretation. The rules of interpretation specified in Section 1.02 of the Credit Agreement shall be applicable to this Agreement.

ARTICLE II

Security Interest

SECTION 2.01. Security Interest. As security for the payment or performance, as the case may be, in full of the Obligations, each Grantor hereby bargains, sells, conveys, assigns, sets over, mortgages, pledges, hypothecates and transfers to the Collateral Agent, its successors and assigns, for the ratable benefit of the Secured Parties, and hereby grants to the Collateral Agent, its successors and assigns, for the ratable benefit of the Secured Parties, a security interest in, all of such Grantor's right, title and interest in, to and under the Collateral (the "Security Interest"). Without limiting the foregoing, the Collateral Agent is hereby authorized to file one or more financing statements (including fixture filings), continuation statements, filings with the United States Patent and Trademark Office or United States Copyright Office (or any successor office or any similar office in any other country) or other documents for the purpose of perfecting, confirming, continuing, enforcing or protecting the Security Interest granted by each Grantor, without the signature of any Grantor, and naming any Grantor or the Grantors as debtors and the Collateral Agent as secured party.

SECTION 2.02. No Assumption of Liability. The Security Interest is granted as security only and shall not subject the Collateral Agent or any other Secured Party to, or in any way alter or modify, any obligation or liability of any Grantor with respect to or arising out of the Collateral.

ARTICLE III

Representations and Warranties

The Grantors jointly and severally represent and warrant to the Collateral Agent and the Secured Parties that:

SECTION 3.01. Title and Authority. Each Grantor has good and valid rights in and title to the Collateral with respect to which it has purported to grant a Security Interest hereunder and has full corporate power and authority to grant to the Collateral Agent the Security Interest in such Collateral pursuant hereto and to execute, deliver and perform its obligations in accordance with the terms of this Agreement, without the consent or approval of any other person other (i) than any consent or approval which has been obtained and (ii) any consent or approval the failure of which to obtain could not impair or adversely affect the Security Interests intended to be granted hereunder.

SECTION 3.02. Filings. (a) The Perfection Certificate has been duly prepared, completed and executed and the information set forth therein is correct and complete. Fully executed Uniform Commercial Code financing


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statements (including fixture filings, as applicable) or other appropriate filings, recordings or registrations containing a description of the Collateral have been delivered to the Collateral Agent for filing in each appropriate governmental, municipal or other office, which are all the filings, recordings and registrations (other than filings required to be made in the United States Patent and Trademark Office and the United States Copyright Office in order to perfect the Security Interest in Collateral consisting of United States Patents, Trademarks and Copyrights) that are necessary to publish notice of and protect the validity of and to establish a legal, valid and perfected security interest in favor of the Collateral Agent (for the ratable benefit of the Secured Parties) in respect of all Collateral (other than Collateral in transit with an aggregate fair market value not to exceed $20,000,000 at any one time) in which the Security Interest may be perfected by filing, recording or registration in the United States (or any political subdivision thereof) and its territories and possessions, and no further or subsequent filing, refiling, recording, rerecording, registration or reregistration is necessary in any such jurisdiction, except as provided under applicable law with respect to the filing of continuation statements.

(b) Each Grantor represents and warrants that fully executed security agreements in the form hereof and containing a description of all Collateral consisting of Intellectual Property with respect to United States Patents and United States registered Trademarks (and Trademarks for which United States registration applications are pending) and United States registered Copyrights, have been delivered to the Collateral Agent for recording by the United States Patent and Trademark Office and the United States Copyright Office pursuant to 35 U.S.C. ss. 261, 15 U.S.C. ss. 1060 or 17 U.S.C. ss. 205 and the regulations thereunder, as applicable, and otherwise as may be required pursuant to the laws of any other necessary jurisdiction, to protect the validity of and to establish a legal, valid and perfected security interest in favor of the Collateral Agent (for the ratable benefit of the Secured Parties) in respect of all Collateral consisting of Patents, Trademarks and Copyrights in which a security interest may be perfected by filing, recording or registration in the United States (or any political subdivision thereof) and its territories and possessions, or in any other necessary jurisdiction, and no further or subsequent filing, refiling, recording, rerecording, registration or reregistration is necessary (other than such actions as are necessary to perfect the Security Interest with respect to any Collateral consisting of Patents, Trademarks and Copyrights (or registration or application for registration thereof) acquired or developed after the date hereof).

SECTION 3.03. Validity of Security Interest. The Security Interest constitutes (a) a legal and valid security interest in all the Collateral securing the payment and performance of the Obligations, (b) subject to the filings described in Section 3.02 above, a perfected security interest in all Collateral in which a security interest may be perfected by filing, recording or registering a financing statement or analogous document in the United States (or any political subdivision thereof) and its territories and possessions pursuant to the Uniform Commercial Code or other applicable law in such jurisdictions and
(c) a security interest that shall be perfected in all Collateral in which a security interest may be perfected upon the receipt and recording of this Agreement with the United States Patent and Trademark Office and the United States Copyright Office, as applicable, within the three month period (commencing as of the date hereof) pursuant to 35 U.S.C. ss. 261 or 15 U.S.C. ss. 1060 or the one month period (commencing as of the date hereof) pursuant to 17 U.S.C. ss. 205 and otherwise as may be required pursuant to the laws of any other necessary jurisdiction. The Security Interest is and shall be prior to any other Lien on any of the Collateral, other than Liens expressly permitted to be prior to the Security Interest pursuant to Section 6.02 of the Credit Agreement.

SECTION 3.04. Absence of Other Liens. The Collateral is owned by the Grantors free and clear of any Lien, except for Liens expressly permitted pursuant to Section 6.02 of the Credit Agreement. The Grantor has not filed or consented to the filing of (a) any financing statement or analogous document under the Uniform Commercial Code or any other applicable laws covering any Collateral except for financing statements or analogous documents filed for precautionary reasons relating to operating leases, consignments and other similar items, in each case (i) in the ordinary course of business, and (ii) as


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permitted under the Credit Agreement, (b) any assignment in which any Grantor assigns any Collateral or any security agreement or similar instrument covering any Collateral with the United States Patent and Trademark Office or the United States Copyright Office or (c) any assignment in which any Grantor assigns any Collateral or any security agreement or similar instrument covering any Collateral with any foreign governmental, municipal or other office, which financing statement or analogous document, assignment, security agreement or similar instrument is still in effect, except, in each case, for Liens expressly permitted pursuant to Section 6.02 of the Credit Agreement.

ARTICLE IV

Covenants

SECTION 4.01. Change of Name; Location of Collateral; Records; Place of Business. (a) Each Grantor agrees promptly to notify the Collateral Agent in writing of any change (i) in its corporate name or in any trade name used to identify it in the conduct of its business or in the ownership of its properties, (ii) in the location of its chief executive office, its principal place of business, any office in which it maintains books or records relating to Collateral owned by it or any office or facility at which Collateral owned by it is located (including the establishment of any such new office or facility),
(iii) in its identity or corporate structure or (iv) in its Federal Taxpayer Identification Number. Each Grantor agrees not to effect or permit any change referred to in the preceding sentence unless all filings have been made under the Uniform Commercial Code or otherwise that are required in order for the Collateral Agent to continue at all times following such change to have a valid, legal and perfected first priority security interest in all the Collateral. Each Grantor agrees promptly to notify the Collateral Agent if any material portion of the Collateral owned or held by such Grantor is damaged or destroyed.

(b) Each Grantor agrees to maintain, at its own cost and expense, such complete and accurate records with respect to the Collateral owned by it as is consistent with its current practices and in accordance with such prudent and standard practices used in industries that are the same as or similar to those in which such Grantor is engaged, but in any event to include complete accounting records indicating all payments and proceeds received with respect to any part of the Collateral, and, at such time or times as the Collateral Agent may reasonably request, promptly to prepare and deliver to the Collateral Agent a duly certified schedule or schedules in form and detail satisfactory to the Collateral Agent showing the identity, amount and location of any and all Collateral.

SECTION 4.02. Periodic Certification. Each year, at the time of delivery of annual financial statements with respect to the preceding fiscal year pursuant to Section 5.04 of the Credit Agreement, Terex shall deliver to the Collateral Agent a certificate executed by a Financial Officer and the chief legal officer of Terex (a) setting forth the information required pursuant to
Section 2 of the Perfection Certificate or confirming that there has been no change in such information since the date of such certificate or the date of the most recent certificate delivered pursuant to Section 4.02 and (b) certifying that all Uniform Commercial Code financing statements (including fixture filings, as applicable) or other appropriate filings, recordings or registrations, including all refilings, rerecordings and reregistrations, containing a description of the Collateral have been filed of record in each governmental, municipal or other appropriate office in each jurisdiction identified pursuant to clause (a) above to the extent necessary to protect and perfect the Security Interest for a period of not less than 18 months after the date of such certificate (except as noted therein with respect to any continuation statements to be filed within such period). Each certificate delivered pursuant to this Section 4.02 shall identify in the format of Schedule II, III, IV or V, as applicable, all Intellectual Property of any Grantor in


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existence on the date thereof and not then listed on such Schedules or previously so identified to the Collateral Agent.

SECTION 4.03. Protection of Security. Each Grantor shall, at its own cost and expense, take any and all commercially reasonable actions necessary to defend title to the Collateral against all persons and to defend the Security Interest of the Collateral Agent in the Collateral and the priority thereof against any Lien not expressly permitted pursuant to Section 6.02 of the Credit Agreement.

SECTION 4.04. Further Assurances. Each Grantor agrees, at its own expense, to execute, acknowledge, deliver and cause to be duly filed all such further instruments and documents and take all such actions as the Collateral Agent may from time to time reasonably request to better assure, preserve, protect and perfect the Security Interest and the rights and remedies created hereby, including the payment of any fees and taxes required in connection with the execution and delivery of this Agreement, the granting of the Security Interest and the filing of any financing statements (including fixture filings) or other documents in connection herewith or therewith. If any amount payable under or in connection with any of the Collateral shall be or become evidenced by any promissory note or other instrument, such note or instrument shall be immediately pledged and delivered to the Collateral Agent, duly endorsed in a manner satisfactory to the Collateral Agent.

Without limiting the generality of the foregoing, each Grantor hereby authorizes the Collateral Agent, with prompt notice thereof to the Grantors, to supplement this Agreement by supplementing Schedule II, III, IV or V hereto or adding additional schedules hereto to specifically identify any asset or item that may constitute Copyrights, Licenses, Patents or Trademarks; provided, however, that any Grantor shall have the right, exercisable within 10 days after it has been notified by the Collateral Agent of the specific identification of such Collateral, to advise the Collateral Agent in writing of any inaccuracy of the representations and warranties made by such Grantor hereunder with respect to such Collateral. Each Grantor agrees that it will use its best efforts to take such action as shall be necessary in order that all representations and warranties hereunder shall be true and correct in all material respects with respect to such Collateral within 30 days after the date it has been notified by the Collateral Agent of the specific identification of such Collateral.

SECTION 4.05. Inspection and Verification. The Collateral Agent and such persons as the Collateral Agent may reasonably designate shall have the right at the Grantors' own cost and expense, to inspect, during normal business hours and on reasonable notice, the Collateral, all records related thereto (and to make extracts and copies from such records) and the premises upon which any of the Collateral is located (no more than two such inspections being permitted annually under this Section 4.05 unless an Event of Default shall have occurred and be continuing) to discuss the Grantors' affairs with the officers of the Grantors and their independent accountants and to verify under reasonable procedures the validity, amount, quality, quantity, value, condition and status of, or any other matter relating to, the Collateral, including, in the case of Accounts or Collateral in the possession of any third person, by contacting Account Debtors or the third person possessing such Collateral for the purpose of making such a verification. The Collateral Agent shall have the absolute right to share any information it gains from such inspection or verification with any Secured Party (it being understood that any such information shall be deemed to be "Information" subject to the provisions of Section 9.17 of the Credit Agreement).

SECTION 4.06. Taxes; Encumbrances. At its option at any time after ten days notice to the applicable Grantor (or, to the extent the Collateral Agent deems it necessary to act prior the end of such ten day notice period in order to preserve the Collateral, the applicable Grantor's rights to and use of the Collateral or the Security Interest granted herein, any shorter notice period) the Collateral Agent may discharge past due taxes, assessments, charges, fees, Liens, security interests or other encumbrances at any time levied or placed on the Collateral and not permitted pursuant to Section 6.02 of the Credit


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Agreement, and may pay for the maintenance and preservation of the Collateral to the extent any Grantor fails to do so as required by the Credit Agreement or this Agreement, and each Grantor jointly and severally agrees to reimburse the Collateral Agent on demand for any payment made or any expense incurred by the Collateral Agent pursuant to the foregoing authorization; provided, however, that nothing in this Section 4.06 shall be interpreted as excusing any Grantor from the performance of, or imposing any obligation on the Collateral Agent or any Secured Party to cure or perform, any covenants or other promises of any Grantor with respect to taxes, assessments, charges, fees, liens, security interests or other encumbrances and maintenance as set forth herein or in the other Loan Documents.

SECTION 4.07. Assignment of Security Interest. If at any time any Grantor shall take a security interest in any property of an Account Debtor or any other person to secure payment and performance of an Account, such Grantor shall promptly assign (to the extent permitted to do so) such security interest to the Collateral Agent; provided that such Grantor shall make all commercially reasonable efforts to obtain consent to assign such property as security to the Collateral Agent pursuant to this Agreement. Such assignment need not be filed of public record unless necessary to continue the perfected status of the security interest against creditors of and transferees from the Account Debtor or other person granting the security interest.

SECTION 4.08. Continuing Obligations of the Grantors. Each Grantor shall remain liable to observe and perform all the conditions and obligations to be observed and performed by it under each contract, agreement or instrument relating to the Collateral, all in accordance with the terms and conditions thereof, and each Grantor jointly and severally agrees to indemnify and hold harmless the Collateral Agent and the Secured Parties from and against any and all liability for such performance.

SECTION 4.09. Use and Disposition of Collateral. None of the Grantors shall make or permit to be made an assignment, pledge or hypothecation of the Collateral or shall grant any other Lien in respect of the Collateral, except as expressly permitted by Section 6.02 of the Credit Agreement. None of the Grantors shall make or permit to be made any transfer of the Collateral and each Grantor shall remain at all times in possession of the Collateral owned by it, except that (a) Inventory and Accounts Receivable may be sold in the ordinary course of business and (b) unless and until the Collateral Agent shall notify the Grantors that an Event of Default shall have occurred and be continuing and that during the continuance thereof the Grantors shall not sell, convey, lease, assign, transfer or otherwise dispose of any Collateral (which notice may be given by telephone if promptly confirmed in writing), the Grantors may use and dispose of the Collateral in any lawful manner not inconsistent with the provisions of this Agreement, the Credit Agreement or any other Loan Document. Without limiting the generality of the foregoing, each Grantor agrees that it shall not permit any Inventory to be in the possession or control of any warehouseman, bailee, agent or processor at any time unless such warehouseman, bailee, agent or processor shall have been notified of the Security Interest and such Grantor shall have taken all commercially reasonable steps necessary to obtain the agreement from such warehouseman, bailee, agent or processor in writing to hold the Inventory subject to the Security Interest and the instructions of the Collateral Agent and to waive and release any Lien held by it with respect to such Inventory, whether arising by operation of law or otherwise.

SECTION 4.10. Limitation on Modification of Accounts. None of the Grantors will, without the Collateral Agent's prior written consent, which consent shall not be unreasonably withheld, grant any extension of the time of payment of any of the Accounts Receivable, compromise, compound or settle the same for less than the full amount thereof, release, wholly or partly, any person liable for the payment thereof or allow any credit or discount whatsoever thereon, other than extensions, credits, discounts, compromises or settlements granted or made in the ordinary course of business and consistent with its current and past practices and in accordance with such commercially prudent and


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standard practices used in industries that are the same as or similar to those in which such Grantor is engaged.

SECTION 4.11. Insurance. The Grantors, at their own expense, shall maintain or cause to be maintained insurance covering physical loss or damage to the Inventory and Equipment in accordance with Section 5.02 of the Credit Agreement. Each Grantor irrevocably makes, constitutes and appoints the Collateral Agent (and all officers, employees or agents designated by the Collateral Agent) as such Grantor's true and lawful agent (and attorney-in-fact) for the purpose, during the continuance of an Event of Default, of making, settling and adjusting claims in respect of Collateral under policies of insurance, endorsing the name of such Grantor on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance and for making all determinations and decisions with respect thereto. In the event that any Grantor at any time or times shall fail to obtain or main tain any of the policies of insurance required hereby or to pay any premium in whole or part relating thereto, the Collateral Agent may, without waiving or releasing any obligation or liability of the Grantors hereunder or any Event of Default, in its sole discretion, obtain and maintain such policies of insurance and pay such premium and take any other actions with respect thereto as the Collateral Agent deems advisable. All sums disbursed by the Collateral Agent in connection with this Section 4.11, including reasonable attorneys' fees, court costs, expenses and other charges relating thereto, shall be payable, upon demand, by the Grantors to the Collateral Agent and shall be additional Obligations secured hereby.

SECTION 4.12. Legend. Each Grantor shall legend, in form and manner reasonably satisfactory to the Collateral Agent, its Accounts Receivable and its books, records and documents evidencing or pertaining thereto with an appropriate reference to the fact that such Accounts Receivable have been assigned to the Collateral Agent for the benefit of the Secured Parties and that the Collateral Agent has a security interest therein. Collateral Agent shall provide Grantors with its legending requirements in writing.

SECTION 4.13. Covenants Regarding Patent, Trademark and Copyright Collateral. (a) Each Grantor agrees that it will not, nor will it permit any of its licensees to, do any act, or omit to do any act, whereby any Patent which is material to the conduct of such Grantor's business may become invalidated or dedicated to the public, and agrees that it shall continue to mark any products covered by a Patent with the relevant patent number as necessary and sufficient to establish and preserve its maximum rights under applicable patent laws.

(b) Each Grantor (either itself or through its licensees or its sublicensees) will, for each Trademark material to the conduct of such Grantor's business, (i) maintain such Trademark in full force free from any claim of abandonment or invalidity for non-use, (ii) maintain the quality of products and services offered under such Trademark, (iii) display such Trademark with notice of Federal or foreign registration to the extent necessary and sufficient to establish and preserve its maximum rights under applicable law and (iv) not knowingly use or knowingly permit the use of such Trademark in violation of any third party rights.

(c) Each Grantor (either itself or through licensees) will, for each work covered by a material Copyright, continue to publish, reproduce, display, adopt and distribute the work with appropriate copyright notice as necessary and sufficient to establish and preserve its maximum rights under applicable copyright laws.

(d) Each Grantor shall notify the Collateral Agent immediately if it knows or has reason to know that any Patent, Trademark or Copyright material to the conduct of its business may become abandoned, lost or dedicated to the public, or of any adverse determination or development (including the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office, United States Copyright Office or any court or similar office of any country) regarding such Grantor's ownership of any Patent, Trademark or Copyright, its right to register the same, or to


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keep and maintain the same.

(e) In no event shall any Grantor, either itself or through any agent, employee, licensee or designee, file an application for any Patent, Trademark or Copyright (or for the registration of any Trademark or Copyright) with the United States Patent and Trademark Office, United States Copyright Office or any office or agency in any political subdivision of the United States or in any other country or any political subdivision thereof, unless it promptly informs the Collateral Agent, and, upon request of the Collateral Agent, executes and delivers any and all agreements, instruments, documents and papers as the Collateral Agent may reasonably request to evidence the Collateral Agent's security interest in such Patent, Trademark or Copyright, and each Grantor hereby appoints the Collateral Agent as its attorney-in-fact to execute and file such writings for the foregoing purposes, all acts of such attorney being hereby ratified and confirmed; such power, being coupled with an interest, is irrevocable.

(f) Each Grantor will take all commercially reasonable necessary steps that are consistent with the practice in any proceeding before the United States Patent and Trademark Office, United States Copyright Office or any office or agency in any political subdivision of the United States or in any other country or any political subdivision thereof, to maintain and pursue each material application relating to the Patents, Trademarks and/or Copyrights (and to obtain the relevant grant or registration) and to maintain each issued Patent and each registration of the Trademarks and Copyrights that is material to the conduct of any Grantor's business, including timely filings of applications for renewal, affidavits of use, affidavits of incontestability and payment of maintenance fees, and, if consistent with good business judgment, to initiate opposition, interference and cancelation proceedings against third parties.

(g) In the event that any Grantor has reason to believe that any Collateral consisting of a Patent, Trademark or Copyright material to the conduct of any Grantor's business has been or is about to be infringed, misappropriated or diluted by a third party, such Grantor promptly shall notify the Collateral Agent and shall, if consistent with good business judgment, promptly sue for infringement, misappropriation or dilution and to recover any and all damages for such infringement, misappropriation or dilution, and take such other actions as are appropriate under the circumstances to protect such Collateral.

(h) Upon and during the continuance of an Event of Default, each Grantor shall use all commercially reasonable efforts to obtain all requisite consents or approvals by the licensor of each Copyright License, Patent License or Trademark License to effect the assignment of all of such Grantor's right, title and interest thereunder to the Collateral Agent or its designee.

ARTICLE V

Collections

SECTION 5.01. Lockbox System. Terex shall maintain its existing lock-box arrangements for the benefit of the Secured Parties with UMB Bank of St. Louis, N.A. ("UMB") pursuant to the Lockbox Operating and Procedural Agreement, dated as of April 7, 1997, among Terex, certain of its Subsidiaries, UMB and BankBoston, N.A. (formerly The First National Bank of Boston), or at the request of CSFB, shall enter into a substantially similar arrangement with CSFB (any such arrangement the "Lockbox System").

SECTION 5.02. Power of Attorney. Each Grantor irrevocably makes, constitutes and appoints the Collateral Agent (and all officers, employees or agents designated by the Collateral Agent) as such Grantor's true and lawful agent and attorney-in-fact, and in such capacity the Collateral Agent shall have the right, with power of substitution for each Grantor and in each Grantor's


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name or otherwise, for the use and benefit of the Collateral Agent and the Secured Parties, upon the occurrence and during the continuance of an Event of Default (a) to receive, endorse, assign and/or deliver any and all notes, acceptances, checks, drafts, money orders or other evidences of payment relating to the Collateral or any part thereof; (b) to demand, collect, receive payment of, give receipt for and give discharges and releases of all or any of the Collateral; (c) to sign the name of any Grantor on any invoice or bill of lading relating to any of the Collateral; (d) to send verifications of Accounts Receivable to any Account Debtor; (e) to commence and prosecute any and all suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect or otherwise realize on all or any of the Collateral or to enforce any rights in respect of any Collateral; (f) to settle, compromise, compound, adjust or defend any actions, suits or proceedings relating to all or any of the Collateral; (g) to notify, or to require any Grantor to notify, Account Debtors to make payment directly to the Collateral Agent; and (h) to use, sell, assign, transfer, pledge, make any agreement with respect to or otherwise deal with all or any of the Collateral, and to do all other acts and things necessary to carry out the purposes of this Agreement, as fully and completely as though the Collateral Agent were the absolute owner of the Collateral for all purposes; provided, however, that nothing herein contained shall be construed as requiring or obligating the Collateral Agent or any Secured Party to make any commitment or to make any inquiry as to the nature or sufficiency of any payment received by the Collateral Agent or any Secured Party, or to present or file any claim or notice, or to take any action with respect to the Collateral or any part thereof or the moneys due or to become due in respect thereof or any property covered thereby, and no action taken or omitted to be taken by the Collateral Agent or any Secured Party with respect to the Collateral or any part thereof shall give rise to any defense, counterclaim or offset in favor of any Grantor or to any claim or action against the Collateral Agent or any Secured Party. It is understood and agreed that the appointment of the Collateral Agent as the agent and attorney-in-fact of the Grantors for the purposes set forth above is coupled with an interest and is irrevocable. The provisions of this Section shall in no event relieve any Grantor of any of its obligations hereunder or under any other Loan Document with respect to the Collateral or any part thereof or impose any obligation on the Collateral Agent or any Secured Party to proceed in any particular manner with respect to the Collateral or any part thereof, or in any way limit the exercise by the Collateral Agent or any Secured Party of any other or further right which it may have on the date of this Agreement or hereafter, whether hereunder, under any other Loan Document, by law or otherwise.

ARTICLE VI

Remedies

SECTION 6.01. Remedies upon Default. Upon the occurrence and during the continuance of an Event of Default, each Grantor agrees to deliver each item of Collateral to the Collateral Agent on demand, and it is agreed that the Collateral Agent shall have the right to take any of or all the following actions at the same or different times: (a) with respect to any Collateral consisting of Intellectual Property, on demand, to cause the Security Interest to become an assignment, transfer and conveyance of any of or all such Collateral by the applicable Grantors to the Collateral Agent, or to license or sublicense, whether general, special or otherwise, and whether on an exclusive or non-exclusive basis, any such Collateral throughout the world on such terms and conditions and in such manner as the Collateral Agent shall determine (other than in violation of any then-existing licensing arrangements to the extent that waivers cannot be obtained), and (b) with or without legal process and with or without prior notice or demand for performance, to take possession of the Collateral and without liability for trespass to enter any premises where the Collateral may be located for the purpose of taking possession of or removing the Collateral and, generally, to exercise any and all rights afforded to a secured party under the Uniform Commercial Code or other applicable law. Without limiting the generality of the foregoing, each Grantor agrees that the Collateral Agent shall have the right, subject to the mandatory requirements of applicable law, to sell or otherwise dispose of all or any part of the


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Collateral, at public or private sale or at any broker's board or on any securities exchange, for cash, upon credit or for future delivery as the Collateral Agent shall deem appropriate. The Collateral Agent shall be authorized at any such sale (if it deems it advisable to do so) to restrict the prospective bidders or purchasers to persons who will represent and agree that they are purchasing the Collateral for their own account for investment and not with a view to the distribution or sale thereof, and upon consummation of any such sale the Collateral Agent shall have the right to assign, transfer and deliver to the purchaser or purchasers thereof the Collateral so sold. Each such purchaser at any such sale shall hold the property sold absolutely, free from any claim or right on the part of any Grantor, and each Grantor hereby waives (to the extent permitted by law) all rights of redemption, stay and appraisal which such Grantor now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted.

The Collateral Agent shall give the Grantors 10 days' written notice (which each Grantor agrees is reasonable notice within the meaning of Section 9-504(3) of the Uniform Commercial Code as in effect in the State of New York or its equivalent in other jurisdictions) of the Collateral Agent's intention to make any sale of Collateral. Such notice, in the case of a public sale, shall state the time and place for such sale and, in the case of a sale at a broker's board or on a securities exchange, shall state the board or exchange at which such sale is to be made and the day on which the Collateral, or portion thereof, will first be offered for sale at such board or exchange. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as the Collateral Agent may fix and state in the notice (if any) of such sale. At any such sale, the Collateral, or portion thereof, to be sold may be sold in one lot as an entirety or in separate parcels, as the Collateral Agent may (in its sole and absolute discretion) determine. The Collateral Agent shall not be obligated to make any sale of any Collateral if it shall determine not to do so, regardless of the fact that notice of sale of such Collateral shall have been given. The Collateral Agent may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned. In case any sale of all or any part of the Collateral is made on credit or for future delivery, the Collateral so sold may be retained by the Collateral Agent until the sale price is paid by the purchaser or purchasers thereof, but the Collateral Agent shall not incur any liability in case any such purchaser or purchasers shall fail to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may be sold again upon like notice. At any public (or, to the extent permitted by law, private) sale made pursuant to this Section, any Secured Party may bid for or purchase, free (to the extent permitted by law) from any right of redemption, stay, valuation or appraisal on the part of any Grantor (all said rights being also hereby waived and released to the extent permitted by law), the Collateral or any part thereof offered for sale and may make payment on account thereof by using any claim then due and payable to such Secured Party from any Grantor as a credit against the purchase price, and such Secured Party may, upon compliance with the terms of sale, hold, retain and dispose of such property without further accountability to any Grantor therefor. For purposes hereof, a written agreement to purchase the Collateral or any portion thereof shall be treated as a sale thereof; the Collateral Agent shall be free to carry out such sale pursuant to such agreement and no Grantor shall be entitled to the return of the Collateral or any portion thereof subject thereto, notwithstanding the fact that after the Collateral Agent shall have entered into such an agreement all Events of Default shall have been remedied and the Obligations paid in full. As an alternative to exercising the power of sale herein conferred upon it, the Collateral Agent may proceed by a suit or suits at law or in equity to foreclose this Agreement and to sell the Collateral or any portion thereof pursuant to a judgment or decree of a court or courts having competent jurisdiction or pursuant to a proceeding by a court-appointed receiver.


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SECTION 6.02. Application of Proceeds. The Collateral Agent shall apply the proceeds of any collection or sale of the Collateral, as well as any Collateral consisting of cash, as follows:

FIRST, to the payment of all reasonable costs and expenses incurred by the Administrative Agent or the Collateral Agent (in its capacity as such hereunder or under any other Loan Document) in connection with such collection or sale or otherwise in connection with this Agreement or any of the Obligations, including all court costs and the fees and expenses of its agents and legal counsel, the repayment of all advances made by the Collateral Agent hereunder or under any other Loan Document on behalf of any Grantor and any other costs or expenses incurred in connection with the exercise of any right or remedy hereunder or under any other Loan Document;

SECOND, to the payment in full of the Obligations (the amounts so applied to be distributed among the Secured Parties pro rata in accordance with the amounts of the Obligations owed to them on the date of any such distribution); and

THIRD, to the Grantors, their successors or assigns, or as a court of competent jurisdiction may otherwise direct.

The Collateral Agent shall have absolute discretion as to the time of application of any such proceeds, moneys or balances in accordance with this Agreement. Upon any sale of the Collateral by the Collateral Agent (including pursuant to a power of sale granted by statute or under a judicial proceeding), the receipt of the Collateral Agent or of the officer making the sale shall be a sufficient discharge to the purchaser or purchasers of the Collateral so sold and such purchaser or purchasers shall not be obligated to see to the application of any part of the purchase money paid over to the Collateral Agent or such officer or be answerable in any way for the misapplication thereof.

SECTION 6.03. Grant of License to Use Intellectual Property. For the purpose of enabling the Collateral Agent to exercise rights and remedies under this Article at such time as the Collateral Agent shall be lawfully entitled to exercise such rights and remedies, to the extent permitted to do so (and each Grantor shall make all commercially reasonable efforts to obtain the consent to license all Intellectual Property referred to below to the Collateral Agent pursuant to this Section 6.03) each Grantor hereby grants to the Collateral Agent an irrevocable, non-exclusive license (exercisable without payment of royalty or other compensation to the Grantors) to use, license or sub-license any of the Collateral consisting of Intellectual Property now owned or hereafter acquired by such Grantor, and wherever the same may be located, and including in such license reasonable access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof. The use of such license by the Collateral Agent shall be exercised, at the option of the Collateral Agent, upon the occurrence and during the continuation of an Event of Default; provided that any license, sub-license or other transaction entered into by the Collateral Agent in accordance herewith shall be binding upon the Grantors notwithstanding any subsequent cure of an Event of Default.


16

ARTICLE VII

Miscellaneous

SECTION 7.01. Notices. All communications and notices hereunder shall (except as otherwise expressly permitted herein) be in writing and given as provided in Section 9.01 of the Credit Agreement. All communications and notices hereunder to any Subsidiary Guarantor shall be given to it in care of Terex.

SECTION 7.02. Security Interest Absolute. All rights of the Collateral Agent hereunder, the Security Interest and all obligations of the Grantors hereunder shall be absolute and unconditional irrespective of (a) any lack of validity or enforceability of the Credit Agreement, any other Loan Document, any agreement with respect to any of the Obligations or any other agreement or instrument relating to any of the foregoing, (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from the Credit Agreement, any other Loan Document or any other agreement or instrument,
(c) any exchange, release or nonperfection of any Lien on other collateral, or any release or amendment or waiver of or consent under or departure from any guarantee, securing or guaranteeing all or any of the Obligations, or (d) any other circumstance that might otherwise constitute a defense available to, or a discharge of, any Grantor in respect of the Obligations or this Agreement.

SECTION 7.03. Survival of Agreement. All covenants, agreements, representations and warranties made by any Grantor herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by the Secured Parties and shall survive the making by the Lenders of the Loans, and the execution and delivery to the Lenders of any notes evidencing such Loans, regardless of any investigation made by the Lenders or on their behalf, and shall continue in full force and effect until this Agreement shall terminate.

SECTION 7.04. Binding Effect; Several Agreement. This Agreement shall become effective as to any Grantor when a counterpart hereof executed on behalf of such Grantor shall have been delivered to the Collateral Agent and a counterpart hereof shall have been executed on behalf of the Collateral Agent, and thereafter shall be binding upon such Grantor and the Collateral Agent and their respective successors and assigns, and shall inure to the benefit of such Grantor, the Collateral Agent and the other Secured Parties and their respective successors and assigns, except that no Grantor shall have the right to assign or transfer its rights or obligations hereunder or any interest herein or in the Collateral (and any such assignment or transfer shall be void) except as expressly contemplated by this Agreement or the Credit Agreement. This Agreement shall be construed as a separate agreement with respect to each Grantor and may be amended, modified, supplemented, waived or released with respect to any Grantor without the approval of any other Grantor and without affecting the obligations of any other Grantor hereunder.

SECTION 7.05. Successors and Assigns. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party; and all covenants, promises and agreements by or on behalf of any Grantor or the Collateral Agent that are contained in this Agreement shall bind and inure to the benefit of their respective successors and assigns.

SECTION 7.06. Collateral Agent's Fees and Expenses; Indemnification.
(a) Each Grantor jointly and severally agrees to pay upon demand to the Collateral Agent the amount of any and all reasonable expenses, including the reasonable fees, disbursements and other charges of its counsel and of any experts or agents, which the Collateral Agent may incur in connection with (i) the administration of this Agreement, (ii) the custody or preservation of, or the sale of, collection from or other realization upon any of the Collateral,
(iii) the exercise, enforcement or protection of any of the rights of the


17

Collateral Agent hereunder or (iv) the failure of any Grantor to perform or observe any of the provisions hereof.

(b) Without limitation of its indemnification obligations under the other Loan Documents, each Grantor jointly and severally agrees to indemnify the Collateral Agent and the Indemnitees (as defined in Section 9.05 of the Credit Agreement) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including reasonable counsel fees, other charges and disbursements, incurred by or asserted against any Indemnitee arising out of, in any way connected with, or as a result of (i) the execution or delivery of this Agreement or any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations thereunder or the consummation of the Transactions and the other transactions contemplated thereby or (ii) any claim, litigation, investigation or proceeding relating to any of the foregoing, whether or not any Indemnitee is a party thereto, provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or wilful misconduct of such Indemnitee.

(c) Any amounts payable as provided hereunder shall be additional Obligations secured hereby and by the other Security Documents. The provisions of this Section 7.06 shall remain operative and in full force and effect regardless of the termination of this Agreement or any other Loan Document, the consummation of the transactions contemplated hereby, the repayment of any of the Obligations, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of the Collateral Agent or any other Secured Party. All amounts due under this Section 7.06 shall be payable on written demand therefor and shall bear interest at the rate specified in Section 2.07 of the Credit Agreement.

SECTION 7.07. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

SECTION 7.08. Waivers; Amendment. (a) No failure or delay of the Collateral Agent in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Collateral Agent hereunder and of the Secured Parties under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provisions of this Agreement or any other Loan Document or consent to any departure by any Grantor therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) below, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on any Grantor in any case shall entitle such Grantor or any other Grantor to any other or further notice or demand in similar or other circumstances.

(b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Collateral Agent and the Grantor or Grantors with respect to which such waiver, amendment or modification is to apply, subject to any consent required in accordance with Section 9.08 of the Credit Agreement.

SECTION 7.09. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,


18

UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.09.

SECTION 7.10. Severability. In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

SECTION 7.11 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one contract (subject to Section 7.04), and shall become effective as provided in Section 7.04. Delivery of an executed signature page to this Agreement by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof.

SECTION 7.12. Headings. Article and Section headings used herein are for the purpose of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.

SECTION 7.13. Jurisdiction; Consent to Service of Process. (a) Each Grantor hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the other Loan Documents, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that the Collateral Agent or any other Secured Party may otherwise have to bring any action or proceeding relating to this Agreement or the other Loan Documents against any Grantor or its properties in the courts of any jurisdiction.

(b) Each Grantor hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the other Loan Documents in any New York State or Federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(c) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 7.01. Nothing in this Agreement will affected the right of any party to this Agreement to serve process in any other manner permitted by law.


19

SECTION 7.14. Termination. This Agreement and the Security Interest shall terminate when all the Obligations have been paid in full, the Lenders have no further commitment to lend under the Credit Agreement, the L/C Exposure has been reduced to zero and the Issuing Banks have no further commitment to issue Letters of Credit under the Credit Agreement, at which time the Collateral Agent shall promptly execute and deliver to the Grantors, at the Grantors' expense, all Uniform Commercial Code termination statements and other release documents which the Grantors shall reasonably request to evidence such termination. Any execution and delivery of termination statements or documents pursuant to this Section 7.14 shall be without recourse to or warranty by the Collateral Agent. A Subsidiary Guarantor shall automatically be released from its obligations hereunder and the Security Interest in the Collateral of such Subsidiary Guarantor shall be automatically released in the event that all the capital stock of such Subsidiary Guarantor shall be sold, transferred or otherwise disposed of to a person that is not an Affiliate of Terex in accordance with the terms of the Credit Agreement; provided that if consent to such sale, transfer or other disposition is required by the Credit Agreement, such consent is obtained pursuant to Section 9.08(b) of the Credit Agreement and the terms of such consent did not provide otherwise.

SECTION 7.15. Additional Grantors. Pursuant to Section 5.11 of the Credit Agreement, each Domestic Subsidiary that was not in existence or was not a Domestic Subsidiary on the date of the Credit Agreement is required to enter into this Agreement as a Subsidiary Guarantor upon becoming a Domestic Subsidiary. Upon execution and delivery after the date hereof by the Collateral Agent and such a Subsidiary of an instrument in the form of Annex 2, such Subsidiary shall become a Subsidiary Guarantor hereunder with the same force and effect as if originally named as a Subsidiary Guarantor herein. The execution and delivery of any instrument adding an additional Subsidiary Guarantor as a party to this Agreement shall not require the consent of any other Grantor hereunder. The rights and obligations of each Grantor hereunder shall remain in full force and effect notwithstanding the addition of any new Subsidiary Guarantor as a party to this Agreement.

SECTION 7.16. Credit Agreement. Notwithstanding anything else contained in this Agreement, each Grantor may do any act or omit to do any act or cause or permit any condition or circumstance to exist, in each case to the extent expressly permitted by the Credit Agreement.

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.

TEREX CORPORATION,

by

Name:


Title:

EACH OF THE SUBSIDIARY GUARANTORS
LISTED ON SCHEDULE I HERETO,

by

Name:


Title: Authorized Officer


20

CREDIT SUISSE FIRST BOSTON, as Collateral
Agent,

by

Name:


Title: Authorized Officer

by

Name:


Title: Authorized Officer


21

SCHEDULE I

SUBSIDIARY GUARANTORS


22

SCHEDULE II

COPYRIGHTS


23

SCHEDULE III

LICENSES


24

SCHEDULE IV

PATENTS


25

SCHEDULE V

TRADEMARKS


26

Annex 1 to the
Security Agreement

LOCKBOX AND DEPOSITORY AGREEMENT

TO FOLLOW


1

Annex 2 to the
Security Agreement

SUPPLEMENT NO. __ dated as of ___ , to the Security Agreement dated as of March 6, 1998, (as amended, supplemented or otherwise modified from time to time, the (the "Security Agreement") among TEREX CORPORATION, a Delaware corporation ("Terex"), each subsidiary of Terex listed on Schedule I thereto (each such subsidiary individually a "Subsidiary Guarantor" and collectively, the "Subsidiary Guarantors"; the Subsidiary Guarantors and Terex are referred to collectively herein as the "Grantors") and CREDIT SUISSE FIRST BOSTON, a bank organized under the laws of Switzerland, acting through its New York branch ("CSFB"), as collateral agent (in such capacity, the "Collateral Agent") for the Secured Parties (as defined herein).

A. Reference is made to (a) the Credit Agreement dated as of March 6, 1998 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among Terex, Terex Equipment Limited, a company organized under the laws of Scotland, P.P.M. S.A., a company organized under the laws of the Republic of France, Unit Rig (Australia) Pty, Ltd., a company organized under the laws of New South Wales, and P.P.M. Sp.A., a company organized under the laws of the Republic of Italy, the Lenders (as defined in Article I thereto), the Issuing Banks (as defined in Article I thereto) and CSFB, as administrative agent and as collateral agent for the Lenders, (b) the Guarantee Agreement dated as of March 6, 1998 (as amended, supplemented or otherwise modified from time to time, the "Subsidiary Guarantee Agreement") among the Subsidiary Guarantors and the Collateral Agent and (c) the Guarantee Agreement dated as of March 6, 1998 (as amended, supplemented or otherwise modified from time to time, the "Terex Guarantee Agreement") between Terex and the Collateral Agent .

B. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Security Agreement.

C. The Grantors have entered into the Security Agreement in order to induce the Lenders to make Loans and the Issuing Banks to issue Letters of Credit. Section 7.15 of Security Agreement provides that additional Subsidiaries may become Grantors under the Security Agreement by execution and delivery of an instrument in the form of this Supplement. The undersigned Subsidiary (the "New Grantor") is executing this Supplement in accordance with the requirements of the Credit Agreement to become a Grantor under the Security Agreement in order to induce the Lenders to make additional Loans and the Issuing Bank to issue additional Letters of Credit and as consideration for Loans previously made and Letters of Credit previously issued.

Accordingly, the Collateral Agent and the New Grantor agree as follows:

SECTION 1. In accordance with Section 7.15 of the Security Agreement, the New Grantor by its signature below becomes a Grantor under the Security Agreement with the same force and effect as if originally named therein as a Grantor and the New Grantor hereby (a) agrees to all the terms and provisions of the Security Agreement applicable to it as a Grantor thereunder and (b) represents and warrants that the representations and warranties made by it as a Grantor thereunder are true and correct on and as of the date hereof. In furtherance of the foregoing, the New Grantor, as security for the payment and performance in full of the Obligations, does hereby create and grant to the Collateral Agent, its successors and assigns, for the benefit of the Secured Parties, their successors and assigns, a security interest in and lien on all of the New Grantor's right, title and interest in and to the Collateral of the New Grantor. Each reference to a "Grantor" in the Security Agreement shall be deemed to include the New Grantor. The Security Agreement is hereby incorporated herein by reference.

SECTION 2. The New Grantor represents and warrants to the Collateral Agent and the other Secured Parties that this Supplement has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws


2

affecting creditors' rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

SECTION 3. This Supplement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Supplement shall become effective when the Collateral Agent shall have received counterparts of this Supplement that, when taken together, bear the signatures of the New Grantor and the Collateral Agent. Delivery of an executed signature page to this Supplement by facsimile transmission shall be as effective as delivery of a manually signed counterpart of this Supplement.

SECTION 4. The New Grantor hereby represents and warrants that (a) set forth on Schedule I attached hereto is a true and correct schedule of the location of any and all Collateral of the New Grantor and (b) set forth under its signature hereto, is the true and correct location of the chief executive office of the New Grantor.

SECTION 5. Except as expressly supplemented hereby, the Security Agreement shall remain in full force and effect.

SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

SECTION 7. In case any one or more of the provisions contained in this Supplement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and in the Security Agreement shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties hereto shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

SECTION 8. All communications and notices hereunder shall be in writing and given as provided in Section 7.01 of the Security Agreement. All communications and notices hereunder to the New Grantor shall be given to it at the address set forth under its signature below.

SECTION 9. The Collateral Agent shall be reimbursed, in accordance with
Section 9.05(a) of the Credit Agreement, for its reasonable out-of-pocket expenses in connection with this Supplement, including the reasonable fees, other charges and disbursements of counsel for the Collateral Agent.

IN WITNESS WHEREOF, the New Grantor and the Collateral Agent have duly executed this Supplement to the Security Agreement as of the day and year first above written.

[Name of New Grantor],

by
Name:


Title:
Address:


3

CREDIT SUISSE FIRST BOSTON, as
Collateral Agent,

by

Name:


Title:

by

Name:


Title:


4

SCHEDULE I
to Supplement No.___ to the
Security Agreement

LOCATION OF COLLATERAL

Description Location


1

PLEDGE AGREEMENT dated as of March 6, 1998, among TEREX CORPORATION, a Delaware corporation ("Terex"), each subsidiary of Terex listed on Schedule I hereto (each such subsidiary individually a "Subsidiary Pledgor" and collectively, the "Subsidiary Pledgors"; Terex and the Subsidiary Pledgors are referred to collectively herein as the "Pledgors") and CREDIT SUISSE FIRST BOSTON, a bank organized under the laws of Switzerland, acting through its New York branch ("CSFB"), as collateral agent (in such capacity, the "Collateral Agent") for the Secured Parties (as defined in the Credit Agreement referred to below).

Reference is made to (a) the Credit Agreement dated as of March 6, 1998 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among Terex, Terex Equipment Limited, a company organized under the laws of Scotland, P.P.M. S.A., a company organized under the laws of the Republic of France, Unit Rig (Australia) Pty. Ltd., a company organized under the laws of New South Wales, and P.P.M. Sp.A., a company organized under the laws of the Republic of Italy, the Lenders (as defined in Article I thereto), the Issuing Banks (as defined in Article I thereto) and CSFB, as administrative agent and as collateral agent for the Lenders, (b) the Guarantee Agreement dated as of March 6, 1998 (as amended, supplemented or otherwise modified from time to time, the "Subsidiary Guarantee Agreement") among the Subsidiary Pledgors and the Collateral Agent and (c) the Guarantee Agreement dated as of March 6, 1998 (as amended, supplemented or otherwise modified from time to time, the "Terex Guarantee Agreement") between Terex and the Collateral Agent. Capitalized terms used herein and not defined herein shall have meanings assigned to such terms in the Credit Agreement.

The Lenders have agreed to make Loans to the Borrowers and the Issuing Banks have agreed to issue Letters of Credit for the account of the Borrowers, pursuant to, and upon the terms and subject to the conditions specified in, the Credit Agreement. The Subsidiary Pledgors have agreed to guarantee, among other things, all the obligations of the Borrower under the Credit Agreement pursuant to the Subsidiary Guarantee Agreement. Terex has agreed to guarantee, among other things, all the obligations of the Subsidiary Borrowers under the Credit Agreement pursuant to the Terex Guarantee Agreement. The obligations of the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit are conditioned upon, among other things, the execution and delivery by the Pledgors of a Pledge Agreement in the form hereof to secure (a) the due and punctual payment by the Borrowers of (i) the principal of and premium, if any, and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Loans, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, (ii) each payment required to be made by any Borrower under the Credit Agreement in respect of any Letter of Credit, when and as due, including payments in respect of reimbursement of disbursements, interest thereon and obligations to provide cash collateral and (iii) all other monetary obligations, including fees, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), of the Borrowers to the Secured Parties under the Credit Agreement and the other Loan Documents, (b) the due and punctual performance of all covenants, agreements, obligations and liabilities of the Borrowers under or pursuant to the Credit Agreement and the other Loan Documents, (c) the due and punctual payment and performance of all the covenants, agreements, obligations and liabilities of each Subsidiary Pledgor under or pursuant to the Subsidiary Guarantee Agreement or the other Loan Documents and (d) the due and punctual payment and performance of all obligations of the Borrowers under each Hedging Agreement entered into with any counterparty that was a Lender (or an Affiliate thereof) at the time such Hedging Agreement was entered into (all the monetary and other obligations referred to in the preceding clauses (a) through (d) being referred to collectively as the "Obligations"); provided, however, that the total principal amount


2

of indebtedness or obligations secured by the Pledged Stock consisting of shares of capital stock of a corporation incorporated in New South Wales shall not exceed $4,000,000.

Accordingly, the Pledgors and the Collateral Agent, on behalf of itself and each Secured Party (and each of their respective successors or assigns), hereby agree as follows:

SECTION 1.1 Pledge. As security for the payment and performance, as the case may be, in full of the Obligations, each Pledgor hereby transfers, grants, bargains, sells, conveys, hypothe cates, pledges, sets over and delivers unto the Collateral Agent, its successors and assigns, and hereby grants to the Collateral Agent, its successors and assigns, for the ratable benefit of the Secured Parties, a security interest in all of the Pledgor's right, title and interest in, to and under (a) the shares of capital stock owned by it and listed on Schedule II hereto and any shares of capital stock of or any Subsidiary obtained in the future by the Pledgor and the certificates representing all such shares (the "Pledged Stock"); provided that the Pledged Stock shall not include
(i), more than 65% of the issued and outstanding shares of stock of any Foreign Subsidiary, (ii) to the extent that applicable law requires that a Subsidiary of the Pledgor issue directors' qualifying shares, such qualifying shares or (iii) the Irish Shares or the Related Rights (as both terms are defined hereinafter);
(b)(i) the debt securities listed opposite the name of the Pledgor on Schedule II hereto, (ii) any debt securities in the future issued to the Pledgor and
(iii) the promissory notes and any other instruments evidencing such debt securities (the "Pledged Debt Securities"); (c) all other property that may be delivered to and held by the Collateral Agent pursuant to the terms hereof; (d) subject to Section 5, all payments of principal or interest, dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed, in respect of, in exchange for or upon the conversion of the securities referred to in clauses (a) and (b) above; (e) subject to Section 5, all rights and privileges of the Pledgor with respect to the securities and other property referred to in clauses (a), (b), (c) and (d) above; and (f) all proceeds of any of the foregoing (the items referred to in clauses (a) through
(f) above and the Irish Shares and the Related Rights referred to in Section 1.2 below, being collectively referred to as the "Collateral"). Upon delivery to the Collateral Agent, (a) any stock certificates, notes or other securities now or hereafter included in the Collateral (the "Pledged Securities") shall be accompanied by stock powers duly executed in blank or other instruments of transfer satisfactory to the Collateral Agent and by such other instruments and documents as the Collateral Agent may reasonably request and (b) all other property comprising part of the Collateral shall be accompanied by proper instruments of assignment duly executed by the applicable Pledgor and such other instruments or documents as the Collateral Agent may reasonably request. Each delivery of Pledged Securities shall be accompanied by a schedule describing the securities theretofore and then being pledged hereunder, which schedule shall be attached hereto as Schedule II and made a part hereof. Each schedule so delivered shall supersede any prior schedules so delivered.

SECTION 1.2 Mortgage over Irish Shares. Terex as legal and beneficial owner of the shares in Terex Aerials Limited ("TAL") referred to in Schedule II hereto (the "Irish Shares") hereby mortgages and charges all its interests both legal and beneficial in the Irish Shares, including any dividends or interest paid or payable in relation to the Irish Shares and any rights, moneys or property accruing or offered at any time in relation to the Irish Shares by way of redemption, substitution, exchange, bonus or preference, under option rights or otherwise (the "Related Rights") to the collateral Agent, its successors and assigns, by way of a first mortgage or charge as a continuing security for the payment and performance, as the case may be, in full of the Obligations.

TO HAVE AND TO HOLD the Collateral, together with all right, title, interest, powers, privileges and preferences pertaining or incidental thereto, unto the Collateral Agent, its successors and assigns, for the ratable benefit of the Secured Parties, forever; subject, however, to the terms, covenants and conditions hereinafter set forth.

SECTION 2. Delivery of the Collateral. (a) Each Pledgor agrees promptly to deliver or cause to be delivered to the Collateral Agent any and all Pledged Securities, and any and all


3

certificates or other instruments or documents representing the Collateral (including in the case of the mortgage over the Irish Shares referred to above a stock transfer form executed in blank by Terex in a form satisfactory to the Collateral Agent).

(b) Each Pledgor will cause any Indebtedness (except for any intercompany Indebtedness not evidenced by notes and subordinated by its terms to the payment of the Obligations) for borrowed money owed to the Pledgor by any person to be evidenced by a duly executed promissory note that is pledged and delivered to the Collateral Agent pursuant to the terms thereof.

(c) Notwithstanding anything to the contrary contained in this Section 2 or Section 1 hereof, if any Pledged Securities (whether now owned or hereafter acquired) are uncertificated securities, the respective Pledgor shall promptly notify the Collateral Agent thereof, and shall promptly take all actions required to perfect the security interest of the Collateral Agent under applicable law (including, in any event, under Section 9-115 of the New York UCC, if applicable). Each Pledgor further agrees to take such actions as the Collateral Agent deems reasonably necessary or desirable to effect the foregoing and to permit the Collateral Agent to exercise any of its rights and remedies hereunder, and agrees to provide an opinion of counsel reasonably satisfactory to the Collateral Agent (which may be counsel employed by Terex) with respect to the creation and perfection of any such pledge of uncertificated Pledged Securities promptly upon request of the Collateral Agent.

SECTION 3. Representations, Warranties and Covenants. Each Pledgor hereby represents, warrants and covenants, as to itself and the Collateral pledged by it hereunder, to and with the Collateral Agent that:

(a) the Pledged Stock and the Irish Shares represent that percentage as set forth on Schedule II of the issued and outstanding shares of each class of the capital stock of the issuer with respect thereto;

(b) except for the security interest granted hereunder, the Pledgor (i) is and will at all times continue to be the direct owner, beneficially and of record, of the Pledged Securities indicated on Schedule II, (ii) holds the same free and clear of all Liens, (iii) will make no assignment, pledge, hypothecation or transfer of, or create or permit to exist any security interest in or other Lien on, the Collateral, other than pursuant hereto or to the Credit Agreement, and (iv) subject to Section 5 and Section 2(c), will cause any and all Collateral, whether for value paid by the Pledgor or otherwise, to be forthwith deposited with the Collateral Agent and pledged or assigned hereunder;

(c) the Pledgor (i) has the corporate power and authority to pledge the Collateral in the manner hereby done or contemplated and
(ii) will defend its title or interest thereto or therein against any and all Liens (other than the Lien created by this Agreement), however arising, of all persons whomsoever;

(d) no consent of any other person (including stockholders or creditors of any Pledgor) and no consent or approval of any Governmental Authority or any securities exchange was or is necessary to the validity of the pledge effected hereby;

(e) by virtue of the execution and delivery by the Pledgors of this Agreement, when the Pledged Securities, certificates or other documents representing or evidencing the Collateral (together with an executed stock transfer form in the case of the Irish Shares) are delivered to the Collateral Agent in accordance with this Agreement (or, in the case of uncertificated stock, the actions required by
Section 2(c) are taken), the Collateral Agent will obtain a valid and perfected first lien upon and security interest in such Pledged Securities as security for the payment and performance of the Obligations;


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(f) the pledge effected hereby is effective to vest in the Collateral Agent, on behalf of the Secured Parties, the rights of the Collateral Agent in the Collateral as set forth herein;

(g) all of the Pledged Stock and the Irish Shares have been duly authorized and validly issued and are fully paid and nonassessable;

(h) all information set forth herein relating to the Pledged Stock and the Irish Shares is accurate and complete in all material respects as of the date hereof; and

(i) the pledge of the Pledged Stock pursuant to this Agreement does not violate Regulation G, T, U or X of the Federal Reserve Board or any successor thereto as of the date hereof;

and Terex covenants, as the sole shareholder of TAL, that it will not vote to amend the provisions concerning the transfer of shares (and, in particular, article 8(b)) contained in the articles of association of TAL (as amended by a written resolution of the single member of TAL dated 5th March, 1998) without the prior written consent of the Collateral Agent.

SECTION 4. Registration in Nominee Name; Denominations. Upon the occurrence and during the continuance of an Event of Default, the Collateral Agent, on behalf of the Secured Parties, shall have the right (in its sole and absolute discretion) to hold the Pledged Securities in its own name as pledgee, the name of its nominee (as pledgee or as sub-agent) or the name of the Pledgors, endorsed or assigned in blank or in favor of the Collateral Agent. Each Pledgor will promptly give to the Collateral Agent copies of any notices or other communications received by it with respect to Pledged Securities registered in the name of such Pledgor. Upon the occurrence and during the continuance of an Event of Default, the Collateral Agent shall have the right to exchange the certificates representing Pledged Securities for certificates of smaller or larger denominations for any purpose consistent with this Agreement.

SECTION 5. Voting Rights; Dividends and Interest, etc. (a) Unless and until an Event of Default shall have occurred and be continuing:

(i) Each Pledgor shall be entitled to exercise any and all voting and/or other consensual rights and powers inuring to an owner of Pledged Securities or any part thereof for any purpose consistent with the terms of this Agreement, the Credit Agreement and the other Loan Documents; provided, however, that such Pledgor will not be entitled to exercise any such right if the result thereof could reasonably be expected to materially and adversely affect the rights inuring to a holder of the Pledged Securities or the rights and remedies of any of the Secured Parties under this Agreement or the Credit Agreement or any other Loan Document or the ability of the Secured Parties to exercise the same.

(ii) The Collateral Agent shall execute and deliver to each Pledgor, or cause to be executed and delivered to each Pledgor, all such proxies, powers of attorney and other instruments as such Pledgor may reasonably request for the purpose of enabling such Pledgor to exercise the voting and/or consensual rights and powers it is entitled to exercise pursuant to subparagraph (i) above and to receive the cash dividends it is entitled to receive pursuant to subparagraph (iii) below.

(iii) Each Pledgor shall be entitled to receive and retain any and all cash dividends, interest and principal paid on the Pledged Securities to the extent and only to the extent that such cash dividends, interest and principal are permitted by, and otherwise paid in accordance with, the terms and conditions of the Credit Agreement, the other Loan Documents and applicable laws. All noncash dividends, interest and principal, and all dividends, interest and principal paid or payable in cash or otherwise in connection with a partial or total liquidation or dissolution, return of capital, capital surplus or paid-in surplus, and all other distributions (other than distributions


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referred to in the preceding sentence) made on or in respect of the Pledged Securities, whether paid or payable in cash or otherwise, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock of the issuer of any Pledged Securities or received in exchange for Pledged Securities or any part thereof, or in redemption thereof, or as a result of any merger, consolidation, acquisition or other exchange of assets to which such issuer may be a party or otherwise, shall be and become part of the Collateral, and, if received by any Pledgor, shall not be commingled by such Pledgor with any of its other funds or property but shall be held separate and apart therefrom, shall be held in trust for the benefit of the Collateral Agent and shall be forthwith delivered to the Collateral Agent in the same form as so received (with any necessary endorsement).

(b) Upon the occurrence and during the continuance of an Event of Default, all rights of any Pledgor to dividends, interest or principal that such Pledgor is authorized to receive pursuant to paragraph (a)(iii) above shall cease, and all such rights shall thereupon become vested in the Collateral Agent, which shall have the sole and exclusive right and authority to receive and retain such dividends, interest or principal. All dividends, interest or principal received by the Pledgor contrary to the provisions of this Section 5 shall be held in trust for the benefit of the Collateral Agent, shall be segregated from other property or funds of such Pledgor and shall be forthwith delivered to the Collateral Agent upon demand in the same form as so received (with any necessary endorsement). Any and all money and other property paid over to or received by the Collateral Agent pursuant to the provisions of this paragraph (b) shall be retained by the Collateral Agent in an account to be established by the Collateral Agent upon receipt of such money or other property and shall be applied in accordance with the provisions of Section 7. After all Events of Default have been cured or waived, the Collateral Agent shall, within five Business Days after all such Events of Default have been cured or waived, repay to each Pledgor all cash dividends, interest or principal (without interest), that such Pledgor would otherwise be permitted to retain pursuant to the terms of paragraph (a)(iii) above and which remain in such account.

(c) Upon the occurrence and during the continuance of an Event of Default, all rights of any Pledgor to exercise the voting and consensual rights and powers it is entitled to exercise pursuant to paragraph (a)(i) of this
Section 5, and the obligations of the Collateral Agent under paragraph (a)(ii) of this Section 5, shall cease, and all such rights shall thereupon become vested in the Collateral Agent, which shall have the sole and exclusive right and authority to exercise such voting and consensual rights and powers, provided that, unless otherwise directed by the Required Lenders, the Collateral Agent shall have the right from time to time following and during the continuance of an Event of Default to permit the Pledgors to exercise such rights. After all Events of Default have been cured or waived, such Pledgor will have the right to exercise the voting and consensual rights and powers that it would otherwise be entitled to exercise pursuant to the terms of paragraph (a)(i) above.

SECTION 6. Remedies upon Default. Upon the occurrence and during the continuance of an Event of Default, subject to applicable regulatory and legal requirements, the Collateral Agent may sell the Collateral, or any part thereof, at public or private sale or at any broker's board or on any securities exchange, for cash, upon credit or for future delivery as the Collateral Agent shall deem appropriate. The Collateral Agent shall be authorized at any such sale (if it deems it advisable to do so) to restrict the prospective bidders or purchasers to persons who will represent and agree that they are purchasing the Collateral for their own account for investment and not with a view to the distribution or sale thereof, and upon consummation of any such sale the Collateral Agent shall have the right to assign, transfer and deliver to the purchaser or purchasers thereof the Collateral so sold. Each such purchaser at any such sale shall hold the property sold absolutely free from any claim or right on the part of any Pledgor, and, to the extent permitted by applicable law, the Pledgors hereby waive all rights of redemption, stay, valuation and appraisal any Pledgor now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted.


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The Collateral Agent shall give a Pledgor 10 days' prior written notice (which each Pledgor agrees is reasonable notice within the meaning of Section 9-504(3) of the Uniform Commercial Code as in effect in the State of New York or its equivalent in other jurisdictions) of the Collateral Agent's intention to make any sale of such Pledgor's Collateral. Such notice, in the case of a public sale, shall state the time and place for such sale and, in the case of a sale at a broker's board or on a securities exchange, shall state the board or exchange at which such sale is to be made and the day on which the Collateral, or portion thereof, will first be offered for sale at such board or exchange. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as the Collateral Agent may fix and state in the notice of such sale. At any such sale, the Collateral, or portion thereof, to be sold may be sold in one lot as an entirety or in separate parcels, as the Collateral Agent may (in its sole and absolute discretion) determine. The Collateral Agent shall not be obligated to make any sale of any Collateral if it shall determine not to do so, regardless of the fact that notice of sale of such Collateral shall have been given. The Collateral Agent may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned. In case any sale of all or any part of the Collateral is made on credit or for future delivery, the Collateral so sold may be retained by the Collateral Agent until the sale price is paid in full by the purchaser or purchasers thereof, but the Collateral Agent shall not incur any liability in case any such purchaser or purchasers shall fail to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may be sold again upon like notice. At any public (or, to the extent permitted by applicable law, private) sale made pursuant to this Section 6, any Secured Party may bid for or purchase, free from any right of redemption, stay or appraisal on the part of any Pledgor (all said rights being also hereby waived and released), the Collateral or any part thereof offered for sale and may make payment on account thereof by using any claim then due and payable to it from such Pledgor as a credit against the purchase price, and it may, upon compliance with the terms of sale, hold, retain and dispose of such property without further accountability to such Pledgor therefor. For purposes hereof, (a) a written agreement to purchase the Collateral or any portion thereof shall be treated as a sale thereof, (b) the Collateral Agent shall be free to carry out such sale pursuant to such agreement and (c) such Pledgor shall not be entitled to the return of the Collateral or any portion thereof subject thereto, notwithstanding the fact that after the Collateral Agent shall have entered into such an agreement all Events of Default shall have been remedied and the Obligations paid in full. As an alternative to exercising the power of sale herein conferred upon it, the Collateral Agent may proceed by a suit or suits at law or in equity to foreclose upon the Collateral and to sell the Collateral or any portion thereof pursuant to a judgment or decree of a court or courts having competent jurisdiction or pursuant to a proceeding by a court-appointed receiver. Any sale pursuant to the provisions of this Section 6 shall be deemed to conform to the commercially reasonable standards as provided in Section 9-504(3) of the Uniform Commercial Code as in effect in the State of New York or its equivalent in other jurisdictions.

SECTION 7. Application of Proceeds of Sale. The proceeds of any sale of Collateral pursuant to Section 6, as well as any Collateral consisting of cash, shall be applied by the Collateral Agent as follows:

FIRST, to the payment of all reasonable costs and expenses incurred by the Collateral Agent in connection with such sale or otherwise in connection with this Agreement, any other Loan Document or any of the Obligations, including all court costs and the reasonable fees and expenses of its agents and legal counsel, the repayment of all advances made by the Collateral Agent hereunder or under any other Loan Document on behalf of any Pledgor and any other costs or expenses incurred in connection with the exercise of any right or remedy hereunder or under any other Loan Document;

SECOND, to the payment in full of the Obligations (the amounts so applied to be distributed among the Secured Parties pro rata in accordance with the amounts of the Obligations owed to them on the date of any such distribution); and


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THIRD, to the Pledgors, their successors or assigns, or as a court of competent jurisdiction may otherwise direct.

The Collateral Agent shall have absolute discretion as to the time of application of any such proceeds, moneys or balances in accordance with this Agreement. Upon any sale of the Collateral by the Collateral Agent (including pursuant to a power of sale granted by statute or under a judicial proceeding), the receipt of the purchase money by the Collateral Agent or of the officer making the sale shall be a sufficient discharge to the purchaser or purchasers of the Collateral so sold and such purchaser or purchasers shall not be obligated to see to the application of any part of the purchase money paid over to the Collateral Agent or such officer or be answerable in any way for the misapplication thereof.

SECTION 8. Reimbursement of Collateral Agent. (a) Each Pledgor jointly and severally agrees to pay upon demand to the Collateral Agent the amount of any and all reasonable expenses, including the reasonable fees, other charges and disbursements of its counsel and of any experts or agents, that the Collateral Agent may incur in connection with (i) the administration of this Agreement, (ii) the custody or preservation of, or the sale of, collection from, or other realization upon, any of the Collateral, (iii) the exercise, enforcement or protection of any of the rights of the Collateral Agent hereunder or (iv) the failure of any Pledgor to perform or observe any of the provisions hereof.

(b) Without limitation of its indemnification obligations under the other Loan Documents, each Pledgor jointly and severally agrees to indemnify the Collateral Agent and the Indemnitees (as defined in Section 9.05 of the Credit Agreement) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including reasonable counsel fees, other charges and disbursements, incurred by or asserted against any Indemnitee arising out of, in any way connected with, or as a result of (i) the execution or delivery of this Agreement or any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations thereunder or the consummation of the Transactions and the other transactions contemplated thereby or (ii) any claim, litigation, investigation or proceeding relating to any of the foregoing, whether or not any Indemnitee is a party thereto, provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or wilful misconduct of such Indemnitee.

(c) Any amounts payable as provided hereunder shall be additional Obligations secured hereby and by the other Security Documents. The provisions of this Section 8 shall remain operative and in full force and effect regardless of the termination of this Agreement, the consummation of the transactions contemplated hereby, the repayment of any of the Obligations, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document or any investigation made by or on behalf of the Collateral Agent or any other Secured Party. All amounts due under this Section 8 shall be payable on written demand therefor and shall bear interest at the rate specified in
Section 2.07 of the Credit Agreement.

SECTION 9. Collateral Agent Appointed Attorney-in-Fact. Each Pledgor hereby appoints the Collateral Agent the attorney-in-fact of such Pledgor for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument that the Collateral Agent may deem necessary or advisable to accomplish the purposes hereof and without limitation to the foregoing to execute and complete in favor of the Collateral Agent or its nominees or of any purchaser any transfers or other documents which the Collateral Agent may require for perfecting its title to or for vesting the Collateral in the Collateral Agent or its nominees or in any purchaser, which appointment is irrevocable and coupled with an interest. The Collateral Agent shall have the right, upon the occurrence and during the continuance of an Event of Default, with full power of substitution either in the Collateral Agent's name or in the name of such Pledgor, to ask for, demand, sue for, collect, receive and give acquittance for any and all moneys due or to become due under


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and by virtue of any Collateral, to endorse checks, drafts, orders and other instruments for the payment of money payable to the Pledgor representing any interest or dividend or other distribution payable in respect of the Collateral or any part thereof or on account thereof and to give full discharge for the same, to settle, compromise, prosecute or defend any action, claim or proceeding with respect thereto, and to sell, assign, endorse, pledge, transfer and to make any agreement respecting, or otherwise deal with, the same; provided, however, that nothing herein contained shall be construed as requiring or obligating the Collateral Agent to make any commitment or to make any inquiry as to the nature or sufficiency of any payment received by the Collateral Agent, or to present or file any claim or notice, or to take any action with respect to the Collateral or any part thereof or the moneys due or to become due in respect thereof or any property covered thereby. The Collateral Agent and the other Secured Parties shall be accountable only for amounts actually received as a result of the exercise of the powers granted to them herein, and neither they nor their officers, directors, employees or agents shall be responsible to any Pledgor for any act or failure to act hereunder, except for their own gross negligence or wilful misconduct.

SECTION 10. Waivers; Amendment. (a) No failure or delay of the Collateral Agent in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Collateral Agent hereunder and of the Secured Parties under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provisions of this Agreement or consent to any departure by any Pledgor therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) below, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice or demand on any Pledgor in any case shall entitle such Pledgor or any other Pledgor to any other or further notice or demand in similar or other circumstances.

(b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to a written agreement entered into between the Collateral Agent and the Pledgor or Pledgors with respect to which such waiver, amendment or modification is to apply, subject to any consent required in accordance with Section 9.08 of the Credit Agreement.

SECTION 11. Securities Act, etc. In view of the position of the Pledgors in relation to the Pledged Securities, or because of other current or future circumstances, a question may arise under the Securities Act of 1933, as now or hereafter in effect, or any similar statute hereafter enacted analogous in purpose or effect (such Act and any such similar statute as from time to time in effect being called the "Federal Securities Laws") with respect to any disposition of the Pledged Securities permitted hereunder. Each Pledgor understands that compliance with the Federal Securities Laws might very strictly limit the course of conduct of the Collateral Agent if the Collateral Agent were to attempt to dispose of all or any part of the Pledged Securities, and might also limit the extent to which or the manner in which any subsequent transferee of any Pledged Securities could dispose of the same. Similarly, there may be other legal restrictions or limitations affecting the Collateral Agent in any attempt to dispose of all or part of the Pledged Securities under applicable Blue Sky or other state securities laws or similar laws analogous in purpose or effect. Each Pledgor recognizes